Earn-Out Amount. (a) Within 60 days following the end of each Earn-Out Period, Purchaser shall prepare and deliver to Agent a statement (each, an "Earn-Out Statement") setting forth: (i) the Acquired Company Revenue for such Earn-Out Period; and (ii) the aggregate value of the Earn-Out Amount for such Earn-Out Period, which shall be calculated as follows: (A) for the 2024 Earn-Out Period (such amount, the "2024 Earn-Out Amount"): 2024 Earnout Amount=Acquired Company Revenue-130,000,00015,000,000×15,000,000 provided that, (x) if the Acquired Company Revenue during the 2024 Earn-Out Period is less than or equal to $130,000,000, then the value of the Earn-Out Amount shall be reduced to nil, and (y) if the Acquired Company Revenue is equal to or greater than $145,000,000, then the aggregate value of the 2024 Earn-Out Amount shall not exceed $15,000,000; and (B) for the 2025 Earn-Out Period (such amount, the "2025 Earn-Out Amount"): 2025 Earnout Amount=Acquired Company Revenue-145,000,00015,000,000×15,000,000 provided that, (x) if the Acquired Company Revenue during the 2025 Earn-Out Period is less than or equal to $145,000,000, then the value of the Earn-Out Amount shall be reduced to nil, and (y) if the Acquired Company Revenue is equal to or greater than $160,000,000, then the aggregate value of the 2025 Earn-Out Amount shall not exceed $15,000,000. An illustrative example of the calculation of the Earn-Out Amount is set forth on Part B of Exhibit D. (b) Within 30 days of receipt of an Earn-Out Statement, Agent may notify Purchaser in writing of any objections it may have to such Earn-Out Statement and/or the calculations set forth therein, which objection notice will set forth a description of the nature and basis for each of the disagreements. During such 30-day period, ▇▇▇▇▇▇▇▇▇ agrees to cause the Acquired Companies to provide Agent and its advisors with access to all work papers of Purchaser and the Acquired Companies' auditors, the Books and Records and supporting schedules as they relate to such Earn-Out Statement and the appropriate personnel to verify the accuracy, presentation and other matters relating to the preparation of such Earn-Out Statement. Agent shall be deemed to have accepted such Earn-Out Statement and the calculations set forth therein if Agent does not notify Purchaser of any objection in a written notice within such 30-day period. #110828415 (c) If Agent disputes an Earn-Out Statement in accordance with Section 2.10(b), then Agent and Purchaser will forthwith and in any event within 15 days, work expeditiously and in good faith in an attempt to resolve any such objections. In the event that Agent and Purchaser are unable to resolve all such objections within 15 days after Purchaser's receipt of such objection notice, Agent and Purchaser will submit the remaining disagreements to the Third Party Auditors who shall resolve the dispute. The provisions of Sections 2.7(e) and (f) will apply, mutatis mutandis, to the review and resolution of any such dispute. (d) With respect to each Earn-Out Amount, within 10 days following (i) the expiry of the relevant 30-day period in Section 2.10(b), (ii) if a notice of objection has been delivered pursuant to Section 2.10(b), the determination of such dispute in accordance with Section 2.10(c), or (iii) written notice by Agent to Purchaser that it accepts such Earn-Out Statement, Purchaser shall pay, after any payment pursuant to Section 2.10(e), an amount equal to the Earn-Out Amount (without interest) less the Employee Contingent Bonus Amount, by wire transfer of immediately available funds to an account designated in writing by Agent. Any payment made pursuant to this Section 2.10(d) shall be deemed an adjustment to the Purchase Price and shall be subject to any applicable withholding pursuant to Section 2.12. (e) At such time as an Earn-Out Amount is payable by Purchaser pursuant to Section 2.10(d), the Purchaser shall cause the Acquired Companies to, first pay any Employee Contingent Bonus Amount owed pursuant to the Employee Contingent Bonus Obligations, through payroll, and the Earn-Out Amount payable by Purchaser to the Agent pursuant to Section 2.10(d) shall be reduced by any such Employee Contingent Bonus Amount payable by an Acquired Company pursuant to the Employee Contingent Bonus Obligations. (f) Until delivery of each of the Earn-Out Statements, within 45 days following the last day of each fiscal quarter, Purchaser will provide Agent with a reasonable estimate of the Acquired Company Revenue to date for the then-applicable Earn-Out Period. (g) During the Earn-Out Period, the Purchaser agrees to, and to cause the Acquired Companies and its and their Affiliates to, operate the Business and the Acquired Companies in good faith (but with such changes permitted below or necessary to integrate back office functions such as finance, legal, human resources, information technology, QHSE with Purchaser’s practices and policies and to otherwise integrate the Business into the practices and policies of Purchaser); and, in connection therewith, to: (i) maintain itself