Common use of Merger Consideration Adjustment Clause in Contracts

Merger Consideration Adjustment. (a) The Merger Consideration will be adjusted as of the Closing Date as follows: (i) If on the Closing Date, the Company’s cash on hand exceeds the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be increased by the amount of such excess. If on the Closing Date, the Company’s cash on hand is less than the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be decreased by the amount of such shortfall; and (ii) If on the Closing Date, the Estimated Net Working Capital (as defined below) of the Company, exclusive of the items covered in (i) above, exceeds the Target Net Working Capital (as defined below), the Base Consideration will be increased by the amount of the excess. If on the Closing Date, the Estimated Net Working Capital of the Company is less than the Target Net Working Capital, the Base Consideration will be decreased by the amount of such shortfall. The Company shall deliver to Alarm not less than three (3) Business Days prior to the anticipated Closing Date an estimated balance sheet of the Company prepared as of a date within three (3) Business Days of the anticipated Closing Date that sets forth a good faith estimate of the Closing Net Working Capital as of the anticipated Closing Date determined in accordance with the definition of “Net Working Capital” (the “Estimated Net Working Capital”) and which estimate is consented to by Alarm, which consent shall not be unreasonably withheld. (b) Within ninety (90) days following the Closing Date, Alarm shall, or shall cause the Surviving Corporation to, prepare and deliver to the Stockholder Representative a statement of the Net Working Capital as of the end of the Business Day immediately preceding the Closing Date (the “Closing Net Working Capital”). “Net Working Capital” means the amount by which accounts receivable, pre-paid expenses, inventory and other current assets, calculated in accordance with GAAP, exceeds accounts payable, accrued expenses, warrant liability if such warrant liability exists post-Closing, deferred revenues to the extent the Company is obligated to provide services post-Closing and, to the extent not paid directly by Alarm pursuant to Section 2.2(b)(iii) hereof, the fees and expenses of the Stockholders and the Company payable in connection with the negotiation, execution and delivery of this Agreement or the transactions contemplated hereby, (including, without limitation, fees and expenses of counsel and any financial advisors) but excluding cash on hand and total debt outstanding under the Convertible Notes and Credit Agreement, calculated in accordance with GAAP.

Merger Consideration Adjustment. (a) The Merger Consideration will be adjusted as of the Closing Date as follows: (i) If on the Closing Date, the Company’s cash on hand exceeds the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be increased by the amount of such excess. If on the Closing Date, the Company’s cash on hand is less No later than the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be decreased by the amount of such shortfall; and (ii) If on the Closing Date, the Estimated Net Working Capital (as defined below) of the Company, exclusive of the items covered in (i) above, exceeds the Target Net Working Capital (as defined below), the Base Consideration will be increased by the amount of the excess. If on the Closing Date, the Estimated Net Working Capital of the Company is less than the Target Net Working Capital, the Base Consideration will be decreased by the amount of such shortfall. The Company shall deliver to Alarm not less than three (3) Business Days prior to the anticipated Closing Date an estimated balance sheet of the Company prepared as of a date within three (3) Business Days of the anticipated Closing Date that sets forth a good faith estimate of the Closing Net Working Capital as of the anticipated Closing Date determined in accordance with the definition of “Net Working Capital” (the “Estimated Net Working Capital”) and which estimate is consented to by Alarm, which consent shall not be unreasonably withheld. (b) Within ninety (90) days 90th calendar day following the Closing Date, Alarm shall, or Parent shall cause the Surviving Corporation to, prepare and deliver to the Stockholder Representative a statement (the “Final Net Working Capital Certificate”), certified as true and correct as of such date by an authorized representative of Parent, setting forth in reasonable detail, using the same methodologies and accounting practices and principles applied on a consistent basis by the Company prior to the Closing as the line items comprising the Closing Net Working Capital as set forth in the definition of Closing Net Working Capital, Parent’s good faith calculation of (i) the Closing Net Working Capital and the Net Working Capital Shortfall or the Net Working Capital Surplus, as applicable, (ii) the Closing Indebtedness and Closing Cash, and (iii) the Transaction Expenses unpaid as of the end Closing, and the calculation of the Business Day immediately preceding difference between such items detailed in clause (i) through (iii), as applicable, in the Closing Date Spreadsheet and in the Final Net Working Capital Certificate, if any. Upon reasonable request, Parent will provide the Stockholder Representative and its advisors reasonable access to the relevant financial records of the Company, including relevant work papers and back-up materials and such other information and materials as