Common use of Contingent Payment Clause in Contracts

Contingent Payment. (a) As soon as practicable, but in any event no later than ninety (90) days following each of December 31, 2004, December 31, 2005 and December 31, 2006, the Buyer shall (i) prepare in accordance with GAAP a statement derived from the audited financial statements of the Buyer (each, an "Earn-Out Statement") of the Business EBITDA (as defined below) for each of the full fiscal years ending on such dates (such one-year periods together being the "Earn-Out Period") and, in the Earn-Out Statement for the fiscal year ending December 31, 2006, the Average Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii) deliver each Earn-Out Statement to the Seller Representative. At any time prior to the expiration of each period ending forty-five (45) days following the Seller Representative's receipt of each Earn-Out Statement for the fiscal years ending December 31, 2004 and December 31, 2005 (each such period, a "Preliminary Dispute Period") and, with respect to the Final Earn-Out Statement (as defined below), during the Final Dispute Period (as defined below), the Buyer shall upon reasonable notice, and during normal business hours, provide the Seller Representative and/or one or more accountants designated by the Seller Representative with reasonable access to the management of the Company, and the Buyer shall, and shall cause the Buyer's accountants, upon reasonable notice, to provide reasonable access to any and all documents, records and work papers used in the preparation of such Earn-Out Statement or Final Earn-Out Statement (as applicable) and shall reasonably cooperate with the Seller Representative and/or such accountant(s) in connection with any such review of such Earn-Out Statement or Final Earn-Out Statement and the documents, records and work papers related thereto. The Seller Representative shall have until the expiration of each Preliminary Dispute Period to dispute any or all amounts or elements of the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period (any such dispute, a "Preliminary Dispute"). The Seller Representative may provide to the Buyer, prior to the end of any Preliminary Dispute Period, written notice of a Preliminary Dispute (a "Preliminary Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement. If the Seller Representative does not so deliver a Preliminary Dispute Notice to the Buyer prior to the end of any applicable Preliminary Dispute Period, the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice (as defined below). The Seller Representative shall have forty-five (45) days after receipt of the Earn-Out Statement prepared for the fiscal year ending December 31, 2006 (the "Final Earn-Out Statement") (such period, the "Final Dispute Period") to dispute any or all amounts or elements of the Final Earn-Out Statement (together with any items set forth in a Preliminary Dispute Notice with respect to any Preliminary Dispute Period that has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), a "Dispute"). The Seller Representative may provide to the Buyer, prior to the end of the Final Dispute Period, written notice of a Dispute (a "Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement and any such Dispute shall be limited to the matters as set forth in such Dispute Notice. If immediately prior to the end of the Final Dispute Period any Preliminary Dispute Notice has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), in the absence of written notice from the Seller Representative canceling such Preliminary Dispute Notice or amending its terms, the Seller Representative shall be deemed to have delivered a Dispute Notice with respect to any such Preliminary Dispute Notice (and the terms of any such Dispute Notice shall be the same as set forth in the applicable Preliminary Dispute Notice). If a Dispute Notice is not delivered or deemed to have been delivered to the Buyer prior to the end of the Final Dispute Period, the Final Earn-Out Statement shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Final Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice. Notwithstanding anything in this Section 2.2 to the contrary, the Buyer may not dispute any amounts or elements contained in any Earn-Out Statement, including the Final Earn-Out Statement, once any such Earn-Out Statement has been delivered to the Seller Representative (except to the extent that any such disputed amounts or elements relate to or arise out of any pending Dispute).

