FILED: NEW YORK COUNTY CLERK 03/10/ :13 PM INDEX NO /2016 NYSCEF DOC. NO. 52 RECEIVED NYSCEF: 03/10/2017

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1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK JEFFREY PAUL ARNOLD DAY, in his capacity as Sellers' Representative, - against - Plaintiff GARDAWORLD CONSULTING (UK) LIMITED, Defendant. x x Index No /2016 Honorable Charles E. Ramos Motion Seq. No. 3 DEFENDANT'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION TO DISMISS THE FIRST AMENDED COMPLAINT OR, IN THE ALTERNATIVE, TO STAY COUNT TWO SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP Seth M. Schwartz Michael P. Richter Four Times Square New York, New York T: (212) F: (212) seth. schwartz@skadden. corn michael. richter@skadden. corn Attorneys for Defendant GardaWorld Consulting (UK) Limited 1 of 18

2 TABLE OF CONTENTS INTRODUCTION 1 STATEMENT OF FACTS 2 A. The Purchase and Sale Agreement 2 B. Delivery and Review of the Earnout Statements 3 C. The Agreement's Dispute Resolution Process 4 D. "The Four Disputes" 4 E. Procedural History 6 ARGUMENT 6 I. PLAINTIFF LACKS STANDING TO SUE 6 II. COUNT TWO SHOULD BE STAYED OR DISMISSED 9 A. Count Two is Subject to Arbitration 9 B. The P SA Does Not Prohibit to Calculate Actual Gross Profit 10 III. COUNT THREE FAILS TO STATE A CAUSE OF ACTION 11 IV. COUNT FOUR FAILS TO STATE A CAUSE OF ACTION 11 V. COUNT FIVE FAILS TO STATE A CAUSE OF ACTION 12 CONCLUSION 14 2 of 18

3 TABLE OF AUTHORITIES CASES Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11 (2d Cir. 1997) 7, 8 Arbitration of Certain Controversies Between Gramercy Advisors LLC v. J.A. Green Development Corp., 134 A.D.3d 652, 653 (1st Dep't 2015) 14 Cortlandt Street Recovery Corp. v. Deutsche Bank AG, London Branch, No. 12 Civ (JPO), 2013 WL (S.D.N.Y. July 18, 2013) 8 Cortlandt Street Recovery Corp. v. Hellas Telecommunications, S.a.r.1., 790 F.3d 411 (2d Cir. 2015) 8 Cortlandt Street Recovery Corp. v. Hellas Telecommunications, S.a.r.l., 47 Misc. 3d 544 (Sup. Ct. N.Y. County 2014), aff'd as modified by 142 A.D.3d 833 (1st Dep't 2016) 6 NAMA Holdings, LLC v. Greenberg Traurig, LLP, 62 A.D.3d 578 (1st Dep't 2009) 9 Oxbow Calcining USA Inc. v. American Industrial Partners, 96 A.D.3d 646 (1st Dep't 2012) 9 Robinson v. Robinson, 303 A.D.2d 234 (1st Dep't 2003) 2 Spencer v. Standard Chemicals &Metals Corp., 237 N.Y. 479 (1924) 6 Vandegrift Forwarding Co. v. Hartford Fire Insurance Co., No. 06-CV-5440 (SLT)(JMA), 2009 WL (E.D.N.Y. Mar. 31, 2009) 7 Wageworks, Inc. v. Metropolitan Transportation Authority, 15 Misc. 3d 1119(A), 2007 N.Y. Slip Op (U) (Sup. Ct. N.Y. County 2007) 13 World Business Center, Inc. v. Euro-American Lodging Corp., 309 A.D.2d 166 (1st Dep't 2003) 9 W.R. Huff Asset Mgmt. Co., LLC v. Deloitte & Touche LLP, 549 F.3d 100 (2d Cir. 2008) 8 ii 3 of 18

