Adjustments to Purchase Price The Preliminary Purchase Price shall be adjusted as follows and the resulting amount shall be herein called the “Final Purchase Price”: (a) The Preliminary Purchase Price shall be adjusted upward by the following: (1) The value of all merchantable oil in storage above the pipeline connection at the Effective Time that is credited to the Interests, such value to be the market or contract price in effect as of the Effective Time less taxes deducted by the purchaser of such oil; (2) The amount of all expenditures (including, without limitation, royalties, rentals and other charges, ad valorem, property, production, excise, severance, windfall profit and other taxes based upon or measured by the ownership of property or the production of hydrocarbons or the receipt of proceeds therefrom, expenses billed under applicable operating agreements and, in the absence of an operating agreement, expenses of the sort customarily billed under such agreements) paid by or on behalf of Seller in connection with the operation of the Interests after the Effective Time; (3) An amount equal to all prepaid expenses attributable to the Interests that are paid by or on behalf of Seller prior to the Closing Date and that are, in accordance with generally accepted accounting principles, attributable to the period after the Effective Time including, without limitation, prepaid ad valorem, property, production, severance and similar taxes (but not including income taxes) based upon or measured by the ownership of property or the production of hydrocarbons or the receipt of proceeds therefrom; and (4) Any other amount agreed upon in writing by Seller and Buyer. (b) The Preliminary Purchase Price shall be adjusted downward by the following: (1) Proceeds received by Seller prior to the Closing Date attributable to the Interests and that are, in accordance with generally accepted accounting principles, attributable to the period of time after the Effective Time; (2) An amount equal to all unpaid ad valorem, property, production, severance and similar taxes and assessments (but not including income taxes) based upon or measured by the ownership of property or the production of hydrocarbons or the receipt of proceeds therefrom accruing to the Interests prior to the Effective Time, which amount shall be computed based upon such taxes assessed against the applicable portion of the Interests for the preceding calendar year or, if such taxes are assessed on other than a calendar year basis, for the tax related year last ended; (3) An amount equal to the sum of all Defect Adjustments and Exclusion Adjustments (as those terms are defined in Section 5.03); and (4) An amount equal to the allocated purchase price for the particular WI Owner specified in Exhibit “A” hereto for any WI Owner listed in Exhibit “A” that does not agree to sell and join in the Assignment to Buyer. In that event, the WI and NRI fractions set forth in Exhibit “B” for any lease in which any WI Owner elects not to join shall be adjusted downward by the parties to exclude the WI and NRI of the non-joining WI Owner. (5) Any other amount agreed upon in writing by Seller and Buyer.
Purchase Price On the terms and subject to the conditions set forth in this Agreement, the Buyer agrees to pay or cause to be paid to Seller: (i) an aggregate of Three Hundred and Fifty Thousand Dollars ($350,000), (ii) subject to American Stock Exchange listing approval, a grant to Seller of Two Hundred Thousand (200,000) shares of Bovie Medical Corporation (AMEX:BVX) restricted stock, subject to the vesting schedule described below, (iii) a grant to Seller of up to an aggregate of One Hundred and Fifty Thousand (150,000) BVX shares of restricted stock (conditioned on terms set forth below), (iv) royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “Tip on Tube” Products and “RF Skin Resurfacing” Products, as set forth below, and (vi) royalty payments of Three Percent (3%) on Buyer’s Net Sales of “SEAL-N-CUT” Products and “MODULLION” Products, as set forth below (collectively, the "Purchase Price"), and to assume or cause Buyer’s subsidiary to assume, the Assumed Liabilities as provided in Section 2.4. The Purchase Price shall be payable to Seller as follows: (a) On the Closing Date, by wire transfer, One Hundred and Fifty Thousand Dollars ($150,000) in immediately available funds to Seller’s bank account set forth on Schedule 2.2(a); CONFIDENTIAL (11.10.06) Page 2 of 34 BUYER: ___ SELLER: ___ (b) No later than thirty (30) days after each of the first four (4) anniversaries of the Closing Date, by wire transfer, Fifty Thousand Dollars ($50,000) in immediately available funds to Seller’s bank account set forth on Schedule 2.2(a); provided, however, that if Buyer fails to render the payments set forth in this Section 2.2(b) after a thirty (30) day grace period immediately following the due date of each such payment, Seller shall be entitled to an immediate vesting of all remaining unvested shares of restricted BVX