Common use of Adjustments to Merger Consideration Clause in Contracts

Adjustments to Merger Consideration. The Exchange Ratio and the Cash Consideration shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant to the provisions of the "Loan and Security Agreement" described in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as follows: (i) The (A) Excess Expenses, if any, shall be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated and shall be equal to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.

Adjustments to Merger Consideration. The Exchange Ratio (a) At least ten Business Days before the Closing Date, each Company shall prepare and deliver to Verano a statement, certified by the Chief Financial Officer and Chief Executive Officer of such Company, setting forth in reasonable detail (1) the Working Capital Adjustment for such Company, (2) the amount of Closing Net Indebtedness for such Company, including the Persons to whom such amounts are payable, (3) the amount of Transaction Expenses for such Company, including the Persons to whom such amounts are payable; and (4) such Company’s calculation of the Cash Consideration and Share Consideration payable with respect to such Company’s Members (and in respect of the Broker Fees) resulting therefrom, which statement shall be subject contain an estimated balance sheet of such Company as of the Closing Date without giving effect to reduction if the transactions contemplated herein (each such statement, a “Merger Consideration Statement”). The Merger Consideration Statement shall contain the certification of the Chief Financial Officer and Chief Executive Officer of each such Company certifying that (i) the "JV Termination Expenses" shall exceed outside accountants of the "Permitted Amount" (as such terms are defined Company participated in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses")preparation of, and/or and reviewed, the Merger Consideration Statement, and (ii) the Merger Consideration Statement was prepared in accordance with IFRS, applied using the same accounting methods, practices, principles, policies and procedures, with consistent classifications, judgments and valuation and estimation methodologies that were used in the preparation of the IFRS Financial Statements of such Company for the most recent fiscal year end as if such Merger Consideration Statement was being prepared as of a fiscal year end. (b) After receipt, Verano shall borrow funds from Parent pursuant review the Merger Consideration Statements and Verano and its accountants shall have full access to the provisions books and records of the "Loan Companies and Security Agreement" described the personnel of, and work papers prepared by, each Company or its accountants to the extent they relate to the Merger Consideration Statements and any historical information relating to such Merger Consideration Statements as Verano may reasonably request; provided that such access shall be in Section 6.18a manner that does not interfere with the normal business operations of such Company. Each Prior to four Business Days before the Closing Date, Verano may object to any Merger Consideration Statement by delivering to Member Representative a written statement setting forth its objections in reasonable detail, indicating each disputed item or amount and the basis for its disagreement therewith. If Verano timely delivers such an objection, Verano and Member Representative shall negotiate in good faith to resolve such objections prior to the Closing Date. If Verano and Member Representative fail to reach an agreement with respect to all of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and matters set forth in the Merger Consideration Statements before the scheduled Closing Date, then the Closing Date may be delayed by either Verano or Member Representative until such time as the amounts determinedremaining in dispute are resolved. If not objected to and accepted by Verano or when any disputed items therein are resolved, such Merger Consideration Statements, with such changes as follows: (i) The (A) Excess Expenses, if anymay have been previously agreed in writing by Verano and Member Representative, shall be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) final and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding binding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated parties hereto and shall be equal to used in determining the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95Share Consideration.

Adjustments to Merger Consideration. (a) The Merger Consideration shall be adjusted appropriately, without duplication, to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Company Shares or Parent Common Stock, as applicable), reorganization, recapitalization, reclassification, combination, exchange of shares or other similar extraordinary change with respect to the number of Company Shares or shares of Parent Common Stock outstanding after the date hereof and prior to the Effective Time. (b) If the aggregate number of shares of Parent Common Stock to be issued in connection with this Agreement (including (i) all shares of Parent Common Stock which may be issued after the Effective Time pursuant to Adjusted Options, Adjusted RSU Awards and the Convertible Notes and (ii) the number of shares of Parent Common Stock issuable in respect of the amount of the unallocated share reserve under the Company Equity Plans that Parent determines to assume) (the “Aggregate Stock Consideration”) would exceed 19.9% of the issued and outstanding shares of Parent Common Stock immediately prior to the Effective Time (the “Maximum Share Number”), (A) the Exchange Ratio shall be reduced to the minimum extent necessary (rounded down to the nearest 4th decimal place) such that the Aggregate Stock Consideration does not exceed the Maximum Share Number and (B) the Cash Consideration shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined increased on a per share basis by an amount in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant cash equal to the provisions of Parent Trading Price multiplied by the "Loan and Security Agreement" described in Section 6.18. Each of difference between the initial Exchange Ratio and the Cash Consideration shall be adjusted Exchange Ratio as described, and determined in the amounts determined, as follows: accordance with this Section 2.6(b) (i) The (A) Excess Expenses, if any, shall be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up rounded to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent). (iiic) The Exchange Ratio Nothing in this Section 2.6 shall be recalculated and shall be equal construed to permit the amount determined as Company or Parent to take any action with respect to its securities that is prohibited by the product terms of (A) .1490 multiplied this Agreement or to modify or limit the effect of any breach of this Agreement by (B) any Party or the quotient determined by dividing (x) the Cash Consideration as reduced pursuant remedies available to clause (ii) above by (y) $1.95any other Party under this Agreement in respect of such breach or any failure of a condition set forth in Article VII.