4 RULES CPLR , 9 CPLR CPLR 3211(a)(3) 9 iii 4 of 18

5 Defendant GardaWorld Consulting (UK) Limited ("GardaWorld" or "Garda") respectfully submits this memorandum of law in support of its motion for an Order, pursuant to CPLR 2201 and 3211, (i) dismissing the First Amended Complaint ("FAC") in this action or, in the alternative, (ii) staying all further proceedings on Count Two of the FAC pending resolution of Counts One, Three and Four by this Court. INTRODUCTION This action arises out of Garda's acquisition of Hestia B.V. ("Hestia"), the owner of an international security and risk management business. Garda acquired Hestia by purchasing all of its outstanding shares from Hestia's shareholders (the "Sellers"). Pursuant to a Purchase and Sale Agreement dated as of July 10, 2015 (the "PSA" or "Agreement"), Garda paid the Sellers approximately $130 million for the stock at closing. The PSA provided that Sellers could receive additional consideration post-closing (i.e., an earnout) if; by Garda's calculation, the acquired business achieved certain profit hurdles specified in the Agreement. The PSA further provided that if Sellers disagreed with Garda's profit calculation and the parties could not resolve their dispute through negotiation, they were to resolve it through arbitration, except to the extent it related to the interpretation of the PSA, in which case the PSA directed the parties to submit the dispute to this Court for resolution. After closing, Garda determined that the business it acquired from Sellers and consequently paid to Sellers. In response, Sellers provided written notice that they disagreed with Garda's profit calculation, advancing a number of arbitrable and non-arbitrable claims challenging its accuracy. Following unsuccessful efforts by the parties to resolve this dispute among themselves, the Plaintiff, acting in his capacity as a representative of Sellers, commenced this action challenging certain aspects of Garda's profit calculations and seeking to recover earnout payments 5 of 18

6 After Garda filed a motion to dismiss Plaintiff's original Complaint, Plaintiff responded by filing an amended complaint, FAC, on January 17, (Dkt. No. 37). The FAC asserts five causes of action, four for declaratory judgment and one for breach of contract, the gravamen of which is that Garda's profit calculation did not comply with certain provisions of the PSA. As shown below, as a threshold matter, all of these claims in the FAC are legally defective because Plaintiff lacks standing to assert them. Moreover, even if Plaintiff could cure this fatal defect, all of his claims, other than Count One, should be dismissed or stayed in all events because they fail to state a cause of action or must be arbitrated under the PSA. Garda's motion therefore should be granted. STATEMENT OF FACTS' A. The Purchase and Sale Agreement GardaWorld acquired Hestia by purchasing all of Hestia's outstanding ordinary shares (the "Acquisition") from the Sellers pursuant to the PSA. (FAC 1). The parties to the PSA included GardaWorld, GardaWorld Security Corporation, Hestia, the Sellers (including Plaintiff in his individual capacity),2 and Plaintiff in his capacity as "Sellers' Representative." (Id. 2; PSA preamble). As Sellers' Representative, Plaintiff is authorized by the PSA "to act as a representative, for the benefit of the Sellers, as the exclusive agent and attorney-in-fact to act on behalf of the Sellers." (PSA 12.13(a)). The facts set forth herein are drawn from the First Amended Complaint and the exhibits thereto, which are attached to the accompanying Transmittal Affirmation of Michael P. Richter dated March 10, 2017 ("Richter AfE"). While the factual allegations of the FAC are assumed to be true for purposes of this motion, "the court is not required to accept factual allegations that are plainly contradicted by the documentary evidence or legal conclusions that are unsupportable based upon the undisputed facts." Robinson v. Robinson, 303 A.D.2d 234, 235 (1st Dep't 2003). The Sellers are Timothy Simon Spicer, Jeffiey Paul Arnold Day, Mark Andrew Bullough, Dominic Edward McCausland Armstrong, Lord Peter Anthony Inge, John Allan Birch, and James William Marriott Ellery. (PSA). 2 6 of 18

