Closing Date Balance Sheet (a) Within thirty (30) days after the Closing Date, Buyer shall prepare and deliver to Shareholders' Representative a draft Closing Date Balance Sheet, which shall be prepared (i) in accordance with GAAP applied in a manner consistent with the past practice of the Company, except as otherwise specifically required by the Net Worth Methodology and (ii) in a manner consistent with the December Balance Sheet.
(b) If Shareholders' Representative has no objections to the draft Closing Date Balance Sheet, such draft shall constitute the Closing Date Balance Sheet. If Shareholders' Representative has any objections to the draft Closing Date Balance Sheet, it will deliver a detailed statement describing its objections to Buyer within thirty (30) days after receiving the draft Closing Date Balance Sheet. Shareholders' Representative and Buyer will use their commercially reasonable efforts to resolve any such objections. If Shareholders' Representative duly gives Buyer such notice of objection, and if Buyer and Shareholders' Representative fail to resolve the issues outstanding with respect to the Closing Date Balance Sheet and the calculation of the Closing Date Net Worth within thirty (30) days of Buyer's receipt of Shareholders' Representative's objection notice, Buyer and Shareholders' Representative shall submit the issues remaining in dispute to PricewaterhouseCoopers, certified public accountants (the "Independent Accountants"). If issues remaining in dispute are submitted to the Independent Accountants for resolution, (i) Buyer and Shareholders' Representative shall promptly furnish or cause to be furnished to the Independent Accountants such work papers and other documents and information relating to the disputed issues as the Independent Accountants may request and are available to that party or its agents and shall be afforded the opportunity to present to the Independent Accountants any material relating to the disputed issues and to discuss the issues with the Independent Accountants; (ii) the determination by the Independent Accountants, as set forth in a notice to be delivered to both Buyer and Shareholders' Representative within thirty (30) days of the submission to the Independent Accountants of the issues remaining in dispute, shall be final, binding and conclusive on the parties and shall be used in the calculation of the Closing Date Net Worth; and
(iii) Buyer shall bear fifty percent (50%) of the fees and costs of the Independent Accountants for such determination and fifty percent (50%) of such fees and expenses shall be paid from the Escrow Fund.
(c) Buyer will make the work papers used in preparing the draft Closing Date Balance Sheet and the Closing Date Balance Sheet available to Shareholders' Representative at reasonable times and upon reasonable notice at any time during the preparation by Buyer of the draft Closing Date Balance Sheet and the resolution of any objections with respect thereto.
Closing Financial Statements At least eight Business Days prior to the Effective Time of the Merger, Malvern shall provide First Bank with ▇▇▇▇▇▇▇’s consolidated financial statements presenting the financial condition of Malvern and its Subsidiaries as of the close of business on the last day of the last month ended prior to the Effective Time of the Merger and Malvern’s consolidated results of operations for the period from January 1, 2022 through the close of business on the last day of the last month ended prior to the Effective Time of the Merger (the “Closing Financial Statements”); provided, that if the Effective Time of the Merger occurs on or before the 15th Business Day of the month, ▇▇▇▇▇▇▇ shall have provided consolidated financial statements as of and through the second month preceding the Effective Time of the Merger. Such financial statements shall be accompanied by a certificate of ▇▇▇▇▇▇▇’s chief financial officer, dated as of the date of delivery, to the effect that such financial statements continue to reflect accurately, as of the date of the certificate, the financial condition of Malvern in all material respects. Such financial statements shall have been prepared in all material respects in accordance with GAAP, and reflect all period-end accruals and other adjustments. Such Closing Financial Statements shall also reflect as of their date (a) accruals for (i) all fees and expenses of all attorneys, accountants, investment bankers and other advisors and agents for Malvern for services rendered in connection with the transactions contemplated by this Agreement, (ii) any employee severance, retention or change-in-control payments or expenses consistent with the terms of this Agreement, (iii) any payment made or expense accrued for the purchase of a directors’ and officers’ liability insurance policy pursuant to this Agreement, (iv) other third-party costs, fees and expenses incurred or accrued by Malvern in connection with the transactions contemplated by this Agreement, and in each case, paid by ▇▇▇▇▇▇▇ or payable by Malvern prior to the Effective Time, (v) losses incurred or accrued by ▇▇▇▇▇▇▇ relating to the loans listed in Section 8.2(f)(1) of Malvern’s Disclosure Memorandum, (vi) costs, fees expenses, or any other amounts or payments, incurred or accrued by Malvern in connection with the matter set forth in Section 8.2(f)(2) of Malvern’s Disclosure Memorandum, (vii) changes in accumulated other comprehensive income from September 30, 2022 through the Closing Date, and (viii) changes to changes to GAAP or regulatory accounting requirements, including GAAP shareholders’ equity as a result of the initial adoption of the Current Expected Credit Losses (CECL) Methodology and (b) the shareholders’ equity referenced in Section 8.2(f).