and the Acquired Companies in good standing as companies under the laws of Alberta, for Purchaser, Alberta, for the Subsidiaries, and British Columbia or Alberta, for the Corporation, except that Purchaser may cause a reorganization whereby the Corporation continues to the Business Corporation Act (Alberta), then Purchaser, the Corporation and the Subsidiaries (with the potential exception of Redco Equipment Sales Ltd.) amalgamate and continue as one corporation which may be re-named Great North Wellhead Company (if that name is available) or similar name; (ii) instruct the management of the Business (which is intended to be the current management of the Business) to use commercially reasonable efforts to exploit market opportunities and set their performance targets for the revenue of the Business to be equal to or greater than the minimum earn-out thresholds described in Section 2.10; (iii) provide reasonably adequate capital to fund the Business' operations, and maintain reasonably adequate levels of investment in inventory and capital #110828415 expenditures and personnel in the Business in a manner consistent with the growth of the Business, including any inventory or capital expenditures necessary to support customer orders or increases in customer orders, and otherwise taking into account industry conditions, return-on-capital and general industry and market conditions; (iv) grant the Agent reasonable access to Books and Records (excluding any work papers where such access (A) would breach any obligations to any third party or obligation of confidentiality binding on Purchaser or the Acquired Companies, (B) would be in violation of applicable Laws or regulations of any Governmental Entity or the provisions of any Contract or policy to which the any Acquired Company is a party or otherwise bound or is subject, (C) would contravene any fiduciary duty or (D) would result in the loss of the ability to successfully assert the attorney-client, work product or any other legal privilege, which Purchaser reasonably determines upon the advice of counsel), including financial statements and other financial records, relating to the Business, solely for the purposes of determining the Earn-Out Amount; (v) refrain from intentionally taking any action or omitting to take an action in bad faith that is intended to reduce the amount of the Earn-Out Amounts that would otherwise be payable to Sellers under this Agreement; (vi) renegotiate in good faith with Agent the earn-out thresholds described in Section 2.10 in the event of a sale, transfer, assignment or other disposal of material assets or Material Contracts of the Business to any third party, excluding any sale, transfer, assignment or other disposition of inventory in the Ordinary Course consistent with past practice to adjust for the revenue that otherwise would have been generated by the material assets or Material Contracts that are transferred or disposed of; and (vii) other than as required by Law, refrain from entering into or permitting to exist any covenants or restrictions, whether in documents pertaining to indebtedness or otherwise, that specifically restrict payment of any Earn-Out Amount or compliance with this Agreement or that are in conflict with the provisions of this Agreement. For the avoidance of doubt, except as expressly set forth in clauses (i) – (vii) of this Section 2.10(g), (w) Purchaser shall have the right to own and operate the Business and the Acquired Companies in any way that Purchaser and its Affiliates deem appropriate, in their sole discretion, (x) Sellers have not relied on any statements or information provided by Purchaser or its Affiliates with respect to potential Acquired Company Revenue or other performance of the Business or the Acquired Companies, (y) neither Purchaser nor any of its Affiliates owe any fiduciary duty to Sellers or any of their Affiliates or equityholders in connection with the ownership and operation of the Business and the Acquired Companies, and (z) the Parties intend the express provisions of this Agreement to govern their contractual relationship in respect of the payment of the Earn-Out Amounts, if any. (h) At any time after the Closing Date, Purchaser may, in its sole discretion, elect to pay the full Earn-Out Amount by wire transfer of immediately available funds to an account designated in writing by Agent which, upon payment thereof, shall fully release and discharge Purchaser, its successors and assigns from any further liability or obligation under this Section 2.10. For greater certainty, such payment shall be subject to Section 2.10(e). #110828415
Appears in 1 contract
Earn-Out Amount. (a) Within 60 The Purchaser shall pay an earn-out (the “Earn-Out Amount”) through the issuance of Marble Shares, up to a maximum aggregate amount of $425,000 (the “Maximum Earn-Out Amount”), based on the Net Income for each Calculation Period within the Earn-Out Period calculated in a historically consistent manner and in accordance with IFRS, subject to, and in accordance with, the terms and conditions in this Section 3.3.