Contingent Payment. (a) As soon additional consideration and as practicablean adjustment to Merger Consideration, but in any event no later than ninety (90) days following on each of December 31, 2004, December 31, 2005 and December 31, 2006, the Buyer shall (i) prepare in accordance with GAAP a statement derived from the audited financial statements of the Buyer (each, an "Earn-Out Statement"Payment Date the Parent shall pay to the Former Company Stockholders’ Agent, for distribution to the Former Company Stockholders, the Annual Payment Earned, if any, upon the terms and subject to the conditions set forth in this Section 3.3(i); provided, that, in no event shall the amount of any annual payment under this Section 3.3(i) exceed the Annual Cap, unless such payment is made following a Change in Control, in which case the Parent shall pay to the Former Company Stockholders’ Agent, for distribution to the Former Company Stockholders, the Aggregate Earned Amount less all amounts previously paid to or for the benefit of the Business EBITDA (as defined below) for each of Former Company Stockholders under this Section 3.3(i). If the full fiscal years ending Annual Payment Earned exceeds the Annual Cap on such dates (such one-year periods together being the "final Earn-Out Period") and, Payment Date with respect to the final year in the Earn-Out Statement Period then the difference between the Annual Payment Earned for such period and the Annual Cap shall be paid, without interest, in the subsequent fiscal year ending December 31or years, 2006up to the Annual Cap each year, until the Average Annual Business EBITDA Aggregate Earned Amount is paid in full, without interest; provided that following the consummation of a Change in Control that meets the requirements of clauses (as defined belowi) for the Earn-Out Period, and or (ii) deliver each Earn-Out Statement of the definition of Aggregate Earned Amount, the Parent shall pay to the Seller Representative. At any time prior Former Company Stockholders’ Agent, for distribution to the expiration of each period ending forty-five (45) days following Former Company Stockholders, the Seller Representative's receipt of each Earn-Out Statement Aggregate Earned Amount less all amounts previously paid to or for the fiscal years ending December 31, 2004 and December 31, 2005 (each such period, a "Preliminary Dispute Period") and, with respect to the Final Earn-Out Statement (as defined below), during the Final Dispute Period (as defined below), the Buyer shall upon reasonable notice, and during normal business hours, provide the Seller Representative and/or one or more accountants designated by the Seller Representative with reasonable access to the management benefit of the Company, and the Buyer shall, and shall cause the Buyer's accountants, upon reasonable notice, to provide reasonable access to any and all documents, records and work papers used in the preparation of such Earn-Out Statement or Final Earn-Out Statement (as applicable) and shall reasonably cooperate with the Seller Representative and/or such accountant(s) in connection with any such review of such Earn-Out Statement or Final Earn-Out Statement and the documents, records and work papers related thereto. The Seller Representative shall have until the expiration of each Preliminary Dispute Period to dispute any or all amounts or elements of the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period (any such dispute, a "Preliminary Dispute"Former Company Stockholders under this Section 3.3(i). The Seller Representative may provide to the Buyer, prior to the end of any Preliminary Dispute Period, written notice of a Preliminary Dispute (a "Preliminary Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement. If the Seller Representative does not so deliver a Preliminary Dispute Notice to the Buyer prior to the end of any applicable Preliminary Dispute Period, the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice (as defined below). The Seller Representative shall have forty-five (45) days after receipt of the Earn-Out Statement prepared for the fiscal year ending December 31, 2006 (the "Final Earn-Out Statement") (such period, the "Final Dispute Period") to dispute any or all amounts or elements of the Final Earn-Out Statement (together with any items set forth in a Preliminary Dispute Notice with respect to any Preliminary Dispute Period that has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), a "Dispute"). The Seller Representative may provide to the Buyer, prior to the end of the Final Dispute Period, written notice of a Dispute (a "Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement and any such Dispute shall be limited to the matters as set forth in such Dispute Notice. If immediately prior to the end of the Final Dispute Period any Preliminary Dispute Notice has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), in the absence of written notice from the Seller Representative canceling such Preliminary Dispute Notice or amending its terms, the Seller Representative shall be deemed to have delivered a Dispute Notice with respect to any such Preliminary Dispute Notice (and the terms of any such Dispute Notice shall be the same as set forth in the applicable Preliminary Dispute Notice). If a Dispute Notice is not delivered or deemed to have been delivered to the Buyer prior to the end of the Final Dispute Period, the Final Earn-Out Statement shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Final Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice. Notwithstanding anything in this Section 2.2 Agreement to the contrary, in no event shall the Buyer may not dispute any amounts aggregate amount of payments payable under or elements contained in any by reason of this Section 3.3(i) exceed the Maximum Earn-Out StatementPayment. Attached hereto as Exhibit 3.3(i), including for illustrative purposes only, are examples of the Final Earn-Out Statement, once any such Earn-Out Statement has been delivered calculation of the Aggregate Earned Amount following a hypothetical Change in Control transaction in which the return on the WP Investment is at least equal to 1.75 times the Seller Representative WP Investment (except to it being expressly acknowledged and agreed that in the extent that any such disputed amounts or elements relate to or arise out event of any pending Disputeconflict between Exhibit 3.3(i) and the terms and conditions of this Agreement, the terms and conditions of this Agreement shall control).

