Earn-Out Payments. Upon the terms and subject to the conditions of this Agreement, as additional consideration for the transfer of the Purchased Assets to Buyer pursuant to Section 2.1, Buyer shall pay to Seller an amount in cash calculated with respect to each Earn-Out Period as follows: 3.6.1 For each Earn-Out Period, Buyer shall make the payments described in this Section 3.6.1 (each such annual amount, an “Earn-Out Payment”) in the manner set forth in Section 3.6.4. (a) The Earn-Out Payment for the First Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Target and (ii) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Target. In such event, the Earn-Out Payment for the First Earnout Period (the “First Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the First Earnout Target. (b) The Earn-Out Payment for the Second Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Target and (ii) the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such event, the Earn-Out Payment for the Second Earnout Period (the “Second Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Second Earnout Target. (c) The Earn-Out Payment for the Third Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Target and (ii) the Sales Volume for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Volume Target. In such event, the Earn-Out Payment for the Third Earnout Period shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout Target. 3.6.2 Within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the end of each Earnout Period, Buyer will prepare and deliver to Seller a written schedule (the “Earn-Out Schedule”) setting forth its calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such applicable Earnout Period, including the basis for such calculations set forth in reasonable detail. Upon receipt of the Earn-Out Schedule, Seller shall have twenty five (25) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) (the “Review Period”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment. In connection with such review of the Earn-Out Schedule, Buyer shall, and shall cause the Aprinnova Business to, make available during normal business hours (subject to execution of customary confidential agreements) to Seller and its Representatives such documents, books, records, work papers, facilities, personnel and other information of Buyer with respect to the Aprinnova Business to the extent relating to the calculation of the Annual Aprinnova Actual Sales Value or the Sales Volume, in each case as Seller may reasonably request in order to permit the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; provided, that Buyer and the Aprinnova Business shall not be required to provide any such information or access if it would (i) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure of such information to the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of Objections”) to Buyer setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule shall be final and binding upon the Parties, and the Earn-Out Payment set forth on such Earn-Out Schedule shall be deemed to be the final Earn-Out Payment for such Earn-Out Period. Any items in the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such Earn-Out Period within fifteen (15) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolution, and such determination shall be final and binding upon Buyer and Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested in the Earn-Out Statement of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expert, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, will be final and binding upon the Parties, and judgment may be entered on the award. Buyer and Seller shall share the fees and expenses of the Arbitrating Accountant in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of such Party, in accordance with the following formulas: (i) Seller shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections and (ii) Buyer shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections.
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Earn-Out Payments. Upon the terms and subject (a) In addition to the conditions of this AgreementClosing Purchase Price Distribution, as additional consideration for the transfer of the Purchased Assets Sellers shall be eligible to Buyer pursuant to Section 2.1, Buyer shall pay to Seller an amount in cash calculated with respect to each Earnreceive earn-Out Period as follows:
3.6.1 For each Earn-Out Period, Buyer shall make the out payments described in this Section 3.6.1 (each such annual amount, an “Earn-Out PaymentPayments”) in ), upon achievement of Adjusted EBITDA as follows (it being understood that the manner set forth in Section 3.6.4.
(a) The aggregate Earn-Out Payment for paid to Sellers pursuant to this Agreement shall not exceed $1,400,000 (the First Earnout Period shall be paid only if “Maximum Amount”) under any circumstances):
(i) Annual Aprinnova Actual Sales Value for If Adjusted EBITDA of the First Earnout Period Business equals or exceeds $2,000,000 (as finally determined pursuant to Section 3.6.2the “Year 1 Adjusted EBITDA Target”) exceeds during the First Earnout Target period beginning on Buyer’s 2015 fiscal year (approximately January 1, 2015) and ending on the last day of Buyer’s 2015 fiscal year (iiapproximately December 31, 2015) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Target. In such eventperiod, “Year 1”), the Earn-Out Payment for Year 1 will be $560,000.
(ii) If Adjusted EBITDA of the First Earnout Period Business equals or exceeds $3,000,000 (the “First Earnout PaymentYear 2 Adjusted EBITDA Target”) shall be equal to during the lesser period beginning on the first day of Buyer’s 2016 fiscal year and ending on last day of Buyer’s 2016 fiscal year (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the First Earnout Target.
(b) The Earn-Out Payment for the Second Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Target and (ii) the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such eventperiod, “Year 2”), the Earn-Out Payment for Year 2 will $840,000. In the Second Earnout Period event that (y) the “Second Earnout Payment”Business does not achieve the Year 1 Adjusted EBITDA Target, and/or the Year 2 Adjusted EBITDA Target, and (z) less than the Maximum Amount has been paid pursuant to Sections 1.1(a)(i), and (ii), if the cumulative Adjusted EBITDA for Year 1 and Year 2 equals or exceeds $5,000,000, an Earn-Out Payment shall be made after Year 2 equal to the lesser of (x1) [***] and (y) fifty twenty-eight percent (5028%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value actual cumulative Adjusted EBITDA for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Second Earnout Target.