(b) The Purchaser shall calculate the Net Income for each Calculation Period within 30 days following the end of each such Calculation Period.
(c) Within five Business Days following the calculation (or such longer period required for any CSE or regulatory approval) of the Net Income for a Calculation Period, the Purchaser shall pay an amount equal to 33-1/3% of the Net Income, if any, up to the Maximum Earn-Out Amount. For example, (i) if the Net Income during a Calculation Period is equal to or less than $0, then no Earn-Out Amount will be payable in connection with such Calculation Period, (ii) if the Net Income during a Calculation Period is equal to $150,000, then the Vendor will be entitled to an Earn- Out Amount of $50,000, and (iii) if the Net Income during a Calculation Period is equal to or exceeds $1,275,000, then the Vendor will be entitled to the full Maximum Earn-Out Amount (being $425,000) and no more, including to the extent there is Net Income during any of the following Calculation Periods within the remaining term of the Earn-Out Period, Purchaser shall prepare and deliver to Agent a statement .
(each, an "Earn-Out Statement"d) setting forth:
If (i) the Acquired Company Revenue for such aggregate Earn-Out PeriodAmount paid by the Purchaser has reached the Maximum Earn-Out Amount; and
or (ii) the aggregate value Net Income is negative for two consecutive Calculation Periods, the Vendor’s right to receive any Earn-Out Amount shall forthwith cease.
(e) The effective price of any Marble Shares issued in satisfaction of the payment of any portion of the Earn-Out Amount for such (“Earn-Out Shares”) shall be the VWAP of the Marble Shares for the five consecutive trading days ending three trading days preceding the last day of the Calculation Period, which shall be calculated as follows:
(A) for and the 2024 number of Earn-Out Period Shares issued shall be, provided the Net Income is positive, be determined by dividing the Net Income for the quarter by the VWAP for the five (such amount, 5) prior trading days ending three (3) trading days prior to the "2024 end of each financial quarter.
(f) Any Earn-Out Amount"): 2024 Earnout Amount=Acquired Company Revenue-130,000,00015,000,000×15,000,000 provided that, (x) if Shares issued to the Acquired Company Revenue during Vendor in satisfaction of the 2024 Earn-Out Period is less than or equal to $130,000,000, then the value payment of any portion of the Earn-Out Amount shall be reduced to nil, and (y) if the Acquired Company Revenue is equal to or greater than $145,000,000, then the aggregate value of the 2024 Earn-Out Amount shall not exceed $15,000,000; and
(B) for the 2025 Earn-Out Period (such amount, the "2025 Earn-Out Amount"): 2025 Earnout Amount=Acquired Company Revenue-145,000,00015,000,000×15,000,000 provided that, (x) if the Acquired Company Revenue during the 2025 Earn-Out Period is less than or equal to $145,000,000, then the value of the Earn-Out Amount shall be reduced to nil, and (y) if the Acquired Company Revenue is equal to or greater than $160,000,000, then the aggregate value of the 2025 Earn-Out Amount shall not exceed $15,000,000. An illustrative example of the calculation of the Earn-Out Amount is set forth on Part B of Exhibit D.