reasonably requested by the Stockholder Representative, that are relevant to the determination of the amounts set forth in Final Net Working Capital Certificate until the 30th calendar day following the receipt by the Stockholder Representative of the Final Net Working Capital Certificate and during the Accounting Arbitrator process. If the Stockholder Representative disagrees with any of the amounts set forth in the Final Net Working Capital Certificate, the Stockholder Representative shall notify Parent of such disagreement by the 30th calendar day following receipt by the Stockholder Representative of the Final Net Working Capital Certificate, which written notice shall set forth each such disagreement in reasonable detail (“Disagreement Notice”). If the Stockholder Representative fails to deliver a Disagreement Notice by such time, the Stockholder Representative shall be deemed to have accepted the amounts set forth in the Final Net Working Capital Certificate as delivered by Parent. The Stockholder Representative and Parent shall negotiate in good faith to resolve any such disagreement, and any resolution agreed to in writing by the Stockholder Representative and Parent shall be final and binding. The date of any express or deemed acceptance of the Final Net Working Capital Certificate or the final resolution of all disputes in regard thereto pursuant to this Section 1.7 shall be the “Determination Date.” (b) If the Stockholder Representative and Parent are unable to resolve any disagreement as contemplated by this Section 1.7 by the 30th calendar day following receipt by Parent of a Disagreement Notice, the Stockholder Representative and Parent shall jointly select a mutually acceptable third party from the Israeli offices of one of the “big four” certified public accounting firm to resolve such disagreement (the firm so retained shall be referred to herein as the “Accounting Arbitrator”), which in the absence of an agreement during such thirty (30) day period shall be Deloitte. The Stockholder Representative and Parent shall instruct the Accounting Arbitrator to accept all items and amounts that are not subject to unresolved disputes in accordance with this Section 1.7 and to resolve only those items and amounts set forth in the Final Net Working Capital Certificate as to which the Stockholder Representative has disagreed pursuant to a Disagreement Notice and the Stockholder Representative and Parent have not resolved their disagreement in accordance with this Section 1.7. The Stockholder Representative and Parent shall be afforded the opportunity to present to the Accounting Arbitrator any material related to the disputed items and to discuss the issues with the Accounting Arbitrator. The Stockholder Representative and Parent shall use commercially reasonable efforts to cause the Accounting Arbitrator to deliver to the Stockholder Representative and Parent, as promptly as practicable, a written report setting forth the resolution of any disagreement determined in accordance with the terms of this Agreement. In making its determination, the Accounting Arbitrator shall (i) be bound by the definition of Closing Net Working Capital”). “, Closing Cash, Closing Indebtedness and Transaction Expenses and shall use the same methodologies and accounting practices and principles applied on a consistent basis by the Company prior to the Closing as the line items comprising the Closing Net Working Capital” means , Closing Cash, Closing Indebtedness or Transaction Expenses as set forth in the respective definitions of such terms under this Agreement, and (ii) not assign any value with respect to a disputed amount that is greater than the highest value for such amount claimed by either the Stockholder Representative or Parent or that is less than the lowest value for such amount claimed by either the Stockholder Representative or Parent. Such report shall be final and binding and judgment may be entered on such determination of the Accounting Arbitrator in any court having jurisdiction over the party against which accounts receivablesuch determination is to be enforced and either party may seek specific enforcement or take other necessary legal action to enforce any decision under this Section 1.7(b). The Stockholder Representative, pre-paid expenseson the one hand, inventory and Parent, on the other current assetshand, calculated in accordance with GAAPshall each bear fifty percent (50%) of the fees, exceeds accounts payable, accrued expenses, warrant liability if such warrant liability exists post-Closing, deferred revenues to the extent the Company is obligated to provide services post-Closing and, to the extent not paid directly by Alarm pursuant to Section 2.2(b)(iii) hereof, the fees costs and expenses of the Stockholders and the Company payable Accounting Arbitrator, except in connection with the negotiation, execution and delivery case of this Agreement fraud or willful misconduct of either Parent or the transactions contemplated herebyStockholder Representative, in which case such party shall be responsible for hundred percent (including100%) of such fees, without limitationcosts and expenses. The portion of the fees, fees costs and expenses of counsel and any financial advisorsthe Accounting Arbitrator, which is deemed attributable to the Representative (solely on behalf of the Indemnifying Parties) but excluding cash on hand and total debt outstanding under shall paid out of the Convertible Notes and Credit Agreement, calculated in accordance with GAAPExpense Fund.

