RE:GFI contract with SICPA
We read on some news release that the 5% earn-out would be calculated based on the gross sales.
But it is clear from the Management information circular for the shareholders meeting that :
- Post-closing earn-out payments equal to 5% of the net revenues earned by GFI from contracts entered into by it following the execution of the Purchase Agreement and during the period ending six years from the closing of the Proposed Transaction, with a minimum guaranteed of $1.5 million per year for the six years earn-out period (total payment of at least $9,000,000);
- Additional post-closing payments, calculated and payable every six (6) months, equal to 5% of the net revenues earned by GFI from contracts signed during the fourth through sixth years following closing paid until the third anniversary of such contracts;
Fortunately, the net revenues = gross revenues minus
- special payments and commissions to be paid to third parties on an arms' length basis, with the aim of acquiring or securing such contracts (including without limitation subsequent additional consultancy, joint ventures, partnerships or shareholders costs), but excluding for avoidance of doubts any travel costs, marketing and the like,
- applicable value added, sales and withholding taxes
- discounts and deductions for returned merchandise, for whatever reason
- similar items or any revenues so received under such Contracts.
Even better, as everyone knows :
"...These payments are to be calculated based on net revenues of GFI from all new contracts for the sale of not only existing products, but also on the sale of related logistics services, which GFI plans to be able to offer as a result of the Proposed Transaction ..."
"...Logistics revenue as a component of the over-all revenue derived from a comprehensive fuel marking program are generally a multiple of the revenue generated from sales of markers and detectors ..."
As for Xenemetrix:
"...As a key part of the transaction, the Company, through its wholly - owned subsidiary, Xenemetrix has agreed to enter into a strategic exclusive long term supply, maintenance and support agreement (the “Supply Agreement”), pursuant to which Xenemetrix would continue to supply to GFI, and GFI would continue to purchase, Xenemetrix’s products and services currently used by GFI in its business, in each case, on an exclusive basis within the oil and gas marking and monitoring field of GFI’s current operations..."