Adjustments to Merger Consideration. The Exchange Ratio and (A) In the Cash Consideration event the ----------------------------------- product obtained by multiplying (x) 3,500,000 by (y) the Per-Share Placement Amount (the "Adjusted Placement Amount") shall be subject to reduction if less than $20,000,000 (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess ExpensesInitial Placement Floor"), and/or the aggregate amount of the Merger Consideration, as adjusted, to be paid under this Agreement shall be decreased by 50% of the difference between the Adjusted Placement Amount and $20,000,000 (iithe "Initial Placement Floor Adjustment"). In the event the Adjusted Placement Amount shall exceed $30,000,000 (the "Initial Placement Ceiling") then the Company aggregate amount of the Merger Consideration, as adjusted, to be paid under this Agreement shall borrow funds from Parent pursuant be increased by 50% of the difference between the Adjusted Placement Amount and $30,000,000 (the "Initial Placement Ceiling Adjustment"). Notwithstanding the foregoing, in the event any Additional Shares are sold in the Initial Placement, then the Initial Placement Floor and the Initial Placement Ceiling shall be increased, respectively, by an amount equal to the provisions of the "Loan and Security Agreement" described percentage increase in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as follows:Additional Shares over Initial Shares. (i) The (A) Excess Expenses, if any, shall be added to (B) the The aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined belowMerger Consideration to be delivered pursuant to subsection 2.1(b) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only above shall also be reduced on a dollar-for-dollar basis to the extent that such the amount of the Company's cash and cash equivalents plus working capital (exclusive of cash and cash equivalents and any Contingent ---- Payments) and the amount by which the Merger Consideration is reduced pursuant to subsection 2.1(b)(iv)(C) (unless paid by Parent), less (1) long-term ---- liabilities as set forth on the unaudited balance sheet for the month immediately preceding the Closing Date, (2) expenses projected to be incurred in the ordinary course of business between the Closing Date and December 31, 1997, and (3) all severance obligations not previously accrued as of Closing Date, plus (1) all revenues projected to be received by the Company between the ---- Closing Date and December 31, 1997, (2) the $750,000 Eisai milestone payment, expected in early 1998, less any costs and expenses associated with the receipt of said payment after December 31, 1997, and (3) the aggregate amount of the Contingent Payments (net of the liability for income taxes attributable to the Contingent Payments, including the receipt of the Convertible Note, as determined under Section 4.15(b) (the "Tax Liability") and legal and other expenses related thereto) received by the Company after the Closing Date is less than $33 million (the "Contingent Payment Adjustment"), provided, however, that there shall exceed be a credit against any such Contingent Payment Adjustment in an amount equal to any Initial Placement Floor Adjustment made pursuant to subsection 2.1(b)(iii)(A) above resulting from the sale of Initial Shares below the Initial Placement Floor. On or before the Closing Date, Parent and the Company will use their best good faith efforts to agree upon the projected income and expenses of the Company for the period between the Closing Date and December 31, 1997. (C) The aggregate amount of the Merger Consideration to be determined pursuant to subsection 2.1(b) above shall also be reduced, on a dollar-for- dollar basis, in an amount equal to the lesser of (x) one-half ( 1/2) of the JV Termination Expenses actually amount of any fee paid prior by the Company to any investment banking firm or financial advisor engaged by the Adjustment Measurement Date, as such term is defined below, Company in connection with the Merger and the transactions contemplated by this Agreement or (y) $100,000. For the Permitted Amount) through purposes of this Agreement, the third day immediately preceding the mailing "Fair Market Value" of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount Parent Common Shares shall be equal to the quotient determined by dividing average closing sales prices of the Parent Common Shares as reported on The Nasdaq National Market for the ten (A10) trading days immediately preceding the Aggregate Consideration Adjustment Amount by date which is five (B5) the Company Common Stock Capitalization Number, rounding up trading days prior to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified date such Fair Market Value is to Parent by the Company's transfer agentbe determined. (iii) The Exchange Ratio shall be recalculated and shall be equal to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.

Adjustments to Merger Consideration. The Exchange Ratio Notwithstanding anything to the contrary in this Agreement, if, and only if, the Cash Closing Stock Consideration shall be subject Tax Value is less than 40.5% of the Closing Total Consideration Tax Value (in each case, for the avoidance of doubt, prior to reduction if (i) giving effect to the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"Adjustment Election), and/or (ii) the Company shall borrow funds from may elect, by delivery of an irrevocable written notice to Parent pursuant no later than 5:00 p.m. (Eastern Time) on the Closing Date, to adjust the provisions relative stock and cash portions of the "Loan and Security Agreement" described Total Merger Consideration (the “Adjustment Election”) in accordance with this Section 6.182.1(f). Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as follows: (i) The (A) Excess Expenses, if any, shall be added to (B) the aggregate principal amount of funds borrowed by If the Company from Parent, plus any interest accrued thereon through makes the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of Election, (x) the JV Termination Expenses actually paid prior to aggregate number of shares of Parent Common Stock issuable at the Adjustment Measurement Date, as such term is defined belowClosing shall be increased, and (y) the Permitted Amount) through the third day immediately preceding the mailing aggregate cash portion of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as Total Merger Consideration payable at the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration Closing shall be reduced by on a dollar-for-dollar basis (measured based on the "Per Share Cash Parent Stock Price), until the Closing Stock Consideration Tax Value (after giving effect to the Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be Election) is equal to 40.5% of the quotient determined by dividing Closing Total Consideration Tax Value (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up after giving effect to the nearest whole cent. For purposes of this calculation, Adjustment Election); provided that in no event shall the Company Common Stock Capitalization Number shall mean the total number of shares of Company Parent Common Stock outstanding issuable at the Closing (after giving effect to the Adjustment Election) exceed the Closing Stock Consideration Adjustment Cap, and for the avoidance of doubt, once the Closing Stock Consideration Adjustment Cap has been reached, no additional reductions to the aggregate cash portion of the Total Merger Consideration shall be made pursuant to the foregoing clause (y). No later than 6:00 p.m. (Eastern Time) on the Closing Date after making the Adjustment Measurement Date as certified Election, the Company shall deliver to Parent by an updated Allocation Schedule setting forth the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated and shall be equal amounts payable to each Company Indemnitor at the Closing after giving effect to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant Adjustment Election and provide Parent with a reasonable opportunity to clause (ii) above by (y) $1.95review and comment on such updated Allocation Schedule.