Merger Consideration Adjustment. (a) The Merger Consideration will be adjusted as of the Closing Date as follows: (i) If on the Closing Date, the Company’s cash on hand exceeds the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be increased by the amount of such excess. If on the Closing Date, the Company’s cash on hand is less No later than the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be decreased by the amount of such shortfall; and (ii) If on the Closing Date, the Estimated Net Working Capital (as defined below) of the Company, exclusive of the items covered in (i) above, exceeds the Target Net Working Capital (as defined below), the Base Consideration will be increased by the amount of the excess. If on the Closing Date, the Estimated Net Working Capital of the Company is less than the Target Net Working Capital, the Base Consideration will be decreased by the amount of such shortfall. The Company shall deliver to Alarm not less than three (3) Business Days prior to the anticipated Closing Date an estimated balance sheet of the Company prepared as of a date within three (3) Business Days of the anticipated Closing Date that sets forth a good faith estimate of the Closing Net Working Capital as of the anticipated Closing Date determined in accordance with the definition of “Net Working Capital” (the “Estimated Net Working Capital”) and which estimate is consented to by Alarm, which consent shall not be unreasonably withheld. (b) Within ninety (90) 90 days following the Closing Date, Alarm shall, or shall cause the Surviving Corporation to, Parent will prepare and deliver to the Stockholder Representative a statement (the “Preliminary Adjustment Schedule”), which sets forth Parent’s calculation of (i) the Net Working Capital as of the end of the Business Day immediately preceding the Closing Date (the “Closing Preliminary Net Working Capital”), (ii) the Net Working Capital Surplus, if any (the “Preliminary Net Working Capital Surplus”), or the Net Working Capital Deficit, if any (the “Preliminary Net Working Capital Deficit”), (iii) Closing Date Cash (the “Preliminary Closing Date Cash”), (iv) Closing Date Indebtedness (the “Preliminary Closing Date Indebtedness”), (v) Transaction Expenses (the “Preliminary Transaction Expenses”), and (vi) the Adjustment Amount calculated based on the information contained in the Preliminary Adjustment Schedule. (b) The Stockholder Representative will have 60 days following receipt of the Preliminary Adjustment Schedule during which to notify Parent of any dispute of any item contained in the Preliminary Adjustment Schedule, which notice will set forth in reasonable detail the basis for such dispute. If the Stockholder Representative does not notify Parent of any such dispute within such 60 day period, the Preliminary Adjustment Schedule will be deemed to be the Final Adjustment Schedule. If the Stockholder Representative notifies Parent of any such dispute within such 60 day period, Parent and the Stockholder Representative will cooperate in good faith to resolve any such dispute as promptly as possible, and upon such resolution, the Final Adjustment Schedule will be prepared in accordance with the agreement of Parent and the Stockholder Representative. The Stockholder Representative and its representatives shall be given such access to the financial books and records and appropriate employees, accountants and advisers of the Company Group as the Stockholder Representative may reasonably request to the extent reasonably necessary to confirm Parent’s calculation set forth in the Preliminary Adjustment Schedule. (c) If Parent and the Stockholder Representative are unable to resolve any dispute regarding the Preliminary Adjustment Schedule within 30 days (or such longer period as Parent and the Stockholder Representative will mutually agree in writing), following notice of such dispute, such dispute will be submitted to, and all issues having a bearing on such dispute will be resolved by the dispute resolution group of FTI Consulting, or in the event that FTI Consulting is unable or unwilling to take such assignment, the dispute resolution group of an internationally recognized accounting or financial consulting firm mutually agreed upon by Parent and the Stockholder Representative (FTI Consulting or the accounting firm so selected, the “Arbitrator”). Such resolution will be final and binding on the Parties. Parent and the Stockholder Representative will instruct the Arbitrator to make a final determination of Net Working Capital” means , the Net Working Capital Deficit, if any, or the Net Working Capital Surplus, if any, the Closing Date Cash, the Closing Date Indebtedness, the Transaction Expenses and the Adjustment Amount based solely on