Exhibit 10.1
Earnout Agreement
This
Earnout Agreement (this “ Agreement
”) is dated as of July
[ ], 2007, by and between
Wireless Facilities, Inc., a Delaware corporation (“
Seller ”), and Burgundy Acquisition Corporation, a
Delaware corporation (“ Purchaser ”).
Seller and Purchaser are sometimes individually referred to herein
as a “ Party ” and collectively as the “
Parties .”
RECITALS
Whereas
, as set forth in the Asset Purchase Agreement, dated as of July 7,
2007, between Purchaser and Seller (the “ Purchase
Agreement ”), Purchaser has agreed to purchase from
Seller and Seller has agreed to sell, transfer, assign and deliver
to Purchaser all of the Transferred Assets against delivery of the
Purchase Price in accordance with the terms of the Purchase
Agreement;
Whereas
, the Purchase Agreement provides that the Parties shall enter into
an agreement pursuant to which the Earnout Amount, subject to the
terms and conditions hereof, may be paid to Seller, in addition to
the Closing Purchase Price paid at Closing, in further
consideration of the sale of the Business by Seller to Purchaser;
and
Whereas
, Seller and Purchaser hereby desire to set forth the terms and
conditions upon which the Earnout Amount may be determined and
paid.
Now,
Therefore , for good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged , the
Parties agree as follows:
1.
Definitions; Construction .
1.1
Initially capitalized terms used but not defined herein (including
such terms used in the Recitals above) shall have the meaning
assigned in the Purchase Agreement.
1.2
“ 2008 Cash Collections Calculation ” shall have
the meaning set forth in Section 2.1 .
1.3
“ 2009 Cash Collections Calculation ” shall have
the meaning set forth in Section 2.1 .
1.4
“ 2010 Cash Collections Calculation ” shall have
the meaning set forth in Section 2.1 .
1.5
“ Cash Collections ” shall mean the net cash
amounts realized by Purchaser from customers of the Business during
a particular period, which shall exclude (a) the net amounts
realized from any other operations of Purchaser other than the
Business, including in such exclusion any add-ons to the Business
after the Closing Date and (b) any amounts received for payment to
be made on any customer’s behalf (i.e., pass through
payments) that include no mark-up for the benefit of the
Business.
1.6
“ Cumulative Cash Collections Calculation ”
shall mean the sum of the 2008 Cash Collections Calculation, the
2009 Cash Collections Calculation and the 2010 Cash Collections
Calculation.
1.7
“ Earnout Amount ” shall mean Six Million
Dollars ($6,000,000), subject to adjustment as set forth in
Section 3 below.
1.8
“ Earnout Payment ” shall mean the payment of
the Earnout Amount after determination of the Earnout Amount after
expiration of the Earnout Period in accordance with Section
3 .
1.9
“ Earnout Period ” shall mean the date
commencing on January 1, 2008 and continuing through and including
December 31, 2010.
1.10
“ Threshold Amount ” shall mean aggregate Cash
Collections during the Earnout Period of at least Three Hundred
Sixty Million Dollars ($360,000,000).
1.11
Unless the context of this Agreement clearly requires otherwise,
(a) references to the plural include the singular, and
references to the singular include the plural, (b) references
to any gender include the other genders, (c) the words
“include,” “includes” and
“including” do not limit the preceding terms or words
and will be deemed to be followed by the words “without
limitation”, (d) the terms “hereof,”
“herein,” “hereunder,” “hereto”
and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement,
(e) the terms “day” and “days” mean
and refer to calendar day(s) and (f) the terms
“year” and “years” mean and refer to
calendar year(s). Unless otherwise set forth herein,
references in this Agreement to (a) any document, instrument
or agreement (including this Agreement) include (1) all
documents, instruments or agreements issued or executed in
replacement thereof and (2) such document, instrument or
agreement, or replacement or predecessor thereto, as amended,
modified or supplemented from time to time in accordance with its
terms and in effect at any given time, and (b) a particular
Law (as hereinafter defined) means such Law as amended, modified,
supplemented or succeeded, from time to time and in effect through
the Closing Date. All Article, Section, Exhibit and Schedule
references herein are to Articles, Sections, Exhibits and Schedules
of this Agreement, unless otherwise specified. This Agreement
will not be construed as if prepared by one of the Parties, but
rather according to its fair meaning as a whole, as if all Parties
had prepared it. All accounting terms not specifically
defined herein will be construed in accordance with GAAP.
2.
Computation of Cash Collections .
2.1
Calculation of Cash Collections . Within 15 days
following the completion of Purchaser’s audit for each of
2008, 2009 and 2010, but in no event later than 90 days following
the end of each such fiscal year of Purchaser, Purchaser shall
deliver to Seller its calculations of the Cash Collections for such
audited year, together with reasonable detail to support such
calculations (such calculations shall be referred to herein
individually each as a “ Cash Collections Calculation
” or the “ 2008 Cash Collections Calculation,
” “ 2009 Cash Collections Calculation ”
and “ 2010 Cash Collections Calculation,
” as applicable). No later than the date that the 2010
Cash Collections Calculation must be delivered by Purchaser to
Seller as
2
set
forth herein, Purchaser shall also deliver its calculation of the
Cumulative Cash Collections Calculation to Seller, together with
reasonable detail to support such calculation.
2.2
Objection by Seller . Within fifteen (15) days
following receipt of the Cumulative Cash Collections Calculation,
Seller may object to the Cumulative Cash Collections Calculation by
giving written notice to Purchaser setting forth the reasons for
Seller’s objection and Seller’s proposed adjustments to
Purchaser’s calculation (“ Seller’s
Objection ”). If Seller fails to object to the
Cumulative Collections Calculation within such fifteen (15) day
period, Seller will be deemed to have conclusively agreed with and
shall be bound by the Cumulative Cash Collections Calculation for
the purposes of this Section 2 , and such Cumulative Cash
Collections Calculation will be used for calculating the Earnout
Payment in accordance with Section 3 below. If Seller
objects to the Cumulative Cash Collections Calculation, Purchaser
and Seller shall confer in good faith for a period of up to fifteen
(15) days following Purchaser’s receipt of Seller’s
Objection (the “ Resolution Period ”) to attempt
to reach agreement regarding such calculation. If Purchaser
and Seller are unable to reach agreement during the Resolution
Period, then Purchaser and Seller shall confer in good faith for up
to five (5) days to agree on a nationally recognized independent
accounting firm, which shall not be the regular accounting firm of
Purchaser or Seller (the “ Resolution Firm ”) to
resolve the outstanding disagreement in accordance with the
procedures set forth below; provided, however , that if the
Parties cannot agree on a Resolution Firm, then each of Seller and
Purchaser will select a nationally recognized acco
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