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Letters of Intent Relating to “Holdbacks”

Here is a FELIX question from FEI member Bill McNitt.
 
We are looking at acquiring a company that is presently not audited and will  not have audited statements available prior to closing. We plan to have an audit performed after closing. In our Letter of Intent we plan to have a holdback for “valuation variations” that come to light due to the audit. I am looking for “wording” that would incorporate the above.
 
Posted: 1/23/2013 9:29:08 AM by Tom Thompson | with 1 comments
Filed under: holdbacks, intent, letters, of, statements, valuation, valuations, audited


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Comments
Thomas
Here is a response to this question from an anonymous FEI member.

The entire purchase price for the Purchased Assets shall be paid by delivery of 1,500,000 shares of Buyer Stock (the “Purchase Price”). The Buyer Stock shall be issued to Seller on the following dates and in the following amounts: (a) at the Closing, 1,000,000 shares; (b) thirty (30) days following delivery of all of the Purchased Assets by Seller to Buyer, 425,000 shares; and (c) on the first anniversary of the Closing, 75,000 shares. Buyer may withhold any of the foregoing issuances, in whole or part, of Buyer Stock to offset any indemnification obligations of Seller under Article XI [Indemnification], which article more particularly describes such offset procedures. At such dates, Buyer shall deliver to Seller certificates evidencing the number of shares of Buyer Stock specified above, subject to any applicable withholding right Buyer may have under this Agreement.
1/24/2013 2:07:55 PM
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