Adjustments to Merger Consideration. The Exchange Ratio All legal, investment banking, and other professional, advisory, and other transaction-related expenses of the Acquired Companies and the Cash Consideration Members incurred during the six-month period prior to Closing in connection with all efforts to prepare the Acquired Companies for possible sale and engage in the sale process, including but not limited to the expenses incurred in connection with or resulting from the Closing of the Contemplated Transactions, and which are paid by the Acquired Companies at or prior to Closing (the “Transaction Costs”) shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) liability and obligation of the Company shall borrow funds from Parent pursuant to (and not the provisions of the "Loan and Security Agreement" described in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as follows: (i) The (A) Excess Expenses, if any, shall be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only Members); provided that to the extent that any such aggregate amount shall Transaction Costs exceed the lesser of (xi) five hundred thousand dollars ($500,000) or (ii) fifty percent (50%) of the JV Termination Expenses actually Transaction Costs, then such excess (the “Excess Amount”) shall reduce the Merger Consideration in the manner described below in this subsection (vi). At least two (2) business days prior to Closing, the Company will deliver to the Buyer the total amount of Transaction Costs that will be paid by the Company at or prior to the Adjustment Measurement Date, as such term is defined below, Closing and (y) the Permitted Amount) through the third day immediately preceding the mailing a calculation of the Proxy Statement Excess Amount (as such term is defined in Section 3.04(bthe “Cost Calculation”), with such date being referred to as the "Adjustment Measurement Date") . The Merger Consideration will be adjusted downward to the Company's stockholdersextent that the Excess Amount is a positive number as described in the next sentence. The sum aggregate amount of the amounts in clauses (AMerger Consideration that is payable to each Member pursuant to Section 2.2(b)(v) and (B) is defined as the "Aggregate Consideration Adjustment Amount". (ii) The Cash Consideration hereof shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be an amount equal to the quotient determined Excess Amount multiplied by dividing (A) the Aggregate Consideration Adjustment Amount percentage set forth opposite such Member’s name on Schedule 7.4 hereto. Any legal, investment banking, and other professional, advisory, and other transaction-related expenses of the Acquired Companies and the Members incurred by (B) the Company Common Stock Capitalization Number, rounding up to after the nearest whole cent. For purposes of this calculation, Closing or any Transaction Costs which are not reflected in the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent. (iii) The Exchange Ratio Cost Calculation shall be recalculated the responsibility and shall obligation of the Members and not the Acquired Companies. The Members agree that any liabilities and obligations that result from the application of the previous sentence will be equal to paid by each Member on a pro rata basis in accordance with the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95percentages set forth on Schedule 7.4 hereto.

Adjustments to Merger Consideration. The Exchange Ratio and the Cash Merger Consideration shall be subject to reduction if the following adjustments: (i) Closing Merger Consideration. The Company shall, not less than two (2) Business Days prior to the "JV Termination Expenses" Closing Date, deliver to the Buyer a consolidated balance sheet of the Company and its Subsidiaries as of the Closing Date that shall exceed be certified by the "Permitted Amount" Chief Financial Officer of the Company and prepared in accordance with GAAP on a consistent basis with past practice and the Most Recent Balance Sheet, without giving effect to (as such terms are defined in Section 6.17i) (such excess amount being referred adjustments for the transactions contemplated hereby, except for Company Expenses paid on or prior to herein as the "Excess Expenses"), and/or Closing Date or (ii) any fees related to termination of the CIT Agreement (and reflecting each of the line items included in the Baseline Net Working Capital as set forth in Schedule I attached hereto) (the "Estimated Closing Date Balance Sheet"). Such delivery shall be accompanied by a certificate of the Chief Financial Officer of the Company shall borrow funds from Parent pursuant to the provisions setting forth a good faith determination of the "Loan and Security Agreement" described in Section 6.18. Each estimated Net Working Capital Amount of the Exchange Ratio and Company as of the Cash Consideration Closing Date, which amount shall be adjusted calculated in a manner consistent with the calculation of the Baseline Net Working Capital as described, and set forth in Schedule I attached hereto (the amounts determined, "Estimated Net Working Capital Amount"). The Merger Consideration payable at Closing shall be determined as follows: (i) The (A) Excess ExpensesIf the Estimated Net Working Capital Amount is less than the Baseline Net Working Capital, if any, shall then the Merger Consideration will be added to decreased on a dollar-for-dollar basis by the amount of such deficiency; and (B) If the aggregate principal Estimated Net Working Capital Amount is greater than the Baseline Net Working Capital, then the Merger Consideration will be increased on a dollar-for-dollar basis by the amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount"excess. (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated and shall be equal to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.