(c) The Year 1 and Year 2 minus any Earn-Out Payment for the Third Earnout Period shall be paid only if (iPayment(s) Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined previously received pursuant to Section 3.6.2Sections 1.1(a)(i) exceeds the Third Earnout Target and 1.1(a)(ii), and (ii2) the Sales Volume for the Third Earnout Period (as finally determined Maximum Amount minus any Earn-Out Payment(s) previously received pursuant to Section 3.6.2Sections 1.1(a)(i) exceeds the Third Earnout Volume Target. In such eventand 1.1(a)(ii), in all cases subject to the Earn-Out Payment Claw Back. For avoidance of doubt, the actual Adjusted EBITDA for the Third Earnout Period each of Year 1 and Year 2, including any negative amounts, shall be equal to used in calculating the lesser of (x) [***] cumulative Adjusted EBITDA for Year 1 and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout TargetYear 2.
3.6.2 Within thirty (30iii) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the end of each Earnout Period, Buyer will prepare and deliver to Seller a written schedule (the “If any Earn-Out Schedule”) setting forth its calculations of Annual Aprinnova Actual Sales Value, the Sales Volume Payments are made by Buyer to Sellers and it is subsequently determined that the Earn-Out Payment Payments exceeded 28% of the total of the Year 1 Adjusted EBITDA Target and Year 2 Adjusted EBITDA Target, Buyer shall be entitled to reimbursement of the excess payments (the “Earnout Claw Back”), as follows. If the cumulative Adjusted EBITDA for such applicable Earnout PeriodYear 1 and Year 2 is less than $2,500,000, including then Sellers shall reimburse Buyer the basis entire amount of all previous Earn-Out Payments. If the cumulative Adjusted EBITDA for such calculations set forth in reasonable detail. Upon receipt Year 1 and Year 2 is more than $2,500,000, but less than $5,000,000, then Buyer shall pay Sellers the difference between the amount of the Earn-Out SchedulePayments previously paid to Buyer and 28% of the total of the Year 1 Adjusted EBITDA Target and Year 2 Adjusted EBITDA Target. No other claw back of any Earn-Out Payments will be made by Seller, Seller except pursuant to this Section 1.1(a)(iii).
(iv) The Business shall have twenty utilize WGI’s corporate services with such corporate overhead expenses included in the calculation of Adjusted EBITDA. The Business shall be charged three percent (3%) of the gross revenue generated by the Business, which will be deducted prior to calculating the Adjusted EBITDA.
(b) As promptly as practicable after the end of each of Year 1 and Year 2 (but no later than one hundred and five (25105) days (or if after the last day of each fiscal year), Buyer shall deliver to Sellers a statement setting forth Buyer’s good faith calculation of the Adjusted EBITDA for such period is not a Business Dayyear and the cumulative Adjusted EBITDA for all prior years collectively (in each case, then on the first Business Day following the last day of such period) (the “Review PeriodAdjusted EBITDA Statement”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment). In connection with such review of the Earn-Out Schedule, Buyer shall, and shall cause the Aprinnova Business its representatives (including outside auditors) to, make available to Seller, at Seller’s expense (without charge for Buyer’s or WGI’s costs) during normal business hours (subject to execution of customary confidential agreements) to Seller and its Representatives such documentsfollowing reasonable advance notice, the books, records, work papers, facilitiesand personnel used or involved in the preparation of each Adjusted EBITDA Statement. If Sellers disagree with Buyer’s calculation any Adjusted EBITDA Statement delivered pursuant to this Section 1.1(a), personnel Sellers may, within thirty (30) days after receipt of the Adjusted EBITDA Statement, deliver a notice to Buyer disagreeing with such calculation and other information of Buyer with respect to setting forth the Aprinnova Business to the extent relating to the Seller’s calculation of such amount. Any such notice of disagreement shall specify in reasonable detail those items or amounts as to which Sellers disagree. If a notice of disagreement shall be duly delivered pursuant to Section 1.1(a), Sellers and Buyer shall, during the Annual Aprinnova Actual Sales Value ten (10) days after such delivery, use their commercially reasonable efforts to reach agreement on the disputed items or the Sales Volume, in each case as Seller may reasonably request amounts in order to permit determine, as may be required, the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; providedAdjusted EBITDA or cumulative Adjusted EBITDA, that Buyer and the Aprinnova Business whichever is applicable, which amount shall not be required more than the amount thereof shown in Seller’s calculation delivered pursuant to provide this Section 1.1(a). If following such 10-day period, Sellers and Buyer are unable to reach such agreement, they shall promptly thereafter (and in any such information or access if it would event within twenty (i20) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail days of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure end of such information 10-day period) cause a nationally recognized independent accounting firm mutually acceptable to them (the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of ObjectionsAccounting Referee”) to review this Agreement and the disputed items or amounts for the purpose of calculating the Adjusted EBITDA (it being understood that in making such calculation, the Accounting Referee shall be functioning as an expert and not as an arbitrator). The Accounting Referee shall deliver to Sellers and Buyer as promptly as practicable (but in any case no later than thirty (30) days from the date of engagement of the Accounting Referee), a report setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule calculation. Such report shall be final and binding upon the PartiesSellers and Buyer. The cost of such review shall be borne equally by Sellers and Buyer. Buyer and Sellers shall, and shall cause their respective representatives to, and Buyer shall cause the Business and its respective representatives (including outside auditors) to, cooperate and assist in the determination of the Adjusted EBITDA and in the conduct of the review set forth in this Section 1.1(a), including making available, to the extent necessary, books, records, work papers and personnel during normal business hours and following reasonable advance notice.