(b) Within 30 days of receipt of an Earn-Out Statement, Agent may notify Purchaser in writing of any objections it may have to such Earn-Out Statement and/or the calculations set forth therein, which objection notice will set forth a description of the nature and basis for each of the disagreements. During such 30-day period, ▇▇▇▇▇▇▇▇▇ agrees to cause the Acquired Companies to provide Agent and its advisors with access to all work papers of Purchaser and the Acquired Companies' auditors, the Books and Records and supporting schedules as they relate to such Earn-Out Statement and the appropriate personnel to verify the accuracy, presentation and other matters relating to the preparation of such Earn-Out Statement. Agent shall be deemed to have accepted such Earn-Out Statement and the calculations set forth therein if Agent does not notify Purchaser of any objection in a written notice within such 30-day period. #110828415
(c) If Agent disputes an Earn-Out Statement in accordance with Section 2.10(b), then Agent and Purchaser will forthwith and in any event within 15 days, work expeditiously and in good faith in an attempt to resolve any such objections. In the event that Agent and Purchaser are unable to resolve all such objections within 15 days after Purchaser's receipt of such objection notice, Agent and Purchaser will submit the remaining disagreements to the Third Party Auditors who shall resolve the dispute. The provisions of Sections 2.7(e) and (f) will apply, mutatis mutandis, to the review and resolution of any such dispute.
(d) With respect to each Earn-Out Amount, within 10 days following (i) the expiry of the relevant 30-day period in Section 2.10(b), (ii) if a notice of objection has been delivered pursuant to Section 2.10(b), the determination of such dispute in accordance with Section 2.10(c), or (iii) written notice by Agent to Purchaser that it accepts such Earn-Out Statement, Purchaser shall pay, after any payment pursuant to Section 2.10(e), an amount equal to the Earn-Out Amount (without interest) less the Employee Contingent Bonus Amount, by wire transfer of immediately available funds to an account designated in writing by Agent. Any payment made pursuant to this Section 2.10(d) shall be deemed an adjustment to the Purchase Price and shall be subject to any applicable withholding pursuant to Section 2.12.
(e) At such time as an Earn-Out Amount is payable by Purchaser pursuant to Section 2.10(d), the Purchaser shall cause the Acquired Companies to, first pay any Employee Contingent Bonus Amount owed pursuant to the Employee Contingent Bonus Obligations, through payroll, and the Earn-Out Amount payable by Purchaser to the Agent pursuant to Section 2.10(d) shall be reduced by any such Employee Contingent Bonus Amount payable by an Acquired Company pursuant to the Employee Contingent Bonus Obligations.
(f) Until delivery of each of the Earn-Out Statements, within 45 days following the last day of each fiscal quarter, Purchaser will provide Agent with a reasonable estimate of the Acquired Company Revenue to date for the then-applicable Earn-Out Period.
(g) During the Earn-Out Period, the Purchaser agrees to, and to cause the Acquired Companies and its and their Affiliates to, operate the Business and the Acquired Companies in good faith (but with such changes permitted below or necessary to integrate back office functions such as finance, legal, human resources, information technology, QHSE with Purchaser’s practices and policies and to otherwise integrate the Business into the practices and policies of Purchaser); and, in connection therewith, to:
(i) maintain itself and the Acquired Companies in good standing as companies under the laws receipt of AlbertaCSE Acceptance for such issuance, for Purchaser, Alberta, for the Subsidiaries, and British Columbia or Alberta, for the Corporation, except that Purchaser may cause a reorganization whereby the Corporation continues to the Business Corporation Act (Alberta), then Purchaser, the Corporation and the Subsidiaries (with the potential exception of Redco Equipment Sales Ltd.) amalgamate and continue as one corporation which may be re-named Great North Wellhead Company (if that name is available) or similar namerequired;
(ii) instruct the management satisfaction of any requirements or conditions of the Business (which is intended to be CSE imposed on the current management of Vendor and the Business) to use commercially reasonable efforts to exploit market opportunities and set their performance targets Purchaser for the revenue issuance of Earn-Out Shares, including the Business to be equal to Vendor filing any required personal information forms or greater than other information filings with the minimum earn-out thresholds described in Section 2.10CSE;
(iii) provide reasonably adequate capital to fund a resale restriction of four months plus one day from the Business' operationsdate of issuance in accordance with National Instrument 45-102 – Resale of Securities and any additional regulatory restrictions, and maintain reasonably adequate levels of investment in inventory and capital #110828415 expenditures and personnel in which will be legended on the Business in a manner consistent with the growth of the Business, including any inventory or capital expenditures necessary to support customer orders or increases in customer orders, and otherwise taking into account industry conditions, returnEarn-on-capital and general industry and market conditions;Out Shares; and