the items that are in dispute and that, in resolving such items in dispute and in determining Net Working Capital, the Net Working Capital Deficit, if any, or the Net Working Capital Surplus, if any, the Closing Date Cash, the Closing Date Indebtedness, the Transaction Expenses and the Adjustment Amount, the Arbitrator will not assign to any item in dispute a value that is (i) greater than the greatest value for such item assigned by Parent, on the one hand, or the Stockholder Representative, on the other hand, or (ii) less than the smallest value for such item assigned by Parent, on the one hand, or the Stockholder Representative, on the other hand. The Arbitrator will make its determination based solely on the information presented to it by the Parties and will not undertake an independent review. The Arbitrator will use commercially reasonable efforts to complete its work within 30 days following its engagement. The fees and disbursements of or related to the Arbitrator will be borne by Parent and the Stockholder Representative based on the inverse of the percentage that the Arbitrator’s determination bears to the aggregate amount of all of the items in dispute as submitted to the Arbitrator by which accounts receivableParent and the Stockholder Representative. For example, pre-paid expensesshould the items in dispute total $1,000 and the Arbitrator awards $600 in favor of the Stockholder’s Representative’s position, inventory 60% of the fees and other current assetsdisbursements of its review would be borne by Parent and 40% of the fees and disbursements would be borne by the Stockholder Representative. If any disputes are submitted to the Arbitrator pursuant to this Section 3.9(c), calculated the Final Adjustment Schedule will be prepared in accordance with GAAP, exceeds accounts payable, accrued expenses, warrant liability if such warrant liability exists post-Closing, deferred revenues to the extent decision of the Company is obligated to provide services post-Closing Arbitrator and, to the extent applicable, the agreement of Parent and the Stockholder Representative. (d) Within five Business Days following the determination of the Final Adjustment Schedule in accordance with this Section 3.9: (i) if the Adjustment Amount is positive, then (A) Parent will pay, or cause to be paid, an amount equal to such excess (such amount, the “Upward Adjustment”) in accordance with Section 3.9(e) (provided, that any portion of the Upward Adjustment that would have been paid in respect of a Dissenting Share in accordance with Section 3.9(e) if such share did not paid directly constitute a Dissenting Share will instead be retained by Alarm Parent and the Upward Adjustment payable pursuant to Section 2.2(b)(iii3.9(e) hereofwill be reduced by the corresponding amount), the fees and expenses of the Stockholders (B) Parent and the Company payable in connection with Stockholder Representative will promptly deliver a joint written instruction to the negotiation, execution and delivery of this Agreement or Escrow Agent instructing it to release the transactions contemplated hereby, (including, without limitation, fees and expenses of counsel and any financial advisors) but excluding cash on hand and total debt outstanding under the Convertible Notes and Credit Agreement, calculated Adjustment Escrow Fund in accordance with GAAPSection 3.9(e). Upon payment of such Upward Adjustment, Parent will be fully released and discharged of any obligation with respect to payment of the Adjustment Amount; and (ii) if the Adjustment Amount is negative (such amount, the “Downward Adjustment”), then Parent and the Stockholder Representative will promptly deliver a joint written instruction to the Escrow Agent to effectuate disbursement of the Downward Adjustment to Parent from the Adjustment Escrow Fund and thereafter, with respect to any amounts in excess of the Adjustment Escrow Fund, from the Indemnity Escrow Fund, of the lesser of (A) the amount of the Downward Adjustment that exceeds the amount of the Adjustment Escrow Fund and (B) the then-remaining amount of the Indemnity Escrow Fund. If any amount remains in the Adjustment Escrow Fund after the distribution of the Downward Adjustment to Parent, Parent and the Stockholder Representative will promptly deliver a joint written instruction to the Escrow Agent to effectuate disbursement of the remaining amount of the Adjustment Escrow Fund in accordance with Section 3.9(e). (e) Payment of the Upward Adjustment, if any, or release from the Adjustment Escrow Fund for the benefit of the Stockholders, In-the-Money Option Holders, Phantom Equity Participants and Change of Control Bonus Recipients, if any, pursuant to Section 3.9(d) will be paid to the Stockholders, In-the-Money