(c) Each Earn-Out Payment set forth on such Earn-Out Schedule that is earned by Sellers in accordance with this Section 2.3 shall be deemed paid by Buyer to be Sellers within the final later of: (i) one hundred twenty (120) days following the end of the applicable Year 1 or Year 2, and (ii) five (5) Business Days after the Adjusted EBITDA for the applicable Year 1 or Year 2 has been conclusively determined in accordance with Section 1.1(a) above. The remaining Earn-Out Payment for such Earn-Out Period. Any items in the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on paid in cash by wire transfer of immediately available funds to the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, accounts Sellers have designated in writing to Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such Earn-Out Period within fifteen at least two (152) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as Days prior to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolution, and such determination shall be final and binding upon Buyer and Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested in the Earn-Out Statement of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expert, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, will be final and binding upon the Parties, and judgment may be entered on the award. Buyer and Seller shall share the fees and expenses of the Arbitrating Accountant in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of such Party, in accordance with the following formulas: (i) Seller shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections and (ii) Buyer shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objectionspayment date.
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Earn-Out Payments. Upon (a) If the terms Company and subject to the conditions Buyer achieve Earnings before interest expense, Taxes, depreciation and amortization, each item determined in accordance with GAAP consistently applied ("EBITDA"), in excess of this Agreement$1,500,000, as additional consideration for the transfer period beginning as of the Purchased Assets to first day January 2001 and continuing for 12 full months thereafter (the "First Payment Period") (that is, the aggregate of (i) EBITDA for the Company from January 1, 2001 until the Effective Time and (ii) EBITDA for Buyer pursuant to Section 2.1from the Effective Time until December 31, 2001), Buyer shall will pay to Seller an amount in cash calculated with respect to each Earn-Out the amount set forth opposite the EBITDA obtained by Company and Buyer for the First Payment Period as follows:
3.6.1 For each Earn-Out Period, Buyer shall make in the payments described in this Section 3.6.1 following table (each such annual amount, an “the "First Earn-Out Payment”"): Category EBITDA for the First Payment Period First Earn-Out Payment -------- ----------------------------------- ---------------------- I $1,500,001 - $2,500,000 Two (2) times the amount by which the EBITDA exceeds $1,500,000 (for amounts up to $2,500,000 of EBITDA) II Equals or exceeds $2,500,001 One (1) times the amount by which the EBITDA exceeds $2,500,000, plus the amount determined for Category I
(b) If Buyer achieves EBITDA in excess of $1,000,000, for the period beginning as of the first day January 2002 and continuing for 6 full months thereafter (the "Second Payment Period"), Buyer will pay Seller in cash the amount set forth opposite the EBITDA obtained by Buyer for the Second Payment Period in the manner following table (the "Second Earn-Out Payment"): Category EBITDA for the Second Payment Period Second Earn-Out Payment -------- ------------------------------------ ----------------------- I $1,000,001 - $2,000,000 Two and one half (2.5) times the amount by which the EBITDA exceeds $1,000,000 (for amounts up to $2,000,000 of EBITDA) II Equals or exceeds $2,000,001 One (1) times the amount by which the EBITDA exceeds $2,000,000, plus the amount determined for Category I
(c) Earnings shall be determined for purposes of this Agreement with the earn-out principles and procedures set forth in Section 3.6.4on Schedule 2.8.
