M&A Boot Camp booklet 2023 - Flipbook - Page 94
deferred inventory costs associated with deferred revenue) of the Company as of the Closing, all determined in a manner satisfactory
to Parent acting in good faith; minus (B) the current and long-term liabilities of the Company as of the Closing (including, for the
avoidance of doubt, any Company Transaction Expenses not paid prior to the Closing, any indebtedness of the Company and any
deferred interest, forbearance payments, penalties or similar amounts due with respect to such indebtedness, and excluding deferred
revenue and non-cash liabilities associated with warrants exercisable for Company Preferred Stock) and the amount of any change of
control or severance obligations to: (1) Larry Christofori pursuant to any Company Contract (or any Contract with Parent that is
entered into in replacement of such Company Contract, it being understood, however, that for purposes of calculating the “Balance
Sheet Shortfall Amount,” the change of control or severance obligation under any such replacement Contract shall not exceed the
change of control or severance obligation of the Company under the Company Contract with Mr. Christofori identified on Schedule
4.6); and (2) any other executives of the Company pursuant to any Company Contracts that are not otherwise terminated prior to or as
of the Closing, all determined in a manner satisfactory to Parent acting in good faith (it being understood that if, after the Closing, any
accounts receivable included in the calculation of the Balance Sheet Shortfall Amount become uncollectible, then Parent shall only be
entitled to recover under Section 9 with respect to such accounts receivable to the extent that the uncollectible portion thereof in the
aggregate exceeds the allowance for doubtful accounts used in calculating the Balance Sheet Shortfall Amount). For the purposes of
determining the current and long-term liabilities of the Company associated with Taxes, the following conventions shall be applied:
(x) Tax liabilities for periods ended on or before the Closing Date shall be determined based on applicable Legal Requirements and, to
the extent consistent with applicable Legal Requirements, in accordance with the past custom and practice of the Company in
preparing its Tax Returns; (y) Taxes based on income, receipts or sales for a Straddle Period shall be determined based on a closing of
the books method (i.e., a hypothetical calculation that assumes the applicable period ended on the Closing Date but otherwise in
accordance with applicable Legal Requirements and, to the extent consistent with applicable Legal Requirements, in accordance with
the past custom and practice of the Company in preparing its Tax Returns); and (z) all other Taxes for a Straddle Period shall be
reasonably estimated on the Closing Date for the entire relevant period with the Tax liability as of the Closing Date being equal to the
estimated Tax for the entire period multiplied by a fraction, the numerator of which is the number of days in the Straddle Period
occurring on or before the Closing Date and the denominator being the total number of days in the Straddle Period. “Straddle Period”
means any Tax Period beginning before the Closing Date and ending after the Closing Date.
(iii) The “Escrow Amount” shall mean 15% of the Aggregate Transaction Value.
(iv) The “Escrow Contribution Amount” shall mean, with respect to each share of Company Capital Stock outstanding
immediately prior to the Effective Time and held by Non-Dissenting Stockholders, an amount determined by multiplying: (A) the
Escrow Amount; by (B) the fraction having a numerator equal to the Merger Consideration payable pursuant to Section 1.5(a) in
respect to such share of Company Capital Stock outstanding immediately prior to the Effective Time (including any amount contributed
to the Escrow Fund or Stockholders’ Agent Escrow Fund with respect thereto, but excluding any amounts that may become payable
pursuant to Section 1.7), and having a denominator equal to the aggregate amount of Merger Consideration payable pursuant to
Section 1.5(a) in respect of all shares of Company Capital Stock held by Non-Dissenting Stockholders immediately prior to the Effective
Time (including any amount contributed to the Escrow Fund or Stockholders’ Agent Escrow Fund with respect thereto, but excluding
any amounts that may become payable pursuant to Section 1.7).
(v) The “Series A Per Share Amount” shall be equal to $0.540960116.
4.