Contingent Amount. The Contingent Amount shall be calculated as provided in this Section 3.2(g). The Contingent Amount shall be: (i) $70,000,000, (ii) increased by (A) the amount determined pursuant to Section 3.3(h)(i), if any, (B) the Positive Equity True-up, if any and (C) any amount determined pursuant to the last proviso contained in Section 3.2(e) and (iii) decreased by (A) the amount determined pursuant to Section 3.3(h)(ii), if any, (B) the Negative Equity True-up, if any and (C) any amounts determined pursuant to Section 10.1(e), if any. In addition, the amount determined pursuant to the second sentence of this Section 3.2(g) shall bear interest from but not including the Closing Date to and including the date on which payment is made pursuant to Section 3.2(b) and this Section 3.2(g) at a rate per annum equal to the prime rate as published in The Wall Street Journal, Eastern Edition on the Closing Date and the amount of such interest shall constitute a portion of the Contingent Amount for the purposes of this Agreement. To the extent any written notice of a claim pursuant to Article X has been given on or prior to December 28, 2011 and the amount due (if any) with respect to such claim has not been finally determined as provided pursuant to Section 10.1(e) by the close of business on December 28, 2011 (such claim being a “Holdover Claim”), the Contingent Amount to be paid as Per Share Contingent Consideration pursuant to Section 3.2(b) shall be decreased by the reasonable amount claimed in good faith by the applicable Parent Indemnitee in respect of such Holdover Claim (the “Holdover Claim Amount”); provided that upon the final determination of the amount due in respect of such Holdover Claim in accordance with Section 10.1(e) (the “Final Determination Amount”) (1) to the extent that the Holdover Claim Amount exceeds the Final Determination Amount, such excess shall be (I) decreased by the Negative Equity True-up, if any and (II) increased by the Positive Equity True-up, if any, and shall be paid immediately pursuant to Section 3.2(b) by wire transfer of immediately available funds to the Shareholders’ Representative and the Trustee, and the Shareholders’ Representative and the Trustee shall each designate an account in writing to the Parent no later than two Business Days prior to such date, pursuant to Section 3.2(b), (2) such amount paid shall constitute Per Share Contingent Consideration and (3) such payment shall include interest on such amount in accordance with the third sentence of this Section 3.2(g). The parties agree that in order to avoid potential double-counting of amounts in the calculations to be made under this Section 3.2(g), the amount of the difference between (1) the amount by which the aggregate amount of the Total SAR Liability and Additional Equity Holder Payments accrued as a liability (not net of tax) on the Final 2010 Balance Sheet and (2) the aggregate amount of Total SAR Liability and Additional Equity Holder Payments that are actually paid after December 31, 2010 pursuant to the terms of the SAR Plans, the Additional SAR Payment Plan or any other arrangement that obligates the Company to make Additional Equity Holder Payments shall not be counted in the determination of any Positive Equity True-up or Negative Equity True-up pursuant to the immediately preceding sentence to the extent that such difference was counted in a previous determination of any Positive Equity True-up or Negative Equity True-up.
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Sources: Merger Agreement (ACE LTD)
Contingent Amount. (a) As soon as reasonably practicable following December 31, 2015, but in any event by no later than March 1, 2016, Parent shall, or shall cause the Company to, prepare and deliver to the Securityholder Representative a statement (the “Contingent Consideration Statement”) setting forth: (i) the Actual Net Revenue; (ii) the Contingent Amount, which shall be determined in accordance with Section 2.11(b) and (iii) the aggregate number of shares of Parent Common Stock (rounded to the nearest whole share) to be delivered by Parent, on behalf of Sub, to the Selling Shareholders pursuant to the Plan of Arrangement in full satisfaction of the Contingent Amount, which shall be calculated by dividing the Contingent Amount by the Contingent Average Price, assuming, for greater certainty, but subject to Section 2.11(e), that the entire Contingent Amount, if any, will be paid in the form of shares of Parent Common Stock.