(ad) The To the extent OSI determines an First or Second Earn-Out Payment (collectively, the First Earn-Out Payment and the Second Earn-Out Payment are the "Earn-Out Payments" and individually, an "Earn-Out Payment") is due to Seller, Buyer will pay (and OSI will cause Buyer to pay) to Seller a preliminary payment of such Earn-Out Payment due pursuant to Section 2.8(a) or 2.8(b) on the date Buyer submits its preliminary determination to Seller pursuant to Section 2.8(e). Buyer shall pay any additional payments required pursuant to Section 2.8(a) or 2.8(b) promptly following the final and binding determination, pursuant to this Agreement, of the applicable Earn-Out Payment for the First Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for applicable Payment Period. To the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds extent the First Earnout Target and (ii) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Target. In such event, the amount of any Earn-Out Payment is less than the preliminary payment previously paid for the First Earnout Period (the “First Earnout Payment”) applicable Payment Period, Seller shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) refund the amount by which Annual Aprinnova Actual Sales Value for in excess to Buyer promptly following the First Earnout Period (as finally determined final and binding determination, pursuant to Section 3.6.2) is greater than this Agreement, of the First Earnout Targetapplicable Earn-Out Payment.
(be) The determination of the amount of the applicable Earn-Out Payment shall be determined by OSI promptly after the completion of the applicable Payment Period based on the financial statements of Buyer for the Second Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Second Earnout applicable Payment Period (as finally determined pursuant to Section 3.6.2) exceeds and, in the Second Earnout Target and (ii) case of the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such eventFirst Payment Period, the financial statements of the Company from January 1, 2001 through the Effective Time). The determination of the amount of any Earn-Out Payment for the Second Earnout Period (the “Second Earnout Payment”) shall be equal submitted to Seller within 60 calendar days after end of the applicable Payment Period. After such submission and upon request of Seller, OSI will provide Seller with reasonable access to its records relating to the lesser determination of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Second Earnout Target.
(c) The Earn-Out Payment for the Third Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Target and (ii) the Sales Volume for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Volume Target. In such event, the Earn-Out Payment for the Third Earnout Period shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout Target.
3.6.2 Within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the end of each Earnout Period, Buyer will prepare and deliver to Seller a written schedule (the “Earn-Out Schedule”) setting forth its calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such applicable Earnout Period, including the basis for such calculations set forth in reasonable detail. Upon receipt of the Earn-Out Schedule, Seller shall have twenty five (25) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) (the “Review Period”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the applicable Earn-Out Payment. In connection with such review If Seller does not object to the determination by OSI of the applicable Earn-Out SchedulePayment by written notice of objection (the "Notice of Objection") delivered to OSI within 20 calendar days after receipt by Seller of such determination, Buyer shallthe proposed Earn-Out Payment shall be deemed final and binding. If Seller delivers a Notice of Objection to the determination of an Earn-Out Payment within the appropriate time period, such Notice of Objection to describe in reasonable detail Seller's proposed adjustments to the proposed determination of the applicable Earn-Out Payment, Seller and OSI shall negotiate in good faith to resolve any differences. During such negotiation, Seller shall have the right to demand an audit and examination of the applicable financial statements of Buyer, which shall be conducted at OSI's sole cost and expense. Such audit shall be conducted as soon as practicable after written demand by Seller and, upon completion, delivered to Seller ("Audit Delivery Date"). If after 15 calendar days following such notice any of the Audit Delivery Date (or, if Seller waives or fails to exercise the right to cause an audit to be conducted, 30 calendar days after delivery of the Notice of Objection) have not been resolved (the "Disputed Matters"), then such Disputed Matters shall be submitted to arbitration in Chicago, Illinois. A partner in Ernst & Young LLP, certified public accountants (the "Arbiter") shall consider only the Disputed Matters, and the arbitration shall cause be conducted in accordance with the Aprinnova Business to, make available during normal business hours (subject to execution Commercial Rules of customary confidential agreements) to Seller the American Arbitration Association then in effect. If Ernst & Young LLP is the auditor for OSI and its Representatives such documentssubsidiaries (or is providing a material amount of consulting services to OSI and its subsidiaries) at the time of the dispute, books, records, work papers, facilities, personnel the Parties will mutually agree upon another nationally recognized accounting firm to serve as Arbiter. The Arbiter shall act promptly to resolve all Disputed Matters and other information of Buyer its decision with respect to the Aprinnova Business to the extent relating to the calculation of the Annual Aprinnova Actual Sales Value or the Sales Volume, in each case as Seller may reasonably request in order to permit the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; provided, that Buyer and the Aprinnova Business shall not be required to provide any such information or access if it would (i) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure of such information to the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of Objections”) to Buyer setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule all Disputed Matters shall be final and binding upon the PartiesParties hereto and shall not be appealable to any court. The Arbiter shall render an opinion in writing setting forth the basis of its decision on the Disputed Matters. Each Party shall pay all costs and expenses incurred by such Party incident to the arbitration, provided the costs and expenses of the Arbiter shall be shared equally by Seller and OSI. Any portion of an Earn-Out Payment set forth on that is affected by the Disputed Matter shall not be distributed until the resolution of the Disputed Matter, and upon such Earn-Out Schedule shall be deemed to be resolution any increase in the final applicable Earn-Out Payment for such Earn-Out Period. Any items shall be distributed to Seller, or any decrease in the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Sales Volume and the applicable Earn-Out Payment for such Earn-Out Period within fifteen (15) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolution, and such determination shall be final and binding upon Buyer and repaid to OSI by Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested in the Earn-Out Statement of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expert, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, will be final and binding upon the Parties, and judgment may be entered on the award. Buyer and Seller shall share the fees and expenses of the Arbitrating Accountant in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of such Party, in accordance with the following formulas: (i) Seller shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections and (ii) Buyer shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections.