7 As alleged in the FAC, prior to the Acquisition, "Hestia was a private limited liability company incorporated under the laws of the Netherlands whose Company Shares were owned entirely by the Sellers." (FAC 21). Under the terms of the PSA, the Sellers transferred their "right title and interest" in their shares of Hestia to GardaWorld in exchange for the "Purchase Price." (Id. 23; PSA preamble, 1.1 and 1.2). The Purchase Price included a payment of approximately $130 million to the Sellers at closing. (FAC 4). Post-closing, the PSA also provided for one or more earnout payments to Sellers in an amount (the "Earnout Amount") based on the gross profit ("Actual Gross Profit") generated by the operating subsidiaries of Hestia (the "Operating Companies") over defined time periods (the "Earnout Periods"). (Id 114 and 5). B. Delivery and Review of the Earnout Statements The PSA provided for the delivery of "Earnout Statements" by GardaWorld to the Sellers' Representative on certain specified dates. (PSA 1.5). Under the PSA, an Earnout Statement is an income statement showing Garda's calculation of the Actual Gross Profit earned by the Operating Companies in each of two Earnout Periods. (Id 1.5(a)). The amount of Actual Gross Profit reflected on the Earnout Statements determines whether and to what extent the Sellers are entitled to the payment of any Earnout Amount under the PSA. (Id. 1.5; FAC 5). The PSA also provided Sellers with an opportunity to review and raise objections to the Earnout Statements following their delivery by Garda to Sellers' Representative. (PSA 1.5(d)). After GardaWorld delivered each Statement, Sellers' Representative had sixty days to review the Statement and obtain information from GardaWorld to determine whether to object to GardaWorld's calculation of Actual Gross Profit and the Earnout Amount. (Id). If the Sellers' Representative disagreed with that calculation, the PSA authorized him to deliver a dispute 3 7 of 18

8 notice noting his disagreement and the bases for his objections ("Dispute Notice"). (FAC 32; PSA 1. 5 (d)(ii)). Sellers' Representative delivered a Dispute Notice to Garda on August 31, (FAC 39). Twenty-three days later, on September 23, 2016, Sellers' Representative delivered to Garda a purported "Amended Dispute Notice" supplementing his objections to the Earnout Statement. (Id 40). C. The Agreement's Dispute Resolution Process Sections 1.4(c)(ii) and 1.5(d)(iv) of the PSA specify the process for resolving any dispute between the parties regarding the Earnout Amount. (PSA 1.4(c)(ii) and 1.5(d)(iv)). Section 1.5(d)(iv) provides that after a Dispute Notice has been delivered, any dispute that cannot be resolved by the parties through negotiation must be arbitrated, except that disputes ("Contract Disputes") relating to "the validity, interpretation or breach of the [earnout] provisions of... Section [or] the relevant definitions" in the PSA must be submitted to this Court for resolution. (Id 1.5(d)(iv)). D. "The Four Disputes" The FAC addresses four of the disputes raised by Sellers' Representative in the Dispute Notice (the "Four Disputes") and labels them as follows: (1) The Calculation Time Period Dispute, (2) The Afghanistan Withholding Tax Dispute, (3) The Basra Accounts Receivable Dispute, and (4) The Unbilled Accounts Receivable Dispute. (FAC 11; Richter Aff. Ex. 4). The Calculation Time Period Dispute is a Contract Dispute regarding one aspect of Garda's calculation of the Earnout Amount. As noted above, under the Agreement, the Earnout Amount is based on the Actual Gross Profit earned by the Operating Companies during the First Earnout Period and the Second Earnout Period. (FAC IN 42-46). The question raised 4 8 of 18