stock set forth in Section 2.2(c); (c) Subject to the provisions of Section 7.7(d), no later than thirty (30) days after the Closing Date, Two Hundred Thousand (200,000) shares of restricted BVX stock, vesting over a four (4) year period as follows: Forty Percent (40%) or 80,000 shares immediately vested, and Twenty Percent (20%) or 40,000 shares vested at each of the first three (3) anniversaries of the Closing Date; provided, however, Seller shall hold all such vested shares for a period of at least one (1) year before Seller may sell or transfer them; (d) No later than forty-five (45) days after each of the events set forth in subsections (i)-(vi), below (the occurrence of which vests the corresponding number of shares of restricted BVX stock), the number of such shares specified, for an aggregate of up to One Hundred and Fifty Thousand (150,000) such shares; provided, however, Seller shall hold all such vested shares for a period of at least one (1) year before Seller may sell or transfer them : (i) Forty Thousand (40,000) shares upon Buyer obtaining a 510(k) FDA marketing clearance for the “SEAL-N-CUT” Product; (ii) Forty Thousand (40,000) shares upon Buyer obtaining a 510(k) FDA marketing clearance for the “MODULLION” Product; (iii) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of One Million Dollars ($1,000,000) in Net Sales of the “SEAL-N-CUT” Product; (iv) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of One Million Dollars ($1,000,000) in Net Sales of the “MODULLION” Product; (v) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of Three Million Dollars ($3,000,000) in Net Sales of the “SEAL-N-CUT” Product; and (vi) Seventeen Thousand Five Hundred (17,500) shares upon Buyer attaining a total of Three Million Dollars ($3,000,000) in Net Sales of the “MODULLION” Product. (e) Royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “Tip on Tube” Products, as further set forth in Schedule 2.2(e); (f) Royalty payments of Two-and-One-Half Percent (2.5%) on Buyer’s Net Sales of “RF Skin Resurfacing” Products, as further set forth in Schedule 2.2(f); (g) Royalty payments of Three Percent (3%) on Buyer’s Net Sales of “SEAL-N-CUT” Products, as further set forth in Schedule 2.2(g); and (h) Royalty payments of Three Percent (3%) on Buyer’s Net Sales of “MODULLION” Products, as further set forth in Schedule 2.2(h). (i) In addition to the foregoing, after Buyer obtains the applicable 510(k) FDA marketing clearances, Buyer shall pay Seller royalty payments of Two Percent (2%) on Buyer’s Net Sales of “Morscellator” Products and “Focused Ultrasonic Energy” Skin and Tissue Products, as further set forth in Schedule 2.2(i). The Parties agree and acknowledge that Sxxxx Xxxxxx’x on-going personal services, and fulfillment of his obligations, under the “Livneh Employment Agreement” (set forth in Section 5.2.5(a), below) are (w) a material inducement for Buyer to enter into this Agreement, (x) a condition precedent to the Seller’s attainment of each of the elements of the Purchase Price set forth in this Section 2.2 (including all subsections (a)-(i), except (b)), (y) a condition precedent to the vesting of shares of restricted BVX stock under subsections 2.2(c) and 2.2(d), and (z) a condition subsequent to the right to receive royalty payments under subsections 2.2(e)-(i) hereof. With regard to Seller’s right to receive royalty payments hereunder, a failure of the condition subsequent in the preceding subsection (z) (i.e., termination for cause or non-renewal of the Livneh Employment Agreement resulting in less than a total of five (5) years of continuous service thereunder) will permit Buyer to reduce such royalty payments by Fifty Percent (50%). CONFIDENTIAL (11.10.06) Page 3 of 34 BUYER: ___ SELLER: ___ The provisions of the foregoing paragraph concerning Sxxxx Xxxxxx’x performance under the Livneh Employment Agreement shall not apply if Buyer (or its Affiliate employing Sxxxx Xxxxxx under that agreement) (i) terminates the Livneh Employment Agreement without cause, (ii) fails to renew the Livneh Employment Agreement for an additional two (2) years beyond the initial 3-year term, as provided therein, or (iii) both materially and adversely modifies Sxxxx Xxxxxx’x title, location of employment, definitions or compensation, under the Livneh Employment Agreement, without his written consent. In the event of a termination of the Livneh Employment Agreement due to Sxxxx Xxxxxx’x death as set forth under Section 11(a) thereof, Buyer shall (1) pay to Seller Fifty Percent (50%) of the royalty payments due and payable under this Section 2.2, which royalty payments are earned and in effect as of the date of such termination for death, and Buyer shall immediately accelerate the vesting of any remaining unvested shares of restricted BVX stock set forth in Section 2.2(c), if any. From and after the Effective Date the Buyer shall be solely responsible for any and all costs and expenses associated with all provisional patent applications being purchased hereunder.