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Earn-Out Payments. Upon the terms and subject Subject to the conditions of this Agreement, as additional consideration for the transfer of the Purchased Assets Purchaser’s right to Buyer offset amounts pursuant to Section 2.15.3(g), Buyer shall the Purchaser will pay to the Seller an amount in cash calculated with respect to each Earn-Out Period the additional payments as follows:
3.6.1 For each Earn-Out Period, Buyer shall make the payments described in this Section 3.6.1 follows (each such annual amountpayment, an “Earn-Out Earnout Payment,” and collectively, the “Earnout Payments”) in the manner set forth in Section 3.6.4.):
(a) The EarnA one-Out Payment for time cash payment in the First Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Target and (ii) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Target. In such event, the Earn-Out Payment for the First Earnout Period amount of $20,000,000 (the “First Earnout PaymentOEM Earnout”) payable upon completion, to the Purchaser’s reasonable satisfaction, of each of the actions described in Schedule 1.8(a) (the “OEM Earnout Conditions”), which shall be equal to payable in the lesser of (xmanner described in Section 1.8(e) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the First Earnout Targetbelow.
(b) The EarnA one-Out Payment for the Second Earnout Period shall be paid only if time cash payment (i) Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Target and (ii) the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such event, the Earn-Out Payment for the Second Earnout Period (the “Second Earnout PaymentTransfer Earnout”) shall be equal to in the lesser of (x) [***] and (y) fifty percent (50%) amount of (i) 4.4 multiplied by $17,000,000 in the event that the Seller submits for EU MDR Certification for the Seller Products within 15 months of the First Closing Date, and the Second Closing has not yet taken place, or (ii) $13,000,000 in the amount by which Annual Aprinnova Actual Sales Value event that the Seller submits for EU MDR Certification for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than Seller Products after 15 months have passed since the First Closing Date, and the Second Earnout TargetClosing has not yet taken place.
(c) The Earn-Out Payment for Payments based on Net Sales (each, a “Net Sales Earnout,” and collectively, the Third Earnout Period shall be paid only if “Net Sales Earnouts”), as follows:
(i) Annual Aprinnova Actual A one-time cash amount equal to 100% of the Net Sales Value for achieved in the Third first four full fiscal quarters of the Purchaser after Purchaser’s first commercial sale of a Seller Product following satisfaction of the OEM Earnout Conditions (such period, the “Net Sales Earnout Period (as finally determined pursuant to 1”), which shall be payable in the manner described in Section 3.6.21.8(e) exceeds the Third Earnout Target and below;
(ii) the Sales Volume for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Volume Target. In such event, the EarnA one-Out Payment for the Third Earnout Period shall be time cash amount equal to 75% of the lesser Net Sales achieved in the four fiscal quarters of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout Target.
3.6.2 Within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) Purchaser immediately following the end of each Net Sales Earnout PeriodPeriod 1 (such period, Buyer will prepare and deliver to Seller a written schedule (the “EarnNet Sales Earnout Period 2”), which shall be payable in the manner described in Section 1.8(e) below;
(iii) A one-Out Schedule”) setting forth its calculations time cash amount equal to 50% of Annual Aprinnova Actual the Net Sales Valueachieved in the four fiscal quarters of the Purchaser immediately following the end of Net Sales Earnout Period 2 (such period, the “Net Sales Volume Earnout Period 3”), which shall be payable in the manner described in Section 1.8(e) below; and
(iv) A one-time cash amount equal to 50% of the Net Sales achieved in the four fiscal quarters of the Purchaser immediately following the end of Net Sales Earnout Period 3 (such period, the “Net Sales Earnout Period 4”), which shall be payable in the manner described in Section 1.8(e) below.