Contingent Payment. Sedeco currently operates a separate division (athe "Division") As under the assumed name Southwest Computer Company. Separate financial statements are maintained for the Division and the Shareholder has previously delivered to Purchaser a copy of the Division's balance sheet dated as at September 30, 1996 and the related statement of income for the one month and the five months then ended (collectively, the "Southwest Financial Statements"). The Southwest Financial Statements correctly and completely reflect the Division's books and records, fairly present the financial position and results of operations of the Division as of the dates and for the periods indicated and have been prepared on a basis consistent with that of prior periods. Purchaser has advised the Shareholder that it has no interest in acquiring or operating the Division, in acquiring or owning any assets of the Division or in assuming any liabilities or obligations of the Division. The Shareholder and Purchaser agree that Purchaser shall liquidate the Division and remit the net proceeds thereof to the Shareholder subject to the terms and conditions set forth below. Accordingly, effective as of the Closing Date, Purchaser will terminate all operations of the Division and commence the process of winding down the Division. For a period of one hundred and eighty (180) days after the Closing, Purchaser will cause Sedeco to permit one (1) person previously employed by the Division or Sedeco to attempt to collect the accounts receivable of the Division outstanding as of the Closing Date (the "Southwest Receivables") in the normal course of business (but without resort to litigation or the use of collection agencies or similar efforts), to dispose of the Division's inventory and to pay, satisfy or discharge all of its accounts payable, and do such other acts as may reasonably be required to liquidate the Division business and affairs. At the Closing, the Shareholder shall deliver to Purchaser a true, correct and complete list of all of the Southwest Receivables, setting out in reasonable detail such information with respect thereto as Purchaser shall require (including, without limitation, aging), as of the most recent practicable date, which shall not be more than five (5) days prior to the Closing Date (the "Initial Southwest Receivables List"). The Shareholder shall further provide Purchaser, as soon after the Closing Date as practicable, but in any no event no later than ninety the fifth (905th) days following each of December 31business day after the Closing Date, 2004with a true, December 31, 2005 correct and December 31, 2006, the Buyer shall (i) prepare in accordance with GAAP a statement derived from the audited financial statements complete list of the Buyer (eachSouthwest Receivables, an "Earn-Out Statement") in form substantially equivalent to the Initial Southwest Receivables List, as of the Business EBITDA (as defined below) for each of the full fiscal years ending on such dates Closing Date (such one-year periods together list being hereinafter referred to as the "Earn-Out Period") and, in the Earn-Out Statement for the fiscal year ending December 31, 2006, the Average Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii) deliver each Earn-Out Statement to the Seller Representative. At any time prior to the expiration of each period ending forty-five (45) days following the Seller Representative's receipt of each Earn-Out Statement for the fiscal years ending December 31, 2004 and December 31, 2005 (each such period, a "Preliminary Dispute Period") and, with respect to the Final Earn-Out Statement (as defined below), during the Final Dispute Period (as defined below), the Buyer shall upon reasonable notice, and during normal business hours, provide the Seller Representative and/or one or more accountants designated by the Seller Representative with reasonable access to the management of the Company, and the Buyer shall, and shall cause the Buyer's accountants, upon reasonable notice, to provide reasonable access to any and all documents, records and work papers used in the preparation of such Earn-Out Statement or Final Earn-Out Statement (as applicable) and shall reasonably cooperate with the Seller Representative and/or such accountant(s) in connection with any such review of such Earn-Out Statement or Final Earn-Out Statement and the documents, records and work papers related thereto. The Seller Representative shall have until the expiration of each Preliminary Dispute Period to dispute any or all amounts or elements of the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period (any such dispute, a "Preliminary DisputeSupplemental Southwest Receivables List"). The Seller Representative may provide to Purchaser will not compromise any of the BuyerSouthwest Receivables without the prior written consent of the Shareholder, prior to the end of any