Option Holders, Phantom Equity Participants and Change of Control Bonus Recipients in the percentages set forth under the caption “Percent of Proceeds from Escrow Account and Stockholder Representative Expense Release” on the Closing Date Payments Exhibit. (f) Except for any payment to an In-the-Money Option Holder, a Phantom Equity Participant or a Change of Control Bonus Recipient that will be distributed by the Company through the Company’s payroll pursuant to Section 3.9(e), all payments required under this Section 3.9 will be made in cash by wire transfer of immediately available funds to such bank accounts as will be designated in writing by the recipients or, in the case of payments to Stockholders, by the Stockholder Representative. (g) Any payment that is to be made pursuant to Section 3.9(e) to an Equity Holder, which is attributable to an Option will, to the extent required by applicable Law, be treated for Tax purposes as a payment, when and if made, of compensation for services and, accordingly, Parent will reduce, or will cause the Company to reduce, each such payment by the amount of any required federal, foreign, provincial, state, or local withholding Taxes payable by the Company or any Subsidiary with respect to such payment. Parent will pay or will cause the Company or such Subsidiary to pay such withholding Taxes to the applicable Governmental Entities as required by Law.

Merger Consideration Adjustment. 2.10.1 No later than two (a) The Merger Consideration will be adjusted as of the Closing Date as follows: (i) If on the Closing Date, the Company’s cash on hand exceeds the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be increased by the amount of such excess. If on the Closing Date, the Company’s cash on hand is less than the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be decreased by the amount of such shortfall; and (ii) If on the Closing Date, the Estimated Net Working Capital (as defined below) of the Company, exclusive of the items covered in (i) above, exceeds the Target Net Working Capital (as defined below), the Base Consideration will be increased by the amount of the excess. If on the Closing Date, the Estimated Net Working Capital of the Company is less than the Target Net Working Capital, the Base Consideration will be decreased by the amount of such shortfall. The Company shall deliver to Alarm not less than three (32) Business Days prior to the anticipated Closing Date an estimated Date, the Company shall prepare and deliver to Buyer (i) a balance sheet of the Company Company, prepared as of a date within three (3) Business Days of the anticipated Closing Date that sets forth a good faith estimate of the Closing Net Working Capital as of the anticipated Closing Date determined in accordance with the definition of “Net Working Capital” (the “Estimated Net Working Capital”) and which estimate is consented to by AlarmGAAP, which consent shall not be unreasonably withheld. (b) Within ninety (90) days following the Closing Date, Alarm shall, or shall cause the Surviving Corporation to, prepare and deliver to the Stockholder Representative a statement of the Net Working Capital as of the end of the Business Day immediately preceding the Closing Date (the “Closing Net Balance Sheet”), and (ii) an estimate of the Working Capital (the “Estimated Closing Date Working Capital”) of the Company as of the Closing Date. 2.10.2 Within forty-five (45) days after the Closing Date, Buyer shall cause Buyer Accountant at its sole cost and expense to (i) review and/or conduct certain procedures upon the components of the Estimated Closing Date Working Capital and prepare detailed statements (the “Working Capital Statement”) of its calculation of the actual Working Capital of the Company as of the Closing Date (“Actual Closing Working Capital”), which shall be appropriately adjusted for any audit adjustments for the year ended December 31, 2010 and (ii) deliver the Working Capital Statement to the Stockholder Representative on behalf of the Stockholders. “Net The Stockholder Representative shall have a thirty (30) day period to review the Working Capital Statement following receipt thereof and during such period Buyer shall cause the Buyer Accountant to share its work papers with the Stockholder Representative or its professional advisers and to make itself reasonably available to the Stockholder Representative and its professional advisers. If the Buyer’s Accountant fails to deliver the Working Capital Statement within the allotted time period, the Stockholder Representative shall give notice thereof to the Buyer, and the Buyer shall have ten (10) days from receipt of such notice to deliver the Working Capital Statement to the Stockholder Representative. If Buyer does not deliver the Working Capital Statement within such ten (10) day period, Buyer shall be deemed to have agreed to the calculations in the Estimated Closing Date Working Capital” means . 