(iv) grant the Agent reasonable access to Books and Records (excluding any work papers where such access (A) would breach any obligations to any third party or obligation of confidentiality binding on Purchaser or the Acquired Companies, (B) would be in violation of applicable Laws or regulations of any Governmental Entity or the provisions of any Contract or policy to which the any Acquired Company is a party or otherwise bound or is subject, (C) would contravene any fiduciary duty or (D) would result in the loss escrow requirements of the ability to successfully assert the attorney-client, work product or any other legal privilege, which Purchaser reasonably determines upon the advice of counsel), including financial statements and other financial records, relating to the Business, solely for the purposes of determining the Earn-Out Amount;
(v) refrain from intentionally taking any action or omitting to take an action in bad faith that is intended to reduce the amount of the Earn-Out Amounts that would otherwise be payable to Sellers under this Agreement;
(vi) renegotiate in good faith with Agent the earn-out thresholds described in Section 2.10 in the event of a sale, transfer, assignment or other disposal of material assets or Material Contracts of the Business to any third party, excluding any sale, transfer, assignment or other disposition of inventory in the Ordinary Course consistent with past practice to adjust for the revenue that otherwise would have been generated by the material assets or Material Contracts that are transferred or disposed of; and
(vii) other than as required by Law, refrain from entering into or permitting to exist any covenants or restrictions, whether in documents pertaining to indebtedness or otherwise, that specifically restrict payment of any Earn-Out Amount or compliance with this Agreement or that are in conflict with the provisions of this Agreement. For the avoidance of doubt, except as expressly set forth in clauses (i) – (vii) of this Section 2.10(g), (w) Purchaser shall have the right to own and operate the Business and the Acquired Companies in any way that Purchaser and its Affiliates deem appropriate, in their sole discretion, (x) Sellers have not relied on any statements or information provided by Purchaser or its Affiliates with respect to potential Acquired Company Revenue or other performance of the Business or the Acquired Companies, (y) neither Purchaser nor any of its Affiliates owe any fiduciary duty to Sellers or any of their Affiliates or equityholders in connection with the ownership and operation of the Business and the Acquired Companies, and (z) the Parties intend the express provisions of this Agreement to govern their contractual relationship in respect of the payment of the Earn-Out AmountsCSE, if any, or of such other stock exchange or quotation system where predominately the Marble Shares trade.
(h) At any time after the Closing Date, Purchaser may, in its sole discretion, elect to pay the full Earn-Out Amount by wire transfer of immediately available funds to an account designated in writing by Agent which, upon payment thereof, shall fully release and discharge Purchaser, its successors and assigns from any further liability or obligation under this Section 2.10. For greater certainty, such payment shall be subject to Section 2.10(e). #110828415
Appears in 1 contract
Sources: Asset Purchase Agreement
Earn-Out Amount. (a) As incentive consideration for the Purchased Shares, Purchaser shall pay to Seller a maximum amount equal to $5,000,000 (the “Earn-Out Amount”) in a maximum of twenty (20) partial and equal payments of $250,000, in accordance with Section2.6(d), for every $1,000,000 amount of Gross Sales above the 2022 Gross Sales for the first Earn-Out Period, and then for each $1,000,000 Gross Sales Increase.
(b) For greater certainty, (i) if the Gross Sales for the first Earn-Out Period ending after the Closing Date is not $20,000,000 above the 2022 Gross Sales, in which case the total Earn-Out Amount would be due to Seller (20 x $250,000 = $5,000,000), then the Seller shall be entitled to the remaining of the Earn-Out Amount after the second Earn-Out Period, and so on, unless and until the Earn-Out Amount is paid in full to the Seller, (ii) the Earn-Out Amount for each Earn-Out Period following the first Earn-Out Period shall only apply to the Gross Sales amount in excess of the 2022 Gross Sales Amount for which no Earn-Out Amount was already paid to Seller by Purchaser (the Gross Sales Increase), and (iii) there shall be no negative Earn-Out Amount and any calculation of the Earn-Out Amount resulting in a negative number shall be deemed to be equal to zero for the applicable Earn-Out Period. By way of example and for illustration purpose only: Should the Gross Sales of the Target for the first Earn-Out Period exceed the 2022 Gross Sales by $5,500,000, then Seller shall be entitled to an Earn-Out Amount equal to 5.5 times $250,000. Should the Gross Sales of the Target for the second Earn-Out Period exceed the 2022 Gross Sales by $9,000,000, then Seller shall be entitled to an Earn-Out Amount equal to 3.5 times $250,000.