(d) The Seller acknowledges and agrees that the Purchaser is entitled to conduct the Business in a manner that is in the best interests of the Purchaser, its stockholders and the Earn-Out Payment for such applicable Earnout Period, including the basis for such calculations set forth in reasonable detail. Upon receipt stockholders of the Earn-Out Schedule, Seller shall have twenty five (25) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) (the “Review Period”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment. In connection with such review of the Earn-Out Schedule, Buyer shallits parent entities, and shall cause have the Aprinnova Business to, absolute right and sole and absolute discretion to operate and otherwise make available during normal business hours (subject to execution of customary confidential agreements) to Seller and its Representatives such documents, books, records, work papers, facilities, personnel and other information of Buyer decisions with respect to the Aprinnova conduct of the Business and to take or refrain from taking any action with respect thereto, without any express or implied warranties or covenants to the extent relating to the calculation of the Annual Aprinnova Actual Sales Value or the Sales Volume, in each case as Seller may reasonably request in order to permit the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; provided, that Buyer and the Aprinnova Business shall not be required to provide any such information or access if it would (i) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure of such information to the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of Objections”) to Buyer setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule shall be final and binding upon the Parties, and the Earn-Out Payment set forth on such Earn-Out Schedule shall be deemed to be the final Earn-Out Payment for such Earn-Out Period. Any items in the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such Earn-Out Period within fifteen (15) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (other person. Notwithstanding the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolutionforegoing, and such determination shall be final and binding upon Buyer and Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested in the Earn-Out Statement of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expert, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, will be final and binding upon the Parties, and judgment may be entered on the award. Buyer and Seller shall share the fees and expenses of the Arbitrating Accountant in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of such PartyPurchaser’s obligations under the Distribution Agreement, in accordance the Purchaser shall not take any action with the following formulas: (i) Seller shall pay a portion primary intent of such fees and expenses equal to frustrating, or avoiding or reducing the total fees and expenses multiplied by a fractionpayment of, any of the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections and (ii) Buyer shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of ObjectionsEarnout Payments.
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Earn-Out Payments. Upon (a) With respect to each of the terms and five (5) successive years beginning on the first day of the first calendar month immediately following the Closing Date (each such year, an "Earn-Out Year"), Buyer shall, subject to the conditions Buyer's offset rights contained in Section 2.04, Section 10.02 and Article XI of this Agreement, as make an additional consideration for the transfer of the Purchased Assets payment to Buyer pursuant to Section 2.1, Buyer shall pay to Seller an amount in cash calculated with respect to each Earn-Out Period as follows:
3.6.1 For each Earn-Out Period, Buyer shall make the payments described in this Section 3.6.1 Imagyn and Sellers (each such annual amounteach, an “"Earn-Out Payment”) in " and collectively, the manner set forth in Section 3.6.4.
(a) The "Earn-Out Payment Payments") in an amount equal to forty percent (40%) times the total dollar amount by which net revenues (i.e., gross sales revenues less returns, and less write-offs and allowances based on the average five-year accounts receivable bad debt reserve rate for the First Earnout Period shall be paid only if vacuum erection device portion of the Business) from the sale by Buyer of vacuum erection devices (i"Net Revenues") Annual Aprinnova Actual for such Earn-Out Year exceeds Eight Million Dollars ($8,000,000) (the "Minimum Sales Value for Volume"); provided, however, that the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Target and (ii) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Target. In such event, total amount of the Earn-Out Payment for the First Earnout Period Payments shall not exceed Nine Million Dollars (the “First Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the First Earnout Target$9,000,000).
(b) The Earn-Out Payment for the Second Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Target and (ii) the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such event, the Earn-Out Payment for the Second Earnout Period (the “Second Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Second Earnout Target.
(c) The Earn-Out Payment for the Third Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Target and (ii) the Sales Volume for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Volume Target. In such event, the Earn-Out Payment for the Third Earnout Period shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout Target.