2.10.3 If the amount by which accounts receivableStockholder Representative disputes the Actual Closing Working Capital stated in the Working Capital Statement, pre-paid expensesit shall deliver a notice to Buyer no later than thirty (30) days after their receipt of the Working Capital Statement (the “Calculation Dispute Notice”). The Stockholder Representative shall set forth in reasonable detail in the Calculation Dispute Notice the basis for their disagreement with the calculations of the Actual Closing Working Capital. If the Stockholder Representative fails to deliver the Calculation Dispute Notice within the allotted time period, inventory and other current assetsthe Stockholder Representative, calculated in accordance with GAAPon behalf of the Stockholders, exceeds accounts payable, accrued expenses, warrant liability if such warrant liability exists post-Closing, deferred revenues shall be deemed to have agreed to the extent calculations of the Actual Closing Working Capital prepared by Buyer Accountant, which calculations shall be final, conclusive and binding upon the parties. 2.10.4 If the Stockholder Representative, on behalf of the Stockholders, disputes the Actual Closing Working Capital as determined by the Buyer Accountant within the allotted time period, the parties in good faith will attempt to jointly resolve any dispute during the thirty day period following the delivery of the Calculation Dispute Notice. If Buyer and the Stockholder Representative can resolve their dispute and agree upon the Actual Closing Working Capital balance of the Company, they shall memorialize their agreement in writing and such mutually agreed upon figure(s) shall be final, conclusive and binding upon all of the parties. 2.10.5 If Buyer and the Stockholder Representative cannot resolve the dispute to their mutual satisfaction, Buyer and the Stockholder Representative shall engage the Independent Accountants to determine the Actual Closing Working Capital balance of the Company is obligated to provide services post-as of the Closing and, to the extent not paid directly by Alarm pursuant to Section 2.2(b)(iii) hereof, the fees Date. The costs and expenses of the Stockholders Independent Accountants shall be borne fifty percent (50%) by Buyer and fifty percent (50%) by the Stockholder Representative. To the extent that the Independent Accountants desire the parties to this Agreement to meet in person, the parties shall choose a mutually acceptable location for such meeting. Each of Buyer and the Stockholder Representative shall cause their accounting professional advisers to provide the Independent Accountants such of their respective work papers as may be requested by the Independent Accountants. The Independent Accountants shall be requested to complete their engagement within forty-five (45) days of being retained by Buyer and the Stockholder Representative. The determination of the Independent Accountants shall be final, conclusive and binding upon the parties. 2.10.6 The final determination of the Actual Closing Working Capital of the Company payable in connection as of the Closing Date pursuant to this Section 2.10 shall be referred to herein as the “Final Closing Working Capital.” The extent, if any, to which the Final Closing Working Capital is less than the Estimated Closing Date Working Capital shall be referred to herein as a “Negative Working Capital Balance.” 2.10.7 The Merger Consideration shall be reduced to the extent of the Negative Working Capital Balance, with the negotiationreduction in a proportionate amount of Cash Consideration and Buyer Common Shares, execution and delivery where such proportion of this Agreement or Cash Consideration to Buyer Common Shares is equal to the transactions contemplated herebyproportion of the number of shares of Company Common Stock held by the Stockholders to the number of shares of Company Preferred Stock held by the Stockholders as set forth on the Merger Consideration Calculation Statement delivered pursuant to Schedule 2.6.7. The number of Buyer Common Shares will be based on the Closing Price. Any such decrease in the Merger Consideration shall be reimbursed by the Stockholders, through the Stockholder Representative, to the Buyer from the Escrow Amount within five (including, without limitation, fees and expenses 5) Business Days after the determination of counsel and any financial advisors) but excluding cash on hand and total debt outstanding under the Convertible Notes and Credit Agreement, calculated in accordance with GAAPFinal Working Capital.