(c) For greater certainty and notwithstanding anything to the contrary herein, the first Earn-Out Period after the Closing Date shall be the twelve-month period ending on December 31, 2022 and the Earn-Out Amount for such first Earn-Out Period shall be calculated in reference to the 2022 Gross Sales in accordance with Section 2.6(a) hereof and payable not earlier than April 1st, 2023, subject to the Earn-Out Statement being final.
(d) Within 60 30 days following the end financial statements of Target being final for each Earn-Out Period, such financial statements being part of Purchaser’s consolidated financial statements, Purchaser shall will, at Target’s expense, prepare and deliver to Agent Seller a statement supporting draft calculation based on such financial statements (each, each an "“Earn-Out Statement"”) setting forth:
(i) forth in reasonable detail Purchaser’ determination of the Acquired Company Revenue for such portion of the Earn-Out Amount in respect of the Earn-out Period; and
(ii) the aggregate value . Each portion of the Earn-Out Amount for such each Earn-Out Period shall become due immediately upon the end of the applicable Earn-Out Period, which shall be calculated as follows:
(A) for upon the 2024 Earn-Out Period Statement being final, and shall be payable in accordance with the provisions of Section 2.7(k) hereto, which will apply mutatis mutandis.
(such amounte) The provisions of Sections 2.7(b) to 2.7(l) hereto will apply, mutatis mutandis, with the "2024 necessary modifications, to the objections, if any, final determination and payment of the Earn-out Amount.
(f) Until the Earn-out Amount is paid in full to the Seller, Purchaser shall undertake, all actions in good faith and not to knowingly cause or permit anything to be done to avoid the payment of or reduce any partial payment of the Earn-Out Amount"): 2024 Earnout Amount=Acquired Company Revenue-130,000,00015,000,000×15,000,000 , provided thathowever, (x) if that the Acquired Company Revenue during foregoing shall not prevent Purchaser and/or the 2024 Target considering Purchaser’s and/or the Target’s best interests and not designed to avoid the payment of or reduce the Earn-Out Period is less than Amount, even if they ultimately have such an impact, and, if necessary, Purchaser shall make and shall cause the Target to make, their reasonably commercial efforts to adopt and implement the necessary adjustments not to adversely impact the Earn-Out Amount. Purchaser agrees that the Target will be operated in a manner consistent with the foregoing; provided however that Purchaser shall have no obligation to operate the Target in order to achieve or equal to $130,000,000maximize the Earn-Out Amount.
(g) Notwithstanding anything to the contrary herein, then the value any portion of the Earn-Out Amount payable to Seller, as determined in accordance with this Section 2.6, up the Maximum Escrow Amount, shall first be paid by Purchaser to the Escrow Agent by wire transfer in immediately available funds to such account as shall be reduced to nildesignated by the Escrow Agent, and (y) if for deposit into the Acquired Company Revenue is equal to or greater than $145,000,000Indemnity Escrow Account. For the avoidance of doubt, then the aggregate value of the 2024 Earn-Out Amount shall not exceed $15,000,000; and
(B) for the 2025 Earn-Out Period (such amount, the "2025 Earn-Out Amount"): 2025 Earnout Amount=Acquired Company Revenue-145,000,00015,000,000×15,000,000 provided that, (x) if the Acquired Company Revenue during the 2025 Earn-Out Period is less than or equal to $145,000,000, then the value any portion of the Earn-Out Amount payable to Seller in excess of the Maximum Escrow Amount shall be reduced paid by Purchaser directly to nilSeller in accordance with this Section 2.6.