Preliminary Dispute Period, written notice of a Preliminary Dispute which consent shall not be unreasonably withheld. Within one hundred eighty (a "Preliminary Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement. If the Seller Representative does not so deliver a Preliminary Dispute Notice to the Buyer prior to the end of any applicable Preliminary Dispute Period, the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice (as defined below). The Seller Representative shall have forty-five (45180) days after receipt the Closing, and in addition to the Purchase Price, Purchaser agrees to pay to the Shareholder, an amount up to One Hundred Fifty Thousand ($150,000.00), such figure to be equal to the actual amount realized by Purchaser (net of liabilities) through the winding up and liquidation of the Earn-Out Statement prepared Division. The Shareholder acknowledges that Purchaser is not being compensated for liquidating the Division and that Purchaser is doing so solely as an accommodation for the fiscal year ending December 31Shareholder. Accordingly, 2006 (the "Final Earn-Out Statement") (such period, the "Final Dispute Period") to dispute any or all amounts or elements of the Final Earn-Out Statement (together with any items set forth in a Preliminary Dispute Notice with respect to any Preliminary Dispute Period that has Purchaser shall not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), a "Dispute"). The Seller Representative may provide be liable to the Buyer, prior Shareholder for any action taken or for any action which Purchaser fails to the end of the Final Dispute Period, written notice of a Dispute (a "Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement and any such Dispute shall be limited take pursuant to the matters as set forth in such Dispute Notice. If immediately prior to the end of the Final Dispute Period any Preliminary Dispute Notice has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), in the absence of written notice from the Seller Representative canceling such Preliminary Dispute Notice or amending its terms, the Seller Representative shall be deemed to have delivered a Dispute Notice with respect to any such Preliminary Dispute Notice (and the terms of any such Dispute Notice shall be the same as set forth in the applicable Preliminary Dispute Notice). If a Dispute Notice is not delivered or deemed to have been delivered to the Buyer prior to the end of the Final Dispute Period, the Final Earn-Out Statement shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Final Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice. Notwithstanding anything in this Section 2.2 to the contrary, the Buyer may not dispute any amounts or elements contained in any Earn-Out Statement, including the Final Earn-Out Statement, once any such Earn-Out Statement has been delivered to the Seller Representative (except to the extent that any such disputed amounts same constitutes wilful misconduct of Purchaser. Furthermore, Purchaser shall not be responsible for the payment or elements relate to or arise out satisfaction of any pending Dispute)debts, liabilities or obligations of the Division to the extent (the "Excess Liabilities") the aggregate amount thereof exceeds the actual amount realized by Purchaser through the winding up and liquidation of the Division. The Shareholder shall pay and/or satisfy all Excess Liabilities in accordance with the terms thereof.

Contingent Payment. (ae) As soon as practicable, but in any event no later than ninety (90) days following each of December 31, 2004, December 31, 2005 and December 31, 2006additional Consideration, the Buyer Sellers shall be entitled to receive a contingent payment (ithe “Contingent Payment”) prepare consisting of common stock (the “Common Stock”) of HSS in accordance with GAAP this Section 1.5. The Contingent Payment, if any, shall be payable annually over a statement derived from period of three years. In no event shall the audited financial statements of the Buyer (each, an "Earn-Out Statement") of the Business EBITDA (as defined below) for each of the full fiscal years ending on such dates (such one-year periods together being the "Earn-Out Period") andContingent Payment, in the Earn-Out Statement for aggregate, exceed 400,000 shares of Common Stock (the fiscal year ending December 31“Contingent Payment Cap”). Upon reaching the Contingent Payment Cap, 2006, all further obligations of Buyer and HSS to pay the Average Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii) deliver each Earn-Out Statement to the Seller Representative. At any time prior to the expiration of each period ending forty-five (45) days following the Seller Representative's receipt of each Earn-Out Statement for the fiscal years ending December 31, 2004 and December 31, 2005 (each such period, a "Preliminary Dispute Period") and, with respect to the Final Earn-Out Statement (as defined