3.6.2 Within thirty (30) 45 days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the end of each Earnout Period, Buyer will prepare and deliver to Seller a written schedule (the “Earn-Out Schedule”) setting forth its calculations of Annual Aprinnova Actual Sales ValueYear, Buyer shall prepare and send to Imagyn a statement (the Sales Volume and the "Earn-Out Payment for such applicable Earnout PeriodStatement"), including the basis for such calculations set forth in together with reasonable detail. Upon receipt of the Earn-Out Schedulesupporting documentation, Seller shall have twenty five (25) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) (the “Review Period”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment. In connection with such review of the Earn-Out Schedule, Buyer shall, and shall cause the Aprinnova Business to, make available during normal business hours (subject to execution of customary confidential agreements) to Seller and its Representatives such documents, books, records, work papers, facilities, personnel and other information of Buyer with respect to the Aprinnova Business to the extent relating to the calculation of the Annual Aprinnova Actual Sales Value or the Sales Volume, in each case as Seller may reasonably request in order to permit the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; provided, that Buyer and the Aprinnova Business shall not be required to provide any such information or access if it would indicating (i) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure of such information to the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of Objections”) to Buyer setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule shall be final and binding upon the Parties, and the Earn-Out Payment set forth on such Earn-Out Schedule shall be deemed to be the final Earn-Out Payment Net Revenues for such Earn-Out Period. Any items in Year, (ii) whether the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Minimum Sales Volume and the Earn-Out Payment was reached for such Earn-Out Period within fifteen Year, (15iii) days (or if the last day amount of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised for such Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolutionYear, and (iv) the amount, if any, by which such determination shall be final and binding upon Buyer and Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested Payment was reduced to satisfy Buyer's offset rights contained in the Earn-Out Statement Section 2.04, Section 10.02 and Article XI of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expertthis Agreement, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and together with the Earn-Out Payment, if any, will be final and binding upon specified in such Earn-Out Statement. In the Partiesevent Imagyn or Sellers disagree with the Earn-Out Payment for any year, and judgment may be entered on the award. Imagyn shall notify Buyer and Seller shall share the fees and expenses of such disagreement within thirty (30) business days of receipt of the Arbitrating Accountant Earn-Out Statement. If such notice is not given, the determinations set forth in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of will be final and binding. If Imagyn delivers the notice setting forth the disagreement with such Partydetermination, in accordance with the following formulas: (i) Seller shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and Imagyn are unable to resolve the denominator of which is the total dollar amount subject disagreement within thirty (30) business days thereafter, Buyer and Imagyn agree to the Earn-Out Statement of Objections and (ii) Buyer shall pay retain a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections.mutually acceptable
Appears in 1 contract
Samples: Asset Purchase Agreement (Imagyn Medical Technologies Inc)
Earn-Out Payments. Upon the terms and subject In addition to the conditions of this AgreementPurchase Price, as additional consideration for Buyer agrees to make any earn-out payments owed to Seller in accordance with the transfer following terms:
(A) In the event that during the twelve (12) month period from the Closing Date to the first anniversary of the Purchased Assets Closing Date (the “First Earn-Out Date” and such twelve-month period referred to Buyer pursuant herein as the “First Earn-Out Period), Buyer’s net revenue relating solely to Section 2.1the business attached hereto as Schedule 3.6(A) (the Earn-Out Business) exceeds Two Million dollars ($2,000,000.00), Buyer shall pay Seller five percent (5%) of the amount of its net revenue relating solely to the Earn-Out Business for the First Earn-Out Period that is in excess of Two Million dollars ($2,000,000.00) by wire transfer of immediately available funds to the bank account designated by Seller within thirty (30) days of the First Earn-Out Date.
(B) In the event that during the twelve (12) month period from the First Earn-Out Date to the second anniversary of the Closing Date (the “Second Earn-Out Date” and such twelve-month period referred to herein as the “Second Earn-Out Period), Buyer’s net revenue relating solely to the Earn-Out Business exceeds Two Million dollars ($2,000,000.00), Buyer shall pay Seller five percent (5%) of the amount of its net revenue relating solely to the Earn-Out Business for the Second Earn-Out Period that is in excess of Two Million dollars ($2,000,000.00) by wire transfer of immediately available funds to the bank account designated by Seller within thirty (30) days of the Second Earn-Out Date.
(C) Buyer shall provide Seller with such financial statements as requested by Seller, including an amount in cash calculated with respect to income statement and balance sheet for each Earn-Out Period as follows:
3.6.1 For each Earn-Out Period, Buyer shall make the payments described in this Section 3.6.1 (each such annual amount, an “Earn-Out Payment”) in the manner set forth in Section 3.6.4.
(a) The Earn-Out Payment for the First Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Target and (ii) the Sales Volume for the First Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the First Earnout Volume Targetrequested by Seller. In such event, the Earn-Out Payment for the First Earnout Period (the “First Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the First Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the First Earnout Target.
(b) The Earn-Out Payment for the Second Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Target and (ii) the Sales Volume for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Second Earnout Volume Target. In such event, the Earn-Out Payment for the Second Earnout Period (the “Second Earnout Payment”) shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Second Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Second Earnout Target.