Final Closing Statement (a) On or before the date that is ninety (90) days following the Closing Date, Buyer or its representatives shall prepare a schedule setting forth its determination of Working Capital, Indebtedness and Seller Transaction Expenses (the “Final Closing Statement”) and shall deliver the Final Closing Statement to the Seller. Working Capital shall be determined disregarding any effects on the assets and liabilities of the Seller of (i) purchase accounting adjustments arising from or resulting as a consequence of the consummation of the transactions contemplated hereby or (ii) any cash, cash equivalents, or stock contributed to Seller by Buyer or any of its Affiliates on the Closing Date.
(b) Prior to the date which is thirty (30) days after Buyer’s delivery of the Final Closing Statement (the “Protest Date”), the Seller may deliver written notice to Buyer (the “Protest Notice”) setting forth any objections which the Seller may have to the Final Closing Statement. The Protest Notice shall specify in reasonable detail any contested amounts and the basis therefor and shall include a schedule setting forth the Seller’s determination of Working Capital, Indebtedness and Seller Transaction Expenses. If a Protest Notice is not delivered prior to the Protest Date, the Working Capital, Indebtedness and Seller Transaction Expenses as set forth on the Final Closing Statement shall be final, binding and non-appealable by the Sellers. If a Protest Notice is delivered prior to the Protest Date, any amounts not disputed therein shall be final, binding and non-appealable by the Seller. Upon receipt of the Final Closing Statement, the Seller and its accountants will be given reasonable access upon reasonable notice to the relevant books, records, workpapers and personnel during regular business hours for the purpose of verifying Working Capital, Indebtedness and Seller Transaction Expenses. The parties will thereafter negotiate any objections in the Protest Notice in good faith.
Estimated Closing Statement (i) No later than three (3) Business Days prior to the Closing Date, the Company shall deliver to Acquiror (A) a statement (the “Estimated Closing Statement”) setting forth the Company’s good faith estimates of (1) the Estimated Net Working Capital (as well as the resulting Estimated Net Working Capital Surplus (if any) or Estimated Net Working Capital Shortfall (if any)), (2) the Estimated Transaction Expenses, (3) the Estimated Closing Cash and (4) the Estimated Closing Debt, and (B) a schedule which shall include (1) the Estimated Total Stock Purchase Consideration, (2) wire instructions for the payments to be made to NewCo at the Closing pursuant to Section 2.3(b), (3) each Seller’s Pro Rata Percentage and the portion of the Estimated Total Stock Purchase Consideration attributable to each Seller; and (4) wire instructions for the payments of Debt, and the Estimated Transaction Expenses, including, for the avoidance of doubt, the Transaction Bonuses, to be made to the applicable payees thereof pursuant to Section 2.3(b) (such schedule delivered pursuant to this clause (B), the “Payment Schedule”). The Estimated Closing Statement shall be prepared by the Company in accordance with the Agreed Principles.
(ii) The Company shall consider in good faith any reasonable comments or objections to any amounts set forth on the Estimated Closing Statement notified to it by Acquiror prior to the Closing and if, prior to the Closing, the Company and Acquiror agree to make any modification to the Estimated Closing Statement, then the Estimated Closing Statement as so modified shall be deemed to be the Estimated Closing Statement; provided, that the failure of the Company and Acquiror to reach such mutual agreement will not give any party the right to terminate this Agreement or otherwise delay or fail to close the Stock Purchase or the other transactions contemplated hereunder.