9 by the Calculation Time Period Dispute is whether the Earnout Period under the PSA is twelve or sixteen months in length. (Id). Resolution of the issue turns on the proper construction of Section 1.5 of the PSA and various defined terms set forth in the Agreement. (Id.; PSA 1.5). The Afghanistan Withholding Tax Dispute is based on a claim by Plaintiff that GardaWorld understated Actual Gross Profit by According to Plaintiff, Garda's (FAC rif 47-56). constituted an erroneous interpretation of the PSA. (Id and 82). In the alternative, Plaintiff alleges that breached express provisions of the PSA (Id. TT 55 and 82). The Basra Accounts Receivable Dispute is based on the allegation that in preparing the Earnout Statements, GardaWorld in breach of the PSA despite Garda's determination that (Id 58). According to Plaintiff, GardaWorld' s exclusive remedy under the PSA for uncollectible amounts in respect of the Basra Accounts Receivable is an indemnification claim against the Basra Aged Receivables Escrow Fund established under the Agreement. (Id. 60). The Unbilled Accounts Receivable Dispute arises out of accounts receivable recorded by GardaWorld based on unbilled revenue earned on certain work performed on the project known as the Swordfish Engagement. (Id 64). According to Plaintiff, GardaWorld (Id. TT 65-71). Plaintiff claims that Garda's sole remedy with respect to 5 9 of 18

10 uncollectible amounts of the Unbilled Accounts Receivable is (a) a claim for indemnification recoverable solely from an Unbilled Aged Receivables Escrow Fund established under the PSA or, alternatively, (b) a claim under indemnification provisions of the PSA applicable to alleged breaches of the contractual representations and warranties made by Hestia to GardaWorld. (Id. II 70-71). E. Procedural History Plaintiff commenced this case by filing a summons with notice on October 28, After Garda filed a motion to dismiss Plaintiff's Original Complaint (See Mot. Seq. No. 2), Plaintiff responded by filing his amended complaint.3 (Dkt. No. 37). The FAC sets forth the same "Four Disputes" and five causes of action as the Original Complaint and has slightly altered the name of the Plaintiff from "Jeffrey Paul Arnold Day, as Sellers' Representative" to "Jeffrey Paul Arnold Day, in his capacity as Sellers' Representative." (Compare Original Complaint to FAC) (emphasis added). ARGUMENT I. PLAINTIFF LACKS STANDING TO SUE Under New York law, only a real party in interest has standing to sue. Spencer v. Standard Chems. & Metals Corp., 237 N.Y. 479, 480 (1924); Cortlandt St. Recovery Corp. v. Hellas Telecomms., Safi., 47 Misc. 3d 544, (Sup. Ct. N.Y. Cty. 2014), aff'd as modified by 142 A.D.3d 833 (1st Dep't 2016). While a proper party may assign his claims, the assignee will be deemed a real party in interest with standing to sue on the assigned claim only if "'title to the specific claim' is passed to the assignee." Cortlandt, 47 Misc. 3d at 554 (citation omitted). 3 In light of Plaintiff's amended pleading, Garda withdrew its motion to dismiss Plaintiff's Original Complaint pursuant to a stipulation and order entered by this Court on January 27, (Dkt. No. 50) of 18

11 As shown below, Plaintiff is neither a real party in interest nor an assignee with title to a real party's claim. Here, Plaintiff is attempting to establish that the Sellers are entitled to an Earnout Amount under the PSA. To that end, the FAC asserts claims for that relief as to which the Sellers are the real parties in interest. See Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 20 (2d Cir. 1997) (finding that selling shareholders were real parties in interest on claims brought to recoup losses incurred on the sale of their stock). Plaintiff nowhere alleges, however, that the Sellers assigned title to any of those claims to him as Sellers' Representative or in any other capacity. Moreover, the PSA contains no such assignment of the Sellers' claims. While the PSA appoints Sellers' Representative as the Sellers' "exclusive agent and attorney-infact" (PSA 12.13(a)), "New York law is clear that a power of attorney, without an assignment, does not authorize the attorney in fact to bring an action in his own name." Vandegrift Forwarding Co. v. Hartford Fire Ins. Co., No. 06-CV-5440 (SLT)(JMA), 2009 WL , at *5 (E.D.N.Y. Mar. 31, 2009); accord Advanced Magnetics, 106 F.3d at (affirming ruling that a plaintiff with a power of attorney lacked standing to sue because "[t]he grant of a power of attorney.. is not the equivalent of an assignment of ownership; and, standing alone, a power of attorney does not enable the grantee to bring suit in his own name"). Garda identified this fatal defect in its Motion to Dismiss Plaintiff's Original Complaint. In response, Plaintiff has attempted to cure it by alleging for the first time in the FAC that he may pursue this action "on behalf of the Sellers," he is the Sellers' "agent and attorney-in-fact," and the PSA authorizes him to "prosecute an action against GardaWorld." (See, e.g., FAC 1, 3, 5, 8, 12, 18-20, 24, 25, 40, 46, 56, 63, 72, 76, 81, 86 and 91). These newly added allegations, however, remain insufficient to confer standing because it remains 7 11 of 18

