Earnout and post Earnout....................................Would someone please explain the additional 5% post earnout ? Thankyou
2.2
Earn
-
Out
Amounts
and Post Earn
-
Out
Additional Payments
(a)
Earn
-
Out Amounts
.
Buyer
and
Seller
agree
that
a portion of the Purchase
Price
payable to
EC
will be calculated and paid based upon Net Revenues as follows:
(i)
Buyer shall pay to EC
a
minimum
amount
(the
“
Minimum
Annual
Earn
-
Out Amount
”
)
with respect to
each
Calculation Period
during the
Earn
-
Out Term
equal to
CA$1,500,
000
, payable in
two equal
semi
-
annual
installments
.
Within ten (10)
Business Days following the end of each
six
-
month period
during the
Earn
-
Out Term
,
Buyer shall pay to EC
one such installment amount of
CA$
7
50,
000
, being the
amount
equ
al to
fifty
percent (5
0
%) of the
Minimum
Annual
Earn
-
Out Amount
due for that
Calculation Period
.
(ii)
W
ithin
sixty
(
6
0)
d
ays following
the
end of each
six
-
month period
during the
Earn
-
Out Term
, Buyer shall pay to EC an amount equal to the excess, if any,
of
(i)
five percent (5%)
o
f
the
Net Revenues
for such
six
-
month p
eriod
then ended
,
over
(ii)
the sum of all payments
in respect of the
Minimum
Annual
Earn
-
Out Amount
made
and attributable to such
six
-
month p
eriod
.
(b)
Post Earn
-
Out
Additional Payments
.
W
ithin
sixty
(
6
0)
d
ays following the
end of each
six
-
month p
eriod
during the
Post Earn
-
Out Term
, Buyer shall pay to EC
an
amount
with respect to such
six
-
month p
eriod then ended (each such amount being, an
“
Additional
Payment Amount
”
)
,
that is equal to (i) five
percent (5%)
,
multiplied by
(ii)
the aggregate of all
Net Revenues for such
six
-
month p
eriod
then ended, that were derived
only from Contracts that
were first entered into during the fourth (4th), fifth (5th) or sixth (6th) year following the
12
Closing
, and
in calculating such
Net Revenues, all Net Revenues from any such Contract that
a
re
recognized
(in accordance with IFRS) on a date that is more than three
(3)
years from
the
date
such Contract was first entered into shall be excluded.