(iii) Acquiror shall be entitled to rely on the accuracy of the Estimated Closing Statement and the Payment Schedule in all respects in making any payments pursuant to this Agreement, and all obligations to make such payments shall be deemed fulfilled to the extent such payments are made in accordance with this Agreement, the Payment Schedule, and the Estimated Closing Statement, including the Earn-Out Payment. None of Acquiror or any of its Affiliates (including, after the Closing, the Company) or the Seller Representative shall have any liability or obligation to any Person, including the Sellers and the Seller Guarantors, for any Damages arising from or relating to any errors, omissions or inaccuracies in the calculations of the portion of any amounts payable to any Seller or any other Person or any other errors, omissions or inaccuracy in the information set forth on the Estimated Closing Statement or the Payment Schedule.
Net Working Capital Adjustment (a) At least three (3) Business Days, but no more than seven (7) Business Days, prior to the Closing Date, Representative shall cause to be prepared and delivered to Purchaser a good faith estimate of the Net Working Capital immediately prior to the Closing (subject to the last sentence hereof, the “Estimated Net Working Capital”), which shall be certified by a duly authorized officer of the Company as the Sellers’ good faith estimate of the Net Working Capital as of immediately prior to the Closing, which statement shall quantify in reasonable detail the estimates of each item included in such calculation, in each case calculated in accordance with the provisions of this Agreement. The Parties shall cooperate with one another in connection with the preparation and evaluation of such estimate. The Company Parties shall promptly provide Purchaser and its representatives access to all personnel, relevant documents, and information reasonably requested by Purchaser or its representatives in connection with their review of the Estimated Net Working Capital (including all components thereof). Prior to the Closing Date, Purchaser shall notify Representative of any objections to the Estimated Net Working Capital (including any component thereof), and the Parties shall work in good faith to resolve such objections and agree upon a final Estimated Net Working Capital for purposes of Closing, and such agreed upon estimate shall be deemed the Estimated Net Working Capital. (b) Within ninety (90) days after the Closing Date, Purchaser shall prepare and deliver to Representative a statement (the “Closing Statement”) calculating the Net Working Capital as of immediately prior to the Closing (the “Closing Net Working Capital”) as well as the adjustments to the Purchase Price which shall be made pursuant to this Section 1.3; provided, however, that a failure by Purchaser to deliver the Closing Statement within such ninety (90) day period will not impair Purchaser’s rights under this Section 1.3, except to the extent that Seller has been prejudiced by such failure. Sellers shall cooperate with Purchaser in its preparation of the Closing Statement. Upon delivery of the Closing Statement, Purchaser shall promptly provide Representative access to all personnel, relevant documents and information to the extent they relate to the Closing Statement (or preparation thereof) reasonably requested by Representative in connection with its review of the Closing Statement and Purchaser’s calculation of the Closing Net Working Capital (including all components thereof), provided that such access is in a manner that does not unreasonably or materially interfere with the normal business operations of Purchaser and its Affiliates.