(h) Notwithstanding anything to the contrary in this Agreement, and in the event that Seller’s employment with Target pursuant to the Employment Agreement (yi) if the Acquired Company Revenue is equal terminated voluntarily by Seller or (ii) is terminated following Purchaser’s dismissal of Seller for serious reason or for cause (as defined in applicable Laws), Seller will not be entitled to or greater than $160,000,000, then the aggregate value of the 2025 any Earn-Out Amount shall that is not exceed $15,000,000. An illustrative example due as of the calculation date of the termination of Seller’s employment with Target. If Seller is dismissed without cause within the four (4) years following the Closing Date, then the difference between the Earn-Out Amount and portion of the Earn-Out Amount is set forth on Part B of Exhibit D.
(b) Within 30 days of receipt of an Earn-Out Statement, Agent may notify Purchaser in writing of any objections it may have paid to such Earn-Out Statement and/or the calculations set forth therein, which objection notice will set forth a description of the nature and basis for each of the disagreements. During such 30-day period, ▇▇▇▇▇▇▇▇▇ agrees to cause the Acquired Companies to provide Agent and its advisors with access to all work papers of Purchaser and the Acquired Companies' auditors, the Books and Records and supporting schedules as they relate to such Earn-Out Statement and the appropriate personnel to verify the accuracy, presentation and other matters relating Seller prior to the preparation date of dismissal shall immediately become due and payable to Seller, subject to the portion of such Earn-Out Statement. Agent Amount in the Indemnity Escrow Account, which shall be deemed to have accepted such Earn-Out Statement and the calculations set forth therein if Agent does not notify Purchaser of any objection remain in a written notice within such 30-day period. #110828415
(c) If Agent disputes an Earn-Out Statement escrow in accordance with Section 2.10(b), then Agent and Purchaser will forthwith and in any event within 15 days, work expeditiously and in good faith in an attempt to resolve any such objections. In the event that Agent and Purchaser are unable to resolve all such objections within 15 days after Purchaser's receipt of such objection notice, Agent and Purchaser will submit the remaining disagreements to the Third Party Auditors who shall resolve the dispute. The provisions of Sections 2.7(e) and (f) will apply, mutatis mutandis, to the review and resolution of any such dispute.
(d) With respect to each Earn-Out Amount, within 10 days following (i) the expiry terms of the relevant 30-day period in Section 2.10(b), (ii) if a notice of objection has been delivered pursuant to Section 2.10(b), the determination of such dispute in accordance with Section 2.10(c), or (iii) written notice by Agent to Purchaser that it accepts such Earn-Out Statement, Purchaser shall pay, after any payment pursuant to Section 2.10(e), an amount equal to the Earn-Out Amount (without interest) less the Employee Contingent Bonus Amount, by wire transfer of immediately available funds to an account designated in writing by Agent. Any payment made pursuant to this Section 2.10(d) shall be deemed an adjustment to the Purchase Price and shall be subject to any applicable withholding pursuant to Section 2.12.
(e) At such time as an Earn-Out Amount is payable by Purchaser pursuant to Section 2.10(d), the Purchaser shall cause the Acquired Companies to, first pay any Employee Contingent Bonus Amount owed pursuant to the Employee Contingent Bonus Obligations, through payroll, and the Earn-Out Amount payable by Purchaser to the Agent pursuant to Section 2.10(d) shall be reduced by any such Employee Contingent Bonus Amount payable by an Acquired Company pursuant to the Employee Contingent Bonus Obligations.
(f) Until delivery of each of the Earn-Out Statements, within 45 days following the last day of each fiscal quarter, Purchaser will provide Agent with a reasonable estimate of the Acquired Company Revenue to date for the then-applicable Earn-Out Period.