(b) The Contingent Amount shall be calculated determined as provided in this Section 3.2(g). The follows:
(i) if the Actual Net Revenue is less than 75% of the Net Revenue Target, the Contingent Amount shall bebe $0;
(ii) if the Actual Net Revenue is equal to or greater than 75% of the Net Revenue Target but less than 100% of the Net Revenue Target, then the Contingent Amount shall be equal to the product obtained by multiplying: (A) $20,000,000 by (B) the quotient (which, for greater certainty, shall not be greater than 1.0) obtained by dividing the Actual Net Revenue by the Net Revenue Target; or
(iii) if the Actual Net Revenue is equal to or greater than 100% of the Net Revenue Target, the Contingent Amount shall be $20,000,000.
(c) If the Securityholder Representative disagrees with any calculation set forth on the Contingent Consideration Statement, the Securityholder Representative shall notify Parent of such disagreement in writing within 20 Business Days after the Securityholder Representative’s receipt of the Contingent Consideration Statement (such notice setting forth in reasonable detail the basis for such disagreement). In the event that the Securityholder Representative does not notify Parent in writing of a disagreement with any information set forth on the Contingent Consideration Statement within such 20 Business Day period, the Securityholder Representative, on behalf of all Selling Shareholders, shall be deemed to have accepted the Contingent Consideration Statement and the calculation of the Actual Net Revenue and Contingent Amount, each of which shall be final, binding and conclusive for all purposes hereunder and pursuant to the Plan of Arrangement.
(d) Following Parent’s receipt of a notice of disagreement (if any) provided within the applicable time period contemplated in Section 2.11(c), Parent and the Securityholder Representative shall use reasonable best efforts for a period of 10 Business Days to resolve any disagreements with respect to the calculation in dispute. If, at the end of such 10 Business Day period, Parent and the Securityholder Representative are unable to resolve such disagreement, then KPMG LLP or such other nationally recognized independent accounting firm as may be mutually selected by Parent and the Securityholder Representative (the “Arbiter”) shall resolve any remaining disagreements. Each of Parent and the Securityholder Representative shall promptly provide, in writing, their assertions regarding the calculation in dispute and the resulting computation to the Arbiter and to each other. Parent and the Securityholder Representative shall instruct the Arbiter to render its determination with respect to such disagreements as soon as reasonably practicable which: (i) $70,000,000, shall be no later than 30 days following the day on which the disagreement is referred to the Arbiter; and (ii) increased shall be set forth in a written report setting forth in reasonable detail the Arbiter’s determination and the basis for such determination. The determination of the Arbiter shall be final, conclusive and binding on the parties absent manifest error.
(e) By virtue of the Arrangement, the Contingent Amount, if and to the extent earned by the Selling Shareholders, will be payable by Sub (or Parent or one of its Subsidiaries, on behalf of Sub), in accordance with the Plan of Arrangement. The Contingent Amount, if and to the extent earned, will: (i) be payable, at the sole option of Sub, in: (A) the amount determined pursuant to Section 3.3(h)(i), if anycash, (B) the Positive Equity True-up, if any and shares of Parent Common Stock or (C) any amount determined pursuant to the last proviso contained in Section 3.2(ea combination of (A) and (iii) decreased by (A) the amount determined pursuant to Section 3.3(h)(iiB), if any, where the number of shares of Parent Common Stock (B) the Negative Equity True-up, if any and (C) any amounts determined pursuant to Section 10.1(e), if any. In addition, the amount determined pursuant rounded to the second sentence of this Section 3.2(gnearest whole share) shall bear interest from but not including the Closing Date to and including the date on which payment is made pursuant to Section 3.2(b) and this Section 3.2(g) at a rate per annum equal to the prime rate as published in The Wall Street Journal, Eastern Edition on the Closing Date and the amount of such interest shall constitute a portion of the Contingent Amount for the purposes of this Agreement. To the extent any written notice of a claim pursuant to Article X has been given on or prior to December 28, 2011 and the amount due be delivered (if any) with respect shall be calculated by dividing the Contingent Amount, less any amount to such claim has not been finally determined as provided pursuant to Section 10.1(e) be paid in cash (if any), by the close of business Contingent Average Price; and (ii) will be allocated amongst the Selling Shareholders based on December 28, 2011 their Pro Rata Percentages.