Merger Consideration Adjustment. (a) The Merger Consideration will be adjusted as of the Closing Date as follows: (i) If on Within 60 days after the Closing Date, the Company’s cash on hand exceeds the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration Parent will be increased by the amount of such excess. If on the Closing Date, the Company’s cash on hand is less than the sum of the Company’s total debt outstanding under the Convertible Notes and Credit Agreement, the Base Consideration will be decreased by the amount of such shortfall; and (ii) If on the Closing Date, the Estimated Net Working Capital (as defined below) of the Company, exclusive of the items covered in (i) above, exceeds the Target Net Working Capital (as defined below), the Base Consideration will be increased by the amount of the excess. If on the Closing Date, the Estimated Net Working Capital of the Company is less than the Target Net Working Capital, the Base Consideration will be decreased by the amount of such shortfall. The Company shall deliver to Alarm not less than three (3) Business Days prior to the anticipated Closing Date an estimated balance sheet of the Company prepared as of a date within three (3) Business Days of the anticipated Closing Date that sets forth a good faith estimate of the Closing Net Working Capital as of the anticipated Closing Date determined in accordance with the definition of “Net Working Capital” (the “Estimated Net Working Capital”) and which estimate is consented to by Alarm, which consent shall not be unreasonably withheld. (b) Within ninety (90) days following the Closing Date, Alarm shall, or shall cause the Surviving Corporation to, prepare and deliver to the Stockholder Representative a statement of the Net Working Capital as of the end of the Business Day immediately preceding the Closing Date (the “Statement”) of (i) the Closing Net Working CapitalCapital and the resulting Working Capital Overage or Working Capital Underage, if any, (ii) the Closing Cash and the resulting Closing Cash Overage or Closing Cash Underage, if any, (iii) any Transaction Expenses not included in the Transaction Expenses Payoff Amount (the “Additional Transaction Expenses”), and (iv) any Closing Indebtedness of the Company and Company Subsidiaries not included in the calculation of the Initial Merger Consideration (the “Additional Indebtedness”) (b) The Statement will become final and binding upon all of the Parties at 5:00 p.m. in New York, New York on the 60th day following the date on which the Statement was delivered by Parent to the Stockholder Representative, unless the Stockholder Representative delivers written notice of its disagreement with the Statement (a “Notice of Disagreement”) to Parent prior to such time. “Net Working Capital” means During such 60-day period, Parent shall cause the amount by which accounts receivable, preSurviving Corporation and its Subsidiaries to provide the Stockholder Representative and the Stockholder Representative’s advisors with reasonable access (including on-paid expenses, inventory site access and other current assets, calculated in accordance with GAAP, exceeds accounts payable, accrued expenses, warrant liability if such warrant liability exists post-Closing, deferred revenues electronic access to the extent available) during regular business hours and upon reasonable notice to all relevant books and records and employees (including key accounting and finance personnel) of the Company is obligated to provide services post-Closing and, Surviving Corporation and its Subsidiaries to the extent reasonably necessary to review the matters and information used to prepare and to support the Statement, all in a manner not paid directly by Alarm pursuant to Section 2.2(b)(iii) hereofunreasonably interfering with the business of the Surviving Corporation and its Subsidiaries. All fees, the fees costs and expenses of the Stockholder Representative relating to the review of the Statement shall be borne by the holders of Shares and Options out of the Holdback Account and all fees, costs and expenses of Parent or the Surviving Corporation relating thereto shall be borne by Parent. Any Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. If a Notice of Disagreement is received by Parent in a timely manner, then the Statement (as revised in accordance with this Section 2.7(b)) will become final and binding upon Parent and the Stockholder Representative on the earlier of (i) the date Stockholder Representative and Parent resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (ii) the date any disputed