Adjustments to Merger Consideration. The Exchange Ratio following adjustments to the Merger Consideration specified in Section 2.2 shall be made in the order indicated below: (a) first, the number of shares to be issued as Stock Consideration shall be adjusted (x) upward if the Closing Market Price shall be less than $3.125 per share, by multiplying the Common Stock Conversion Rate or the Preferred Stock Conversion Rate (as the case may be) by a fraction, the numerator of which shall equal 3.125 and the denominator of which shall equal the Closing Market Price, and (y) downward if the Closing Market Price shall be greater than $6.50 per share, by multiplying the Common Stock Conversion Rate or the Preferred Stock Conversion Rate (as the case may be) by a fraction, the numerator of which shall equal 6.50 and the denominator of which shall equal the Closing Market Price; (b) second, valuing the Stock Consideration at the Closing Market Price, the Parties will equitably adjust up or down the Common Stock Conversion Rate and the Preferred Stock Conversion Rate such that the sum of the Merger Cash Payment and the Stock Consideration per share of Archetype Preferred Stock (c) third, valuing the Stock Consideration at the Closing Market Price, the Cash Consideration shall be subject to reduction if (i) reduced and the "JV Termination Expenses" Stock Consideration shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant be increased to the provisions of the "Loan and Security Agreement" described extent necessary to result in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in being no greater than 50% of the amounts determined, as follows:total Merger Consideration. (i) After making the adjustments set forth in (a), (b) and (c) above, the Merger Consideration shall be subject to further adjustment (x) downward, to the extent the Threshold Amount does not exceed $300,000 and (y) upward, to the extent the Threshold Amount exceeds $300,000. The "Threshold Amount" shall be an amount equal to, without duplication, (A) Excess Expensesthe aggregate amount, if anyas of the Closing Date, shall be added of all cash, cash equivalents, and accounts receivable (net of bad debt reserves of Archetype computed in accordance with GAAP and excluding any receivables or other amounts owed to Archetype from any director, officer or stockholder thereof), minus (B) the aggregate principal amount, as of the Closing Date, of all liabilities in respect of accounts payable, deposits, prepayments, accrued expenses, taxes, indebtedness and other liabilities and obligations of Archetype (excluding up to $800,000 in aggregate amount of funds borrowed Archetype Stockholder Debt to be repaid by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid Bitstream at the Adjustment Measurement Date) as such term is described Closing in accordance with Section 2.4 and the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined Western Payment referred to in Section 3.04(b7.11), with . Any such date being referred adjustments shall be applied to as both the "Adjustment Measurement Date") to Merger Cash Payment and the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Stock Consideration Adjustment Amount"on a pro rata basis. (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Threshold Amount shall be computed as of the close of business on the Closing Date, in accordance with the general principle that all items of income, liability and expense shall be prorated as of the close of business on the Closing Date. In connection with the computation of the Threshold Amount, any items which relate to both a period of time prior to the Closing Date and a period of time after the Closing Date shall be prorated on the basis of a 365/366 day year and for actual days elapsed. (A) At least five business days prior to the Closing Date, Archetype shall provide to Bitstream a certificate executed by an authorized officer thereof (the "Estimated Threshold Amount Certificate"), which shall set forth in reasonable detail Archetype's estimated calculation of the Threshold Amount, which shall be accompanied by reasonably detailed documentation supporting the calculation of such amount. (B) Bitstream shall have the right to review the Estimated Threshold Amount Certificate, and shall be provided with any additional supporting documentation as it shall reasonably request. If Bitstream shall dispute Archetype's calculation of the estimated Threshold Amount, then, on or prior to the Closing Date, Bitstream shall have the right to deliver to Archetype a certificate executed by an authorized officer thereof (the "Bitstream Threshold Certificate"), which shall set forth in reasonable detail the nature of the dispute and the calculation of the estimated Threshold Amount by Bitstream, and the extent of any difference from the amount calculated in the Estimated Threshold Amount Certificate. (The Estimated Threshold Amount Certificate and the Bitstream Threshold Certificate are sometimes collectively referred to herein as the Certificates"). (C) Notwithstanding any discrepancy between the Certificates, the Closing shall occur pursuant to Section 3.1 hereof, with the amount of the Merger Consideration (minus the Indemnity Escrow Amount, which shall be paid to the Escrow Agent), as determined pursuant to the Threshold Amount set forth in the Bitstream Threshold Certificate (or, if none is given, pursuant to the Estimated Threshold Amount Certificate), to be paid by Bitstream as specified in Section 2.4 on the Closing Date, and a portion of the Merger Consideration equal to the quotient portion of the Threshold Amount disputed pursuant to the Bitstream Threshold Certificate (if any), shall be paid or delivered by Bitstream to the Escrow Agent in accordance with Section 2.4(c), and held in escrow until the final determination of the Threshold Amount and related adjustments pursuant to Section 2.3(d)(iv) below, in accordance with the terms of the Escrow Agreement (the "Dispute Escrow Amount"). The Dispute Escrow Amount shall consist of pro rata portions of the Merger Cash Payment and the Stock Consideration (determined by dividing based on the aggregate amounts of the Merger Cash Payment and the Stock Consideration determined after giving effect to all adjustments made on the Closing Date under Section 2.3 but disregarding the effect of the dispute as to the Threshold Amount) and shall be deemed deposited, on a pro rata basis, from, and reduce the amounts otherwise paid or distributable to, each Archetype Stockholder (based on the proportion of the aggregate Merger Cash Payment and Stock Consideration to be paid to each such stockholder, determined as provided on the preceding parenthetical). (A) Within 60 days after the Aggregate Consideration Adjustment Closing Date, Bitstream shall deliver to the Representative, as agent for the Archetype Stockholders, a certificate (the "Final Threshold Amount Certificate"), signed by an appropriate officer or official of Bitstream, setting forth any proposed changes in the Threshold Amount set forth in the Bitstream Threshold Certificate, (or, if none was given, in the Estimated Threshold Amount Certificate) and setting forth, in reasonable detail, the (B) If the Company Common Stock Capitalization NumberRepresentative shall conclude that the Final Threshold Amount Certificate does not accurately reflect the Threshold Amount, rounding up then the Representative shall, within