12 undisputed that Plaintiff does not hold title to the Sellers' claims. As a matter of law, "a purported assignee of a claim must plead a proprietary interest in that claim, and not simply the ability to pursue the claim on behalf of another." Cortlandt St. Recovery Corp. v. Hellas Telecomms., 790 F.3d 411, 420 (2d Cir. 2015) (affirming dismissal for lack of standing where plaintiff allegedly obtained by contract "full rights to collect amounts... and to pursue all remedies," but failed to allege title or ownership of claims at issue) (emphasis added). Also unavailing is Plaintiff's allegation in the FAC that he is "expressly authorized to prosecute an action against GardaWorld to enforce and protect the rights and interests of the Sellers arising under the PSA, as set forth in 12.13(a)(iv) of the PSA." (FAC 3; see also FAC 19). As explained by the Second Circuit Court of Appeals in rejecting a virtually identical claim: [a] provision by which one person grants another the power to sue on and collect on a claim confers on the grantee a power of attorney with respect to that claim. The grant of a power of attorney, however, is not the equivalent of an assignment of ownership; and, standing alone, a power of attorney does not enable the grantee to bring suit in his own name. (Cortlandt at 418 (quoting Advanced Magnetics)). See also W.R. Huff Asset Mgmt. Co., r,r,c v. Deloitte & Touche LLP, 549 F.3d 100, 109 (2d Cir. 2008) (reversing district court order denying motion to dismiss for lack of standing and ruling that plaintiff, with power of attorney, "enjoy[ed] the authority to make some decisions concerning litigation, [but did] not have an ownership stake in any of the claims"). In the same vein, a contractual right of collection is "plainly insufficient to demonstrate standing." Cortlandt St. Recovery Corp. v. Deutsche Bank AG, London Branch, No. 12 CIV JPO, 2013 WL , at *2 (S.D.N.Y. July 18, 2013) (finding the right to collect on claims inadequate to demonstrate standing pursuant to a contract providing plaintiff with "full power of substitution, to pursue collection and all remedies" with respect to the claims at issue) of 18

13 As the foregoing establishes, the Plaintiff, as "Sellers' Representative," or as the FAC states, "in his capacity as Sellers' Representative," lacks legal capacity to sue Garda. For this reason alone, the FAC should be dismissed pursuant to CPLR 3211(a)(3). H. COUNT TWO SHOULD BE STAYED OR DISMISSED Count Two of the FAC is based on the Afghan Withholding Tax Dispute. (See FAC 78-82). It seeks a declaratory judgment that Garda's breached express provisions of the PSA. (Id.). As shown below, even if Plaintiff had standing to sue, Count Two still should be dismissed for failure to state a cause of action, or at least stayed to the extent it raises issues subject to mandatory arbitration.4 A. Count Two is Subject to Arbitration According to Plaintiff, Garda acted in breach of the PSA by (FAC 49-53). As a threshold matter, in making this allegation, Plaintiff does not contend that Garda had no right under the PSA In any event, even if this claim had any merit, which it does not, the claim is arbitrable under the PSA and therefore should be stayed pending this Court's resolution of the other Counts of the FAC. (See PSA 1.4(c)(ii)). The PSA obligates the parties to arbitrate disputes relating to the Earnout 4 CPLR 2201 provides that "[e]xcept where otherwise prescribed by law, the court in which an action is pending may grant a stay of proceedings in a proper case, upon such terms as may be just." CPLR As courts repeatedly have recognized, under CPLR 2201, actions may be properly stayed in whole or part pending arbitration of arbitrable issues raised in a complaint. See Oxbow Calcining USA Inc. v. Am. Indus. Partners, 96 A.D.3d 646, 652 (1st Dep't 2012) ("Defendants' motion to stay this action pending the outcome of the arbitration should be granted."); NAMA Holdings, LLC v. Greenberg Traurig, LLP, 62 A.D.3d 578, 579 (1st Dep't 2009) (finding that "the court should have granted a stay pursuant to CPLR 2201 in the interest of judicial economy" where "Where are overlapping issues and common questions of fact" in the arbitration); World Bus. Ctr., Inc. v. Euro- American Lodging Corp., 309 A.D.2d 166, 172 (1st Dep't 2003) (granting stay "pursuant to CPLR 2201 pending the outcome pf the arbitration") of 18