(c) The Earn-Out Payment for the Third Earnout Period shall be paid only if (i) Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Target and (ii) the Sales Volume for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) exceeds the Third Earnout Volume Target. In such event, the Earn-Out Payment for the Third Earnout Period shall be equal to the lesser of (x) [***] and (y) fifty percent (50%) of (i) 4.4 multiplied by (ii) the amount by which Annual Aprinnova Actual Sales Value for the Third Earnout Period (as finally determined pursuant to Section 3.6.2) is greater than the Third Earnout Target.
3.6.2 Within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the end of each Earnout Period, Buyer will prepare and deliver to Seller a written schedule (the “Earn-Out Schedule”) setting forth its calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such applicable Earnout Period, including the basis for such calculations set forth in reasonable detail. Upon receipt of the Earn-Out Schedule, Seller shall have twenty five (25) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) (the “Review Period”) to review the Earn-Out Schedule and the related calculations of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment. In connection with such review of the Earn-Out Schedule, Buyer shall, and shall cause the Aprinnova Business to, make available during normal business hours (subject to execution of customary confidential agreements) to Seller and its Representatives such documents, books, records, work papers, facilities, personnel representatives shall be given reasonable access to Buyer’s management employees and other information books and documents for purposes of Buyer with respect to verifying the Aprinnova Business to the extent net revenue relating to the calculation of the Annual Aprinnova Actual Sales Value or the Sales Volume, in each case as Seller may reasonably request in order to permit the timely review of the Earn-Out Schedule in accordance with this Section 3.6.2; provided, that Buyer and the Aprinnova Business shall not be required to provide any such information or access if it would (i) violate any agreement or Law or (ii) result in the waiver of any legal privilege or work product protection; provided, that the applicable Party will notify the other Party in reasonable detail of the circumstances giving rise to any non-disclosure pursuant to the foregoing and to permit disclosure of such information to the extent possible, in a manner consistent with privilege or Law. If Seller has accepted such Earn-Out Schedule in writing or has not given written notice (an “Earn-Out Statement of Objections”) to Buyer setting forth in reasonable detail any objection of Seller to the Earn-Out Schedule (which objections shall be limited to the Annual Aprinnova Actual Sales Value or the Sales Volume not having been calculated in accordance with this Agreement or mathematical errors) prior to the expiration of the applicable Review Period, then such Earn-Out Schedule shall be final and binding upon the Parties, and the Earn-Out Payment set forth on such Earn-Out Schedule shall be deemed to be the final Earn-Out Payment for such Earn-Out Period. Any items in the Earn-Out Statement not objected to in the Earn-Out Statement of Objections shall be final and binding on the Parties. If Seller delivers an Earn-Out Statement of Objections during the Review Period, Buyer and Seller shall use their reasonable efforts to agree on the amount of Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment for such Earn-Out Period within fifteen (15) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the receipt by Buyer of the Earn-Out Statement of Objections. If the Parties are unable to reach an agreement as to such amounts within such fifteen (15) day period, then either Buyer or Seller may submit the matter to a mutually agreed internationally recognized certified public accounting firm that has not performed accounting, tax or auditing services for Buyer or Seller or any of their respective Affiliates after February 21, 2020 (the “Arbitrating Accountant”). The Arbitrating Accountant’s function will be to resolve each element of the Earn-Out Statement of Objections that has not been resolved by Buyer and Seller, to revise the Earn-Out Schedule to reflect such resolutions and to recalculate the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, based on the elements and amounts reflected on the revised Earn-Out Schedule. The Parties shall use commercially reasonable efforts to cause the Arbitrating Accountant shall make such determination within thirty (30) days (or if the last day of such period is not a Business Day, then on the first Business Day following the last day of such period) following the submission of the matter to the Arbitrating Accountant for resolution, and such determination shall be final and binding upon Buyer and Seller. In making such determination, the Arbitrating Accountant will be bound by the provisions of this Agreement and may not revise any element of the Earn-Out Schedule that is not contested in the Earn-Out Statement of Objections or assign a value to any disputed element of the Earn-Out Statement of Objections greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party. The Arbitrating Accountant shall act as an expert, not as an arbitrator. Each of the Arbitrating Accountant’s decision, the revised Earn-Out Schedule and the revised calculation of the Annual Aprinnova Actual Sales Value, the Sales Volume and the Earn-Out Payment, if any, will be final and binding upon the Parties, and judgment may be entered on the awardBusiness. Buyer and shall provide Seller shall share the fees and expenses of the Arbitrating Accountant in inverse proportion to the relative amounts subject to the Earn-Out Statement of Objections determined in favor of such Party, in accordance with the following formulas: (i) Seller shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Buyer and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objections and (ii) Buyer shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount subject to the Earn-Out Statement of Objections resolved in favor of Seller and the denominator of which is the total dollar amount subject to the Earn-Out Statement of Objectionsaccess during normal business hours upon reasonable advance written notice.
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