below), during the Final Dispute Period (as defined below), the Buyer shall upon reasonable notice, and during normal business hours, provide the Seller Representative and/or one or more accountants designated by the Seller Representative with reasonable access to the management of the Company, and the Buyer shall, and shall cause the Buyer's accountants, upon reasonable notice, to provide reasonable access to any and all documents, records and work papers used in the preparation of such Earn-Out Statement or Final Earn-Out Statement (as applicable) and shall reasonably cooperate with the Seller Representative and/or such accountant(s) in connection with any such review of such Earn-Out Statement or Final Earn-Out Statement and the documents, records and work papers related theretoContingent Payment will terminate. The Seller Representative shall have until the expiration of each Preliminary Dispute Period to dispute any or all amounts or elements of the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period (any such dispute, a "Preliminary Dispute"). The Seller Representative may provide to the Buyer, prior to the end of any Preliminary Dispute Period, written notice of a Preliminary Dispute (a "Preliminary Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement. If the Seller Representative does not so deliver a Preliminary Dispute Notice to the Buyer prior to the end of any applicable Preliminary Dispute Period, the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period initial Contingent Payment shall be final based on the period beginning on the Closing Date and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice (as defined below). The Seller Representative shall have forty-five (45) days after receipt of the Earn-Out Statement prepared for the fiscal year ending December 31, 2006 (the "Final Earn-Out Statement") (such period, the "Final Dispute “Initial Period") to dispute any or all amounts or elements of the Final Earn-Out Statement (together with any items set forth in a Preliminary Dispute Notice with respect to any Preliminary Dispute Period that has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), a "Dispute"”). The Seller Representative may provide Contingent Payment shall have as its baseline relationship (x) the issuance of 100,000 shares of Common Stock (the “Base Payment”) and (y) the Company’s achieving at least 95% of the Operating Revenue projected from its operations in each of the Initial Period and the calendar years 2007 and 2008 (collectively, the “Calculation Periods”) as specified on the pro forma operating statement attached hereto as Schedule 1.5 (the “Period Income Goal”). Thus, if the Company meets its Period Income Goal exactly in any Calculation Period, HSS will issue 100,000 shares of Common Stock to the Buyer, prior Sellers pursuant to the end of the Final Dispute Period, written notice of a Dispute (a "Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement and any such Dispute shall be limited to the matters as set forth in such Dispute Notice. If immediately prior to the end of the Final Dispute Period any Preliminary Dispute Notice has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), in the absence of written notice from the Seller Representative canceling such Preliminary Dispute Notice or amending its terms, the Seller Representative shall be deemed to have delivered a Dispute Notice with respect to any such Preliminary Dispute Notice (and the terms of this Section 1.5. If the Company’s Operating Revenue in any such Dispute Notice Calculation Period is greater than the applicable Period Income Goal, then the number of shares of Common Stock issued to the Sellers shall be the same as set forth sum of (x) the Base Payment, plus (y) the product of (a) the percentage of Operating Revenue in excess of 95% of the applicable Preliminary Dispute Notice)projected Operating Revenue times (b) the Base Payment. If a Dispute Notice the Company’s Operating Revenue in any Calculation Period is not delivered or deemed to have been delivered less than the applicable Period Income Goal, then the number of shares of Common Stock issued to the Buyer prior to Sellers shall be the end difference of (x) the Base Payment, less (y) the product of (a) the percentage of Operating Revenue below 95% of the Final Dispute Period, applicable projected period Operating Revenue times (b) the Final Earn-Out Statement shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Final Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice. Notwithstanding anything in this Section 2.2 to the contrary, the Buyer may not dispute any amounts or elements contained in any Earn-Out Statement, including the Final Earn-Out Statement, once any such Earn-Out Statement has been delivered to the Seller Representative (except to the extent that any such disputed amounts or elements relate to or arise out of any pending Dispute)Based Payment.