(g) During the Earn-Out Period, the Purchaser agrees to, and to cause the Acquired Companies and its and their Affiliates to, operate the Business and the Acquired Companies in good faith (but with such changes permitted below or necessary to integrate back office functions such as finance, legal, human resources, information technology, QHSE with Purchaser’s practices and policies and to otherwise integrate the Business into the practices and policies of Purchaser); and, in connection therewith, to:
(i) maintain itself and the Acquired Companies in good standing as companies under the laws of Alberta, for Purchaser, Alberta, for the Subsidiaries, and British Columbia or Alberta, for the Corporation, except that Purchaser may cause a reorganization whereby the Corporation continues to the Business Corporation Act (Alberta), then Purchaser, the Corporation and the Subsidiaries (with the potential exception of Redco Equipment Sales Ltd.) amalgamate and continue as one corporation which may be re-named Great North Wellhead Company (if that name is available) or similar name;
(ii) instruct the management of the Business (which is intended to be the current management of the Business) to use commercially reasonable efforts to exploit market opportunities and set their performance targets for the revenue of the Business to be equal to or greater than the minimum earn-out thresholds described in Section 2.10;
(iii) provide reasonably adequate capital to fund the Business' operations, and maintain reasonably adequate levels of investment in inventory and capital #110828415 expenditures and personnel in the Business in a manner consistent with the growth of the Business, including any inventory or capital expenditures necessary to support customer orders or increases in customer orders, and otherwise taking into account industry conditions, return-on-capital and general industry and market conditions;
(iv) grant the Agent reasonable access to Books and Records (excluding any work papers where such access (A) would breach any obligations to any third party or obligation of confidentiality binding on Purchaser or the Acquired Companies, (B) would be in violation of applicable Laws or regulations of any Governmental Entity or the provisions of any Contract or policy to which the any Acquired Company is a party or otherwise bound or is subject, (C) would contravene any fiduciary duty or (D) would result in the loss of the ability to successfully assert the attorney-client, work product or any other legal privilege, which Purchaser reasonably determines upon the advice of counsel), including financial statements and other financial records, relating to the Business, solely for the purposes of determining the Earn-Out Amount;
(v) refrain from intentionally taking any action or omitting to take an action in bad faith that is intended to reduce the amount of the Earn-Out Amounts that would otherwise be payable to Sellers under this Agreement;
(vi) renegotiate in good faith with Agent the earn-out thresholds described in Section 2.10 in the event of a sale, transfer, assignment or other disposal of material assets or Material Contracts of the Business to any third party, excluding any sale, transfer, assignment or other disposition of inventory in the Ordinary Course consistent with past practice to adjust for the revenue that otherwise would have been generated by the material assets or Material Contracts that are transferred or disposed of; and
(vii) other than as required by Law, refrain from entering into or permitting to exist any covenants or restrictions, whether in documents pertaining to indebtedness or otherwise, that specifically restrict payment of any Earn-Out Amount or compliance with this Agreement or that are in conflict with the provisions of this Escrow Agreement. For the avoidance of doubt, except as expressly set forth in clauses (i) – any Earn-Out Amount due but not paid or payable as of the date of any voluntary termination of his employment by Seller or dismissal for serious reason or for cause (viias defined in applicable Laws) shall be paid to Seller in accordance with the terms of this Section 2.10(gAgreement; and (ii) if Seller’s employment is terminated as a result of the death or disability of Seller (as defined in the Employment Agreement), Seller (wor his heirs or legatees, as the case may be) Purchaser shall have the right will remain entitled to own and operate the Business and the Acquired Companies in any way that Purchaser and its Affiliates deem appropriate, in their sole discretion, (x) Sellers have not relied on any statements or information provided by Purchaser or its Affiliates with respect to potential Acquired Company Revenue or other performance of the Business or the Acquired Companies, (y) neither Purchaser nor any of its Affiliates owe any fiduciary duty to Sellers or any of their Affiliates or equityholders in connection with the ownership and operation of the Business and the Acquired Companies, and (z) the Parties intend the express provisions of this Agreement to govern their contractual relationship in respect of the payment portion of the Earn-Out Amounts, if anyAmount that is due or that will become due or payable pursuant to this Agreement.
(h) At any time after the Closing Date, Purchaser may, in its sole discretion, elect to pay the full Earn-Out Amount by wire transfer of immediately available funds to an account designated in writing by Agent which, upon payment thereof, shall fully release and discharge Purchaser, its successors and assigns from any further liability or obligation under this Section 2.10. For greater certainty, such payment shall be subject to Section 2.10(e). #110828415
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