(such claim being a “Holdover Claim”), f) At the same time as the Contingent Amount is paid in accordance with this Section 2.11 and the Plan of Arrangement, Parent and the Securityholder Representative shall jointly direct the Escrow Agent to transfer the Released Special Contingent Amount (if any) rateably to the Founder Group Members that are Company Shareholders as at the Closing Time (as defined in the Plan of Arrangement) as instructed by the Securityholder Representative and the balance of the Aggregate Special Contingent Amount (if any) to Parent.
(g) Sub shall be entitled to apply and set-off any amount due and unpaid pursuant to this Section 2.11 against any amounts determined to be paid as Per Share Contingent Consideration owing by the Selling Shareholders to the Parent Indemnified Parties pursuant to Article IX.
(h) Following the Closing Time and until December 31, 2015, Parent shall, subject to Section 3.2(b) 2.11(j), cause the Company to operate in all material respects in accordance with the Business Plan; provided, however, that notwithstanding the foregoing, Parent shall be decreased by entitled to change the reasonable amount claimed Company’s branding to the Parent’s branding.
(i) Notwithstanding anything to the contrary in good faith by this Section 2.11, none of Parent, Sub, the applicable Parent Indemnitee Company or any of their Affiliates will: (i) owe any Selling Shareholder any fiduciary duty or other similar duty in respect of such Holdover Claim this Section 2.11; or (the “Holdover Claim Amount”); provided that upon the final determination ii) have any obligation or be bound by any agreement or covenant of the amount due any kind in respect of this Section 2.11, other than an obligation to comply with the covenants and agreements expressly set forth in this Section 2.11, it being the parties’ intention that any and all other obligations of Parent or its Affiliates relating to this Section 2.11 (whether implied or otherwise) are expressly waived and disclaimed. The parties expressly acknowledge that Parent and its Affiliates currently operate a business and, following the Closing Time, will continue to operate such Holdover Claim business and may acquire and/or develop other businesses in the future (which will require the allocation of resources by Parent) and that such actions shall not be deemed to interfere with or impede the ability of the Selling Shareholders to earn the Contingent Amount; provided that, subject to Section 2.11(j), Parent shall nevertheless be required to operate the Company in all material respects in accordance with the Business Plan.
(j) Notwithstanding anything to the contrary in this Section 2.11, Parent shall have the right, in its sole and absolute discretion, to elect, by providing notice to the Securityholder Representative, not to operate the Company in all material respects in accordance with the Business Plan, in which case the Contingent Amount shall be deemed to be $20,000,000 and shall become payable by Sub (or Parent or one of its Subsidiaries, on behalf of Sub), to the Selling Shareholders on December 31, 2015 in accordance with this Agreement and the Plan of Arrangement and the Released Special Contingent Amount shall be deemed to be the Aggregate Special Contingent Amount and such amount shall be released in accordance with Section 10.1(e2.11(f) (at the “Final Determination Amount”)
(1) to the extent that the Holdover Claim Amount exceeds the Final Determination Amount, such excess shall be (I) decreased by the Negative Equity True-up, if any and (II) increased by the Positive Equity True-up, if any, and shall be same time as amounts are paid immediately pursuant to Section 3.2(b) by wire transfer of immediately available funds to the Shareholders’ Representative and the Trustee, and the Shareholders’ Representative and the Trustee shall each designate an account in writing to the Parent no later than two Business Days prior to such date, pursuant to Section 3.2(b), (2) such amount paid shall constitute Per Share Contingent Consideration and (3) such payment shall include interest on such amount in accordance with the third sentence of this Section 3.2(g). The parties agree that in order to avoid potential double-counting of amounts in the calculations to be made under this Section 3.2(g2.11(j).
(k) For greater certainty, the amount this Section 2.11 shall survive a change of the difference between (1) the amount by which the aggregate amount control of the Total SAR Liability and Additional Equity Holder Payments accrued as a liability (not net of tax) on the Final 2010 Balance Sheet and (2) the aggregate amount of Total SAR Liability and Additional Equity Holder Payments that are actually paid after December 31, 2010 pursuant to the terms of the SAR Plans, the Additional SAR Payment Plan or any other arrangement that obligates the Company to make Additional Equity Holder Payments shall not be counted in the determination of any Positive Equity True-up or Negative Equity True-up pursuant to the immediately preceding sentence to the extent that such difference was counted in a previous determination of any Positive Equity True-up or Negative Equity True-upParent.
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