(c) If Representative disputes any amounts as shown on the Closing Statement, Representative shall deliver to Purchaser within thirty (30) days after receipt of the Closing Statement a notice (the “Dispute Notice”) setting forth Representative’s calculation of Closing Net Working Capital and describing in reasonable detail the basis (including for each component, the difference and the amount thereof and reasons therefor) for the determination of such different amount. If Representative does not deliver a Dispute Notice to Purchaser within such thirty (30) day period, the Closing Statement (and the determination of Closing Net Working Capital therein) prepared and delivered by Purchaser will be deemed to be the Final Closing Statement and the Final Closing Net Working Capital. Any such disputes shall be limited to assertions that the Closing Statement (and the determination of Closing Net Working Capital therein) was not calculated in accordance with the provisions of this Section 1.3, including all defined terms in this Agreement. Any component not disputed in the Dispute Notice shall be treated as final and binding. Purchaser and Representative shall use commercially reasonable efforts to resolve such differences within a period of thirty (30) days after Representative has given the Dispute Notice. If Purchaser and Representative resolve such differences, the Closing Statement and the Closing Net Working Capital agreed to by Purchaser and Representative will be deemed to be the Final Closing Statement and the Final Closing Net Working Capital. If Purchaser and Representative do not reach a final resolution on the Closing Statement and the Closing Net Working Capital within thirty (30) days after Representative has delivered the Dispute Notice, unless Purchaser and Representative mutually agree to continue their efforts to resolve such differences, the Neutral Accountant shall resolve such differences with respect to the adjustment under this Section 1.3 pursuant to a reasonable engagement agreement among Purchaser, Representative, and the Neutral Accountant (which Purchaser and Representative agree to execute promptly), in the manner provided below. Each of Purchaser and Representative shall be deemed to have executed such engagement agreement if it fails to do so within twenty (20) days after receiving a draft thereof. The Neutral Accountant shall have full authority to arbitrate all of the issues or matters relating to the adjustments under this Section 1.3, but shall only decide the specific components under dispute in the Dispute Notice (the “Disputed Items”), solely in accordance with the terms of this Agreement. Each of Purchaser and Representative will be entitled to make a presentation to the Neutral Accountant at which the other will be entitled to be present and participate, pursuant to procedures to be agreed to between Purchaser, Representative, and the Neutral Accountant (or, if they cannot agree on such procedures, pursuant to procedures determined by the Neutral Accountant), regarding such Party’s determination of the amounts to be set forth on the Closing Statement (and the determination of the Closing Net Working Capital therein); and Purchaser and Representative shall use commercially reasonable efforts to cause the Neutral Accountant to resolve the differences between them and determine the amounts to be set forth on the Closing Statement (and the determination of the Closing Net Working Capital therein) within twenty (20) days after the engagement of the Neutral Accountant. Each of Purchaser and Representative, as a condition precedent to making a presentation to the Neutral Accountant and having the Neutral Accountant review its calculations, shall provide reasonable advance access to the other Party with respect to such materials and reasonably cooperate with the other Party in its review and analysis thereof. The Neutral Accountant’s determination shall be based solely on such presentations of, and materials provided by, Purchaser and Representative (i.e., not on independent review) and on the definitions and other terms and conditions included in this Agreement. The Closing Statement (and determination of the Closing Net Working Capital therein) determined by the Neutral Accountant shall be deemed to be the Final Closing Statement and the Final Closing Net Working Capital. Such determination by the Neutral Accountant will be conclusive and binding upon the Parties, absent Fraud or manifest error, and will be an arbitral award that is non-appealable. The fees and expenses of the Neutral Accountant shall be borne by Representative and Purchaser in proportion to the amounts by which their respective calculations of the Closing Net Working Capital differ from the Final Closing Net Working Capital as finally determined by the Neutral Accountant. Nothing in this Section 1.3(c) is to be construed to authorize or permit the Neutral Accountant to: (i) determine any questions or matters whatsoever under or in connection with this Agreement, except for the resolution of differences between Purchaser and Representative regarding the determination of the Final Closing Statement (and the Final Closing Net Working Capital calculation therein); or (ii) resolve any such differences by making an adjustment to any component of the Closing Statement (and the Closing Net Working Capital calculation therein) that is outside of the range defined by amounts as finally proposed by Purchaser and Representative.
(d) Promptly, but no later than ten (10) Business Days after the final determination thereof, if the Final Closing Net Working Capital set forth in the Final Closing Statement: (i) exceeds the Estimated Net Working Capital, Purchaser shall pay such excess amount to Representative, for the benefit of Sellers, in Parent Shares or cash, in Purchaser’s sole discretion (or if Purchaser has not paid to the Sellers any excess of the Estimated Net Working Capital over the Target Net Working Capital at Closing, then Purchaser shall pay to Representative, for the benefit of Sellers, the excess amount of the Final Closing Net Working Capital over the Target Net Working Capital in Parent Shares or cash, in Purchaser’s sole discretion); or (ii) is less than the Estimated Net Working Capital, Sellers shall pay such shortfall to Purchaser. Any payments made pursuant to this Section 1.3 shall be treated as an adjustment to the Purchase Price by the Parties. The Parties acknowledge that the limitations on indemnification set forth in Section 7 are inapplicable to the adjustments to be made under this Section 1.3.