thirty (30) days after receipt of the Final Threshold Amount Certificate, furnish to the nearest whole cent. For purposes Bitstream a written statement of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent any discrepancy or discrepancies believed by the Company's transfer agentRepresentative to exist (the "Discrepancy Certificate"). (iiiC) The Exchange Ratio Representative and Bitstream shall attempt jointly to resolve any discrepancy set forth in the Discrepancy Certificate within thirty (30) days after receipt thereof, which resolution, if achieved, shall be recalculated binding upon all parties to this Agreement (and all of the Archetype Stockholders) and not subject to dispute or review. If the Representative and Bitstream cannot resolve the discrepancy to their mutual satisfaction within such thirty (30) day period, the Representative or Bitstream may, within the following ten (10) days, request the Boston office of Arth▇▇ ▇▇▇e▇▇▇▇ ▇▇▇, or such other independent certified public accounting firm in Boston of national standing agreed to by them (the "Designated Accountant"), to review and resolve the matters raised in the Discrepancy Certificate. If Arth▇▇ ▇▇▇e▇▇▇▇ ▇▇▇ declines to act in such capacity and the Representative and Bitstream are unable to agree upon another firm to act as Designated Accountant within such 10 day period, then either the Representative or Bitstream may provide a written notice to the other (the "Selection Notice") setting forth the name of a firm of certified public accountants designated by the party giving the Selection Notice. The other party shall designate a second firm of certified public accountants by notice ("Response Notice") given within ten days of the giving of the Selection Notice. The two firms designated as aforesaid shall promptly select a third firm of certified public accountants to resolve the dispute, provided, however, that if the parties fail to designate two firms of certified public accountants as aforesaid within the period during which a Response Notice may be given, or if the firms so designated are unable to agree upon a third firm, within ten days after the giving of the Response Notice, then the third firm of certified public accountants shall be equal a firm of certified public accountants designated by the American Arbitration Association at the request of any party participating in the resolution of such dispute. The cost of retaining the Designated Accountant and such firm of certified public accountants shall be paid one-half by Bitstream and one-half out of the Escrow Amount. The Designated Accountant or such firm shall report its conclusions as to the determination of the Threshold Amount and the related adjustments (if any) to the amount of the Merger Consideration, and such report shall be conclusive and binding on all parties to this Agreement (and on (D) If the Threshold Amount, either as agreed to by the parties or as determined in accordance with this Section 2.3(d)(iv) (the "Final Threshold Amount"), shall be: (i) greater than the Estimated Threshold Amount, the amount of the difference in such amount (the "Archetype Payment") shall be paid to the Representative, on behalf of the Archetype Stockholders as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.follows:

Adjustments to Merger Consideration. The Exchange Ratio (a) Promptly, but in any event within ninety (90) days after the Closing Date, Acquiror shall prepare and the Cash Consideration shall be subject deliver to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant to Holders’ Agent a statement (the provisions “Acquiror Closing Statement”) setting forth Acquiror’s determination of the "Loan and Security Agreement" described in Section 6.18. Each following as of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as followsClosing Date: (i) The the total amount of Company Cash along with Acquiror’s good faith calculation of such amount in reasonable detail, and on the basis thereof, the difference between (A) Excess Expenses, if any, shall be added to the Estimated Company Cash minus (B) Company Cash as determined by Acquiror (such difference, the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration “Cash Adjustment Amount".”); (ii) The Cash Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to amount of unpaid Transaction Expenses, including an itemized list of each such unpaid Transaction Expense, and on the quotient determined by dividing basis thereof, the difference between (A) the Aggregate Consideration Adjustment Amount unpaid Transaction Expenses as determined by Acquiror minus (B) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculationEstimated Transaction Expenses (such difference, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the “Transaction Expense Adjustment Measurement Date as certified to Parent by the Company's transfer agent.Amount”); (iii) The Exchange Ratio shall be recalculated an itemized list of all Company Debt, and shall be equal to on the amount determined as basis thereof, the product of difference between (A) .1490 multiplied Company Debt as determined by Acquiror minus (B) Estimated Company Debt (such difference, the quotient determined by dividing “Company Debt Adjustment Amount”); and (xiv) the Cash Consideration total amount of Net Working Capital along with Acquiror’s good faith calculation of such amount in reasonable detail, and on the basis thereof (the “Final Net Working Capital”); and the “Net Working Capital Adjustment Amount” shall be defined as reduced pursuant to clause (ii) above by (y) $1.95.follows:

Adjustments to Merger Consideration. The Exchange Ratio and the Cash Merger Consideration shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant to the provisions of the "Loan and Security Agreement" described in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determinedadjustment, as follows: a) The Merger Consideration shall (i) The (A) Excess Expensesbe reduced by the amount, if anyany (the "Deficiency"), shall be added to (B) by which the aggregate principal amount accounts payable and other liabilities of funds borrowed by the Company from ParentCompany, plus any interest accrued thereon through as of the Adjustment Measurement Closing Date (as such term is defined belowthe "Closing Liabilities") and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser inventory (valued at cost), cash and accounts receivable (not including the 90 Day A/R) of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement DateCompany, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement Closing Date (as such term is defined in Section 3.04(bthe "Closing Assets"), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount". or (ii) The be increased by the amount, if any (the "Excess"), that the Closing Assets exceed the Closing Liabilities. If there is a Deficiency, the payment obligations of the Purchaser pursuant to the Deferred Cash Consideration Payment and/or the Notes shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash amount of the Deficiency. If there is an Excess, the Merger Consideration Adjustment Amount shall be increased by the amount of the Excess and the Parent shall pay to the Company Shareholder an amount equal to the quotient determined Excess within thirty (30) days after the calculation thereof, but in no event more than forty (40) days after the Closing Date. Such calculations shall be calculated by dividing (A) the Aggregate Consideration Adjustment Amount by (B) Purchaser's independent certified public accounting firm and delivered to the Company Common Stock Capitalization NumberShareholder within ten (10) days after the Closing Date, rounding up to at the nearest whole centParent's sole cost and expense. For the purposes of such calculations, Closing Liabilities will not include the income tax liabilities of the Company in excess of $100,000. If the Company Shareholder disagrees with the findings of the Purchaser's independent certified public accountant, the parties shall mutually agree on a third party accounting firm to review such calculations. The expense of such third party accountant shall be borne by the Company Shareholder; provided, however, that (i) if such third party accountant's calculations differ from those of the Purchaser's certified public accountant by between one (1%) percent and ten (10%) percent, in favor of the Company Shareholder, then the Company Shareholder and the Parent shall each pay fifty (50%) percent of the expense for such third party accountant, and (ii) if such third party accountant's calculations differ from those of the Purchaser's certified public accountant by greater than ten (10%) percent, in favor of the Company Shareholder, then such expense shall be borne one hundred (100%) percent by the Parent. The Parent shall pay any undisputed portions of the Excess in a timely fashion without regard to a disagreement on the part of the Company Shareholder. Any additional payment amounts resulting from such dispute shall be paid within fifteen (15) days from the date of resolution. b) On the one (1) year anniversary of the Closing Date (the "Appraisal Date"), the parties shall appraise the fair market value of the Merger Shares issued pursuant to Section 1.07(d) above. For the purposes of this calculationAgreement, if the Parent's common stock is quoted or listed on a securities exchange or automated quotation system, the average of (i) the average bid price for the fifteen (15) consecutive trading days immediately prior to, and the fifteen (15) consecutive trading days immediately after, the Appraisal Date, and (ii) the average ask price for the fifteen (15) consecutive trading days immediately prior to, and the fifteen (15) consecutive trading days immediately after, the Appraisal Date, shall be used to determine the fair market value of the Merger Shares ("Fair Market Value"). The Company Common Stock Capitalization Number shall mean Shareholder shall, in the Lock-up Agreement referred to in Section 2.02(b) hereof, agree not to sell, assign, transfer, pledge, hypothecate or otherwise dispose of any of the Merger Shares until after the Appraisal Date, except as otherwise set forth in the Lock-up Agreement. If the Fair Market Value of the Merger Shares is determined to equal or exceed $4,000,000, no adjustment to the number of Merger Shares issued to the Company Shareholder shall be made. If, however, the Fair Market Value of the Merger Shares is less than $4,000,000, then the Parent shall issue to the Company Shareholder, within twenty-five (25) days of the Appraisal Date, such number of additional shares of Company Common Stock outstanding on common stock of the Adjustment Measurement Date as certified to Parent by (the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated and shall be "Additional Shares"), the Fair Market Value of which is equal to the amount determined as difference between $4,000,000 and the product Fair Market Value of (A) .1490 multiplied by (B) the quotient determined by dividing (x) Merger Shares; provided, however, that the Cash Consideration as reduced number of Additional Shares issued pursuant to clause (ii) above by (y) $1.95this Subsection shall in no event exceed 1,000,000 shares.

Adjustments to Merger Consideration. The Exchange Ratio and the Cash Consideration shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant to the provisions of the "Loan and Security Agreement" described in Section 6.18. Each of the Exchange Ratio and the Cash Consideration shall be adjusted as described, and in the amounts determined, as follows: (i) The (Aparties hereby acknowledge that the Merger Consideration set forth in Section 1.4(a) Excess Expenses, if any, shall above will be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid computed at the Adjustment Measurement Date) Closing Date by estimating the Seller Bank Book Value based upon Seller Bank's stockholders' equity as such term is described in of the Loan and Security Agreement (but only to close of business on the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third business day immediately preceding the mailing of Closing Date (the Proxy Statement "Estimated Seller Bank Book Value"). If necessary, on the fifteenth business day after the Closing Date or such earlier date as may be agreed to in writing by the parties (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Payment Date"), an adjustment payment (the "Adjustment Payment") shall be made either by First Tennessee to Buyer Bank or by Buyer Bank to First Tennessee, as appropriate, so as to correct any discrepancy between the amount of the Estimated Seller Bank Book Value and the Seller Bank Book Value, plus interest on the Adjustment Payment amount accruing from the Closing Date to the CompanyAdjustment Payment Date at a rate equal to the Federal Funds rate as published by the Board of Governors of the Federal Reserve System for the applicable period. First Tennessee shall provide, at Buyer Bank's stockholdersrequest, a closing statement which reflects the calculation of the Adjustment Payment. The sum Adjustment Payment and interest due to either party pursuant to this Section shall be paid to such party on the Adjustment Payment Date by the other party by wire transfer of immediately available funds to an account designed by the amounts in clauses (A) and (B) is defined as the "Aggregate Consideration Adjustment Amount"payee party. (ii) The Cash Consideration parties hereby agree that, prior to the Effective Time, accountants selected by Buyer Bank shall be reduced have the right to review the unaudited financial statements and books and records of Seller Bank through December 31, 2000, at Buyer Bank's sole expense (the "Financial Review"). In the event the Financial Review results in a determination by such accountants that Seller Bank has not prepared its financial statements in material accordance with generally accepted accounting principles ("GAAP"), consistently applied, the accountants shall confer with accountants employed by First Tennessee regarding the proposed adjustments necessary to result in the financial statements of Seller Bank being prepared in accordance with GAAP. First Tennessee shall cause such adjustments as agreed to by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall accountants (which adjustments include the tax impact of such changes) to be equal made either by (a) causing such agreed changes to be posted as an adjustment to the quotient determined by dividing stockholders equity of Seller Bank or (Ab) adjusting the Aggregate Consideration Adjustment Amount by (B$13,000,000 cash payment made pursuant to Section 1.4(a) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agentAgreement accordingly. (iii) The Exchange Ratio shall be recalculated and shall be equal to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.