matters are finally resolved in writing by an independent accounting firm (the “Accounting Firm”). During the 14-day period following the delivery of a Notice of Disagreement, the Stockholder Representative and Parent will seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. If at the end of such 14-day period the Stockholder Representative and Parent have not resolved in writing the matters specified in the Notice of Disagreement, then, no later than ten (10) days following such 14-day period, the Stockholder Representative and Parent will submit to the Accounting Firm for resolution, in accordance with the standards set forth in this Section 2.7, only matters that remain in dispute. The Accounting Firm will be UHY, LLP or, if such firm is unable or unwilling to act, such other nationally recognized independent public accounting firm as shall be agreed upon by the Stockholder Representative and Parent in writing. The Stockholder Representative and Parent will use commercially reasonable efforts to cause the Accounting Firm to render a written decision resolving the matters submitted to the Accounting Firm within 30 days of the receipt of such submission. The Accounting Firm may not assign a value greater than the greatest value for such item claimed by either Party or smaller than the smallest value for such item claimed by either Party. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The fees, costs and expenses of the Accounting Firm incurred pursuant to this Section 2.7(b) (the “Accounting Fees”) shall be borne pro rata as between the Stockholder Representative (solely on behalf of the Stockholders and Optionholders), on the Company payable one hand, and Parent, on the other hand, in proportion to the final allocation made by the Accounting Firm of the disputed items weighted in relation to the claims made by the Stockholder Representative and Parent, such that the prevailing party pays the lesser proportion of such fees, costs and expenses. For example, if the Parent claims that the appropriate adjustments are, in the aggregate, $1,000 greater than the amount determined by the Stockholder Representative and if the Accounting Firm ultimately resolves the dispute by awarding to the Parent an aggregate of $300 of the $1,000 contested, then the fees, costs and expenses of the Accounting Firm will be allocated 30% (i.e., 300 ÷ 1,000) to the Stockholder Representative and 70% (i.e., 700 ÷ 1,000) to Parent. For the avoidance of doubt, the fees, costs and expenses of any Party incurred in connection with this Section 2.7 (other than the negotiationAccounting Fees, execution and delivery of this Agreement or the transactions contemplated hereby, (including, without limitation, fees and expenses of counsel and any financial advisors) but excluding cash on hand and total debt outstanding under the Convertible Notes and Credit Agreement, calculated which shall be allocated in accordance with GAAPthis Section 2.7(b)) shall be paid by the Party incurring such fees, costs and expenses; provided, that the Stockholder Representative’s fees, costs and expenses shall be paid by the Stockholders and Optionholders. (c) If the Stockholder Adjustment Amount exceeds the Parent Adjustment Amount (the amount of such excess, the “Excess Amount”), (i) within five (5) Business Days after a final determination Parent will make payment by wire transfer of immediately available funds to the Stockholder Representative, or upon written instruction of the Stockholder Representative, to the Payments Administrator, for distribution to each holder of Shares, contingent upon such holder’s delivery of a Letter of Transmittal and Certificates evidencing such holder’s Shares (or an Affidavit of Loss in lieu thereof) and in accordance with such holder’s Individual Share Percentage, subject to applicable withholding, an amount equal to the Share Percentage of any such Excess Amount, and (ii) Parent will cause the Company to pay to the Optionholders via payroll in accordance with their respective Individual Option Percentage, and subject to applicable withholding, an amount equal to the Option Percentage, the applicable portion of any such Excess Amount. (d) If the Parent Adjustment Amount exceeds the Stockholder Adjustment Amount (the amount of such excess, the “Deficiency Amount”), within five (5) Business Days after a final determination in accordance with Section 2.7(b), the Stockholder Representative shall cause the Escrow Agent to make payment to Parent by wire transfer of immediately available funds from the Escrow Fund, the total amount of the Deficiency Amount.