14 Statement (the "Arbitrable Disputes"), although it specifically carves out Contract Disputes for resolution by this Court. (Id. 1.4(c)(ii) and 1.5(d)(iv)). As for Arbitrable Disputes, the PSA provides that they must "be submitted to... KPMG LLP (the "Accounting Referee") for a determination resolving [the disputes] (it being agreed and understood that the Accounting Referee shall act as an arbitrator)." (Id 1.4(c)(ii)). The PSA also circumscribes the authority of Accounting Referee as follows: The scope of the disputes, if any, to be resolved by the Accounting Referee shall be limited to fixing mathematical errors and determining whether the items in dispute were determined in accordance with this Agreement and the Accounting Referee is not to make any other determination.... The dispute resolution mechanism contained in this Section 1.4(c) shall be the exclusive mechanism for resolving disputes regarding the [Earnout Statement]. (Id. (emphasis added)). This claim raises the question of whether "in accordance with" the PSA. (See PSA 1.4(c)(ii)). This issue is, by definition, one that Section 1.4(c)(ii) of the PSA reserves for resolution by the Accounting Referee. (Compare PSA 1.4(c)(ii), with PSA 1.5(d)(iv)). Alternatively, to the extent this claim raises a contract dispute for resolution by this Court, as shown below, it fails to state a cause of action. B. The PSA Does Not Prohibit to Calculate Actual Gross Profit The PSA's definition of "Gross Profit" "`exclude[s] any and all corporate or entity level Taxes.' (PSA 13.1(a)). Rather, as Plaintiff concedes, it is a (FAC 49). In short, the Afghanistan Withholding Tax is a of 18

15 Consequently, as a matter of law, the PSA did not require Garda M. COUNT THREE FAILS TO STATE A CAUSE OF ACTION Count Three challenges Garda's determination to treat the Basra Accounts Receivable as (Id , 87). According to Plaintiff, under the PSA, Garda's only avenue for recovering uncollectible amounts of the receivable is a claim for indemnification against the Basra Aged Receivables Escrow Fund. (Id. 60). Plaintiff is wrong as a matter of law. While the PSA authorizes Garda to seek indemnification from the Basra Aged Receivables Escrow Fund to recoup uncollectible amounts of the receivable (see PSA 1.9(c), 9.2(a)(vii)), nothing in the PSA requires Garda to do so. Moreover, the PSA expressly authorized Garda to calculate Actual Gross Profit "in accordance with applicable accounting requirements and consistent with past practice of [Hestia] and its Subsidiaries." (Id 1.5(a)). Because the Amended Complaint nowhere alleges that Garda's treatment of the Basra Accounts Receivable failed to comport with applicable accounting requirements or was inconsistent with Hestia's past practice, the claim of breach in Count Three based on that accounting treatment fails to state a cause of action. IV. COUNT FOUR FAILS TO STATE A CAUSE OF ACTION The gravamen of Count Four of the FAC is substantially identical to the gravamen of Count Three, except that the former focuses on the Unbilled Accounts Receivable, while the latter challenges the treatment of the Basra Accounts Receivable, (FAC rll 64-72). In Count Four, according to Plaintiff; Garda's sole remedy under the PSA with respect to uncollected amounts of the Unbilled Accounts Receivable is a claim of indemnification against of 18