Adjustments to Merger Consideration. The Exchange Ratio and the Cash Consideration shall be subject to reduction if (i) the "JV Termination Expenses" shall exceed the "Permitted Amount" (as such terms are defined in Section 6.17) (such excess amount being referred to herein as the "Excess Expenses"), and/or (ii) the Company shall borrow funds from Parent pursuant to the provisions of the "Loan and Security Agreement" described in Section 6.18. Each of the Exchange Ratio and the Cash The Merger Consideration shall be adjusted as describeddownward or upward, and dollar for dollar, in the amounts determined, as follows: (i) The amount of the difference between (A) Excess Expenses, if any, shall be added to (B) cash plus the aggregate principal net amount of funds borrowed by accounts receivable in excess of accounts payable as reflected on the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum of the amounts in clauses (A) Base Balance Sheet and (B) is defined cash plus the net amount of accounts receivable in excess of accounts payable as reflected on the "Aggregate Consideration Adjustment Amount"balance sheet included in the Financial Statements for the year ended December 31, 1997, as prepared by Company and audited, or caused to be audited, for accuracy by Boots & ▇▇▇▇▇ at its sole expense in accordance with Section 2.9 hereof. (ii) The Cash operation of the business on or before December 31, 1997, shall be for the account of Stockholders and all revenues and expenses, costs and liabilities relating to the business (including, without limitation, rental or similar charges or payments payable in respect of any contracts, leases or agreements of Company, insurance premiums, sales and use Taxes payable in respect of services and equipment furnished in connection with the operation of the business, power and utility charges, real and personal property Taxes and rentals, sales and service charges, Taxes and similar prepaid and deferred items), shall be prorated, with Stockholders being entitled to all revenues and subject to all such expenses, costs and liabilities relating to the period at or prior to such time and Boots & ▇▇▇▇▇ entitled to all revenues and subject to all such expenses relating to the period after such time, determined in accordance with Tax basis accounting principles consistently applied. An increase or decrease in the Merger Consideration shall be reduced by the "Per Share Cash Adjustment Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Numbermade, rounding up to the nearest whole cent. For purposes of this calculationas appropriate, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agentbased upon such proration. (iii) Stockholders shall deliver to Boots & ▇▇▇▇▇, not less than one (1) business day prior to the Closing Date, a certificate (the "Closing Adjustment Certificate") which shall set forth Stockholders' good faith estimate and representation of the amount of the adjustments and prorations set forth above, as of December 31, 1997. The Exchange Ratio Closing Adjustment Certificate shall be recalculated in form and substance satisfactory to Boots & ▇▇▇▇▇, and Stockholders shall deliver to Boots & ▇▇▇▇▇ with the Closing Adjustment Certificate a copy of such supporting evidence as shall be equal appropriate hereunder and as Boots & ▇▇▇▇▇ may reasonably request. (iv) Adjustments shall be made to the amount determined as cash and stock components of the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Merger Consideration as reduced at Closing pursuant to clause the Closing Adjustment Certificate as necessary to maintain the proportions thereof at twenty percent (ii20%) above by cash and eighty percent (y80%) $1.95stock.