16 the Unbilled Aged Receivables Escrow Fund or a claim of indemnification for breach of Hestia' s contractual representations and warranties. (Id. 67 and 70). As with the Basra Accounts Receivable, Garda has not made and is not required to make a claim of indemnification in respect of uncollectible amounts of the Unbilled Accounts Receivable. Accordingly, nothing in the PSA prohibited Because the FAC nowhere alleges that Garda's accounting treatment of that receivable failed to comport with applicable accounting requirements or was inconsistent with Hestia's past practice, Count Four fails to state a cause of action. V. COUNT FIVE FAILS TO STATE A CAUSE OF ACTION Count Five of the FAC for breach of contract is in essence a rehash of Counts Two, Three and Four. (Id im 93-99). The latter Counts seek declaratory judgments that Garda's accounting treatment of the Tax, the Basra Accounts Receivable and the Unbilled Accounts Receivable violated the PSA. (Id. IN 78-92). As for Count Five, it redundantly alleges that the accounting treatment challenged in Counts Two, Three and Four constituted a breach of the PSA. (Id 97). But as shown above in Points II, III and IV, the accounting treatment was not prohibited by the PSA and Plaintiffs claims of breach no matter how often they are repeated in the FAC all fail as a matter of law. As for the claim of breach in Count Five based on the Calculation Time Period Dispute described in Count One, the analysis is different, but the conclusion is the same. Count One seeks a declaratory judgment that the Earnout Period is sixteen months in length, a finding that would be contrary to Garda's interpretation of the PSA, which is that the Earnout Period is twelve months long. (Id. IN 73-77). But even if Plaintiff's interpretation were correct, it does of 18

17 not follow, as Plaintiff has alleged, that Garda's use of a twelve-month Earnout Period to calculate Actual Gross Profit, by itself, would constitute a breach of the PSA. Under the earnout provisions of the PSA, Garda had a contractual obligation to deliver to Sellers' Representative Earnout Statements detailing Garda's calculation of Actual Gross Profit for the applicable Earnout Period. (PSA 1.5). The PSA further provided that in the event Sellers disagreed with Garda's calculation, the disagreement would be resolved in accordance with the dispute resolution procedures specified in the Agreement. (Id 1.5(d)(iv)). Pursuant to those procedures, Sellers' Representative has challenged Garda's use of a twelvemonth period to calculate Actual Gross Profit. (FAC 42-46, 73-77). But even if the Court rules in favor of Plaintiff on this issue, that determination would not be dispositive of the ultimate question raised by Plaintiff's Dispute Notice the Earnout Amount, if any, Sellers are entitled to receive under the P SA. Once the dispute concerning the length of the Earnout Period has been resolved, if there remains any dispute concerning the proper calculation of the Earnout Amount due and owing to Sellers, under the PSA that dispute must be tendered to the Accounting Referee for resolution in binding arbitration. (PSA 1.4(c)(ii)). Only after the Accounting Referee completes that calculation can it be determined whether and to what extent any Earnout Amount is due to Plaintiff under the PSA. (Id. 1.4(c)(ii) and 1.4(d)(ii)). Thus, Plaintiff's pending breach of contract claim is premature given that it has been asserted before the Accounting Referee has calculated the Earnout Amount based on this Court's construction of the earnout provisions of the PSA. Count Five therefore should be dismissed. See Wageworks, Inc. v. Metropolitan Transp. Auth., 15 Misc. 3d 1119(A), 2007 N.Y. Slip Op (U), at *3 (Sup. Ct. N.Y. Cty. 2007) (Ramos, J.) (granting motion to dismiss breach of contract claim as premature of 18

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