Adjustments to Merger Consideration. (a) The Exchange Ratio Merger Consideration (i) shall be increased or decreased, as the case may be, by the dollar amount of the Closing Working Capital (whether positive or negative), (ii) shall be decreased by the dollar amount of the Closing Indebtedness, and (iii) shall be decreased by the total liability of the Company as of the Closing Date related to the Employment Agreements referenced in Schedule 2.11 hereto including but not limited to any federal employment taxes imposed on the Company on account of the required payments, and the Cash insurance liabilities related to retirees ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ as referenced in Schedule 2.11. The Closing Working Capital and the Closing Indebtedness shall be determined in accordance with GAAP and this Section 1.9. The Company, in conjunction with its accountant and subject to the review and approval of Parent, shall prepare and deliver to Parent, not less than ten (10) days prior to Closing, a statement setting forth its good faith estimates of the Closing Working Capital and the Closing Indebtedness as of the Closing Date (the "Estimated Closing Statement"). The Estimated Closing Statement (A) will be prepared based upon the good faith estimate of the assets and liabilities of the Company on a consolidated basis on the Closing Date, (B) will be in accordance with the books of account and records of the Company and its Subsidiaries, (C) will be prepared in accordance with GAAP and the Company's past practices consistent with its historical financial statements, but adjusted to reflect the specific definitions set forth in Section X DEFINITIONS hereof, and (D) will present fairly and accurately a good faith estimate of the Company's consolidated financial position as of the Closing Date. The Merger Consideration shall be subject to reduction if preliminarily adjusted based on the Estimated Closing Statement (i) as preliminarily adjusted, the "JV Termination Expenses" shall exceed Initial Merger Consideration"). Within 90 days after the Closing Date, Parent (at its expense) will prepare and deliver to the Shareholder Representative a statement setting forth its good faith determination of the Closing Working Capital and the Closing Indebtedness as of the Closing Date (the "Permitted Amount" Proposed Closing Statement"). The Proposed Closing Statement (as such terms are defined A) will be prepared based upon the assets and liabilities of the Company on a consolidated basis on the Closing Date, (B) will be in accordance with the books of account and records of the Company and its Subsidiaries, (C) will be prepared in accordance with GAAP and the Company's past practices consistent with its historical financial statements, but adjusted to reflect the specific definitions set forth in Section 6.17X DEFINITIONS hereof, and (D) will present fairly and accurately the Company's consolidated financial position as of the Closing Date. To illustrate the application of the concepts set forth in this Section 1.9(a), a pro forma calculation of the Adjusted Merger Consideration based upon a hypothetical closing as of December 31, 2002 is attached hereto as Exhibit C and made a part hereof. At the Shareholder Representative's expense, representatives of the Shareholders may examine the work papers of the Parent developed in connection with preparing the Proposed Closing Statement. (b) The Final Closing Statement will be finally determined as provided by this Section 1.9(b) (such excess amount being referred whereupon all references herein to herein as the "Excess Expenses"Final Closing Statement" will mean the same as so finally determined). Within thirty (30) days after receipt of the Proposed Closing Statement, and/or the Shareholder Representative will deliver, on behalf of the Company's shareholders, written objections to the Proposed Closing Statement (iiif any) to Parent. To the Company shall borrow funds from extent that the Shareholder Representative fails to deliver any such objections within such 30-day period, the Proposed Closing Statement (or such undisputed item(s) thereof) will be deemed the Final Closing Statement and binding upon all parties for all purposes. If the Shareholder Representative delivers any such objection, Shareholder Representative and Parent pursuant will use their respective best efforts to resolve such dispute(s) promptly by mutual agreement, in writing, and any such mutually agreed resolution will be final and binding upon all parties for all purposes. Failing mutually agreed resolution of any such dispute(s) within ten (10) days of delivery of any such objection, the Shareholder Representative, on behalf of the Company's shareholders, and Parent will then each have the right to require that such dispute(s) be submitted to an independent third-party national accounting firm chosen by the Shareholder Representative and Parent for computation or verification in accordance with the provisions of this Agreement. Such firm's resolution of such dispute(s), which will be delivered to Parent and the "Loan Shareholder Representative within thirty (30) days after submission to such firm, will be final and Security Agreement" described binding upon all parties for all purposes, and such firm's fees and expenses therefor will be borne equally by the parties hereto. (c) If the Adjusted Merger Consideration as calculated in Section 6.18. Each accordance with the Final Closing Statement is less than the Initial Merger Consideration, then the amount of such difference shall be refunded to Parent from the Escrow Amount with same day funds within ten (10) days of the Exchange Ratio and final determination of the Cash Final Closing Statement by the Escrow Agent. If the Adjusted Merger Consideration shall as calculated in accordance with the Final Closing Statement exceeds the Initial Merger Consideration, then the difference will be adjusted as describedpaid by Parent to the Shareholders, both in the same manner and in the amounts determined, same percentages as follows: the Initial Merger Consideration was paid with same day funds within ten (i10) The (A) Excess Expenses, if any, shall be added to (B) the aggregate principal amount of funds borrowed by the Company from Parent, plus any interest accrued thereon through the Adjustment Measurement Date (as such term is defined below) and any "Parent Loan Expenses" (but only to the extent unpaid at the Adjustment Measurement Date) as such term is described in the Loan and Security Agreement (but only to the extent that such aggregate amount shall exceed the lesser of (x) the JV Termination Expenses actually paid prior to the Adjustment Measurement Date, as such term is defined below, and (y) the Permitted Amount) through the third day immediately preceding the mailing days of the Proxy Statement (as such term is defined in Section 3.04(b), with such date being referred to as the "Adjustment Measurement Date") to the Company's stockholders. The sum final determination of the amounts Final Closing Statement. Under no circumstances will the Shareholders be required to reimburse Parent if the Adjusted Merger Consideration as calculated in clauses (A) and (B) accordance with the Final Closing Statement is defined as less than the "Aggregate Initial Merger Consideration Adjustment Amount". (ii) The Cash Consideration shall be reduced by an amount more than the "Per Share Cash Adjustment Escrow Amount." The Per Share Cash Consideration Adjustment Amount shall be equal to the quotient determined by dividing (A) the Aggregate Consideration Adjustment Amount by (B) the Company Common Stock Capitalization Number, rounding up to the nearest whole cent. For purposes of this calculation, the Company Common Stock Capitalization Number shall mean the number of shares of Company Common Stock outstanding on the Adjustment Measurement Date as certified to Parent by the Company's transfer agent. (iii) The Exchange Ratio shall be recalculated and shall be equal to the amount determined as the product of (A) .1490 multiplied by (B) the quotient determined by dividing (x) the Cash Consideration as reduced pursuant to clause (ii) above by (y) $1.95.