Contingent Payment. The Buyer shall pay to the Seller for each calendar year (a) As soon as practicable, but in any event no later than ninety (90) days following each of except that the first year shall run from the Closing Date until December 31, 2004, December 31, 2005 and December 31, 2006, 1999) in the Buyer shall (i) prepare in accordance with GAAP a statement derived period from the audited financial statements of the Buyer (each, an "Earn-Out Statement") of the Business EBITDA (as defined below) for each of the full fiscal years ending on such dates (such one-year periods together being the "Earn-Out Period") and, in the Earn-Out Statement for the fiscal year ending December 31, 2006, the Average Annual Business EBITDA (as defined below) for the Earn-Out Period, and (ii) deliver each Earn-Out Statement to the Seller Representative. At any time prior to the expiration of each period ending forty-five (45) days following the Seller Representative's receipt of each Earn-Out Statement for the fiscal years ending Closing Date until December 31, 2004 and December 31, 2005 (each such period, a the "Preliminary Dispute EBIT Period") anda Contingent Payment equal to five percent of "EBIT". "EBIT" shall mean for each year in the EBIT Period, the gross revenues (the "Gross Revenues") received in such calendar year from the sale of Vertech Machines, and associated injection molds and associated tooling (the "Products") shipped during such calendar year minus the following: (a) the production costs (the "Production Costs") incurred or paid by the Buyer for the Products manufactured or in the process of being manufactured during such calendar year; (b) an allocation for overhead (the "Overhead Allocation") which shall be a percentage of Gross Revenues equal to the percentage that the Gross Revenues for that calendar year bears to the total gross revenues of the Buyer for that calendar year, (c) the travel expenses and commissions paid by the Buyer during such calendar year to Michxxx Xxxxxx xx connection with proposed sales of Products (the "Noggxx Xxxenses"), (d) the fees and expenses incurred at any time by the Buyer with respect to this transaction (the Final Earn-Out Statement (as defined below), during the Final Dispute Period (as defined below), the Buyer shall upon reasonable notice, and during normal business hours, provide the Seller Representative and/or one or more accountants designated by the Seller Representative with reasonable access to the management of the Company, and the Buyer shall, and shall cause the Buyer's accountants, upon reasonable notice, to provide reasonable access to any and all documents, records and work papers used in the preparation of such Earn-Out Statement or Final Earn-Out Statement (as applicable) and shall reasonably cooperate with the Seller Representative and/or such accountant(s) in connection with any such review of such Earn-Out Statement or Final Earn-Out Statement and the documents, records and work papers related thereto. The Seller Representative shall have until the expiration of each Preliminary Dispute Period to dispute any or all amounts or elements of the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period (any such dispute, a "Preliminary Dispute"). The Seller Representative may provide to the Buyer, prior to the end of any Preliminary Dispute Period, written notice of a Preliminary Dispute (a "Preliminary Dispute NoticeTransaction Costs"), specifically setting forth including without limitation, the amounts fees and elements with which expenses of lawyers and accountants, travel costs and the Seller Representative disagrees and each basis for each such disagreement. If the Seller Representative does not so deliver a Preliminary Dispute Notice to expenses paid by the Buyer prior to under Section 2.2, amortized equally over the end of any applicable Preliminary Dispute EBIT Period, (e) any royalties paid pursuant to Section 3.3 hereof by the Earn-Out Statement delivered immediately prior to such Preliminary Dispute Period shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered Buyer to the Seller Representative or its nominee or successors during such calendar year, (f) the book value, as of the Closing Date, of any inventory acquired by the BuyerBuyer from the Seller determined during that calendar year by the Buyer in the exercise of its reasonable business judgment to be defective or unusable inventory (the "Inventory Deduction"), (g) to the extent it exceeds a total of $1,000, Seller's Warranty Expense paid or incurred during such calendar year, and no amounts in such Earn-Out Statement may be disputed (h) any expenses incurred by or on behalf of any Seller in Buyer to collect revenue from the Dispute Notice (as defined below). The Seller Representative shall have forty-five (45) days after receipt sale of the Earn-Out Statement prepared for the fiscal year ending December 31, 2006 (the "Final Earn-Out Statement") (such period, the "Final Dispute Period") to dispute any or all amounts or elements of the Final Earn-Out Statement (together with any items set forth in a Preliminary Dispute Notice with respect to any Preliminary Dispute Period that has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), a "Dispute"). The Seller Representative may provide to the Buyer, prior to the end of the Final Dispute Period, written notice of a Dispute (a "Dispute Notice"), specifically setting forth the amounts and elements with which the Seller Representative disagrees and each basis for each such disagreement and any such Dispute shall be limited to the matters as set forth in such Dispute Notice. If immediately prior to the end of the Final Dispute Period any Preliminary Dispute Notice has not been resolved between the Buyer and the Seller Representative in accordance with Section 2.2(b), in the absence of written notice from the Seller Representative canceling such Preliminary Dispute Notice or amending its terms, the Seller Representative shall be deemed to have delivered a Dispute Notice with respect to any such Preliminary Dispute Notice (and the terms of any such Dispute Notice shall be the same as set forth in the applicable Preliminary Dispute Notice). If a Dispute Notice is not delivered or deemed to have been delivered to the Buyer prior to the end of the Final Dispute Period, the Final Earn-Out Statement shall be final and binding upon each Seller and the Seller Representative in the form in which it was delivered to the Seller Representative by the Buyer, and no amounts in such Final Earn-Out Statement may be disputed by or on behalf of any Seller in the Dispute Notice. Notwithstanding anything in this Section 2.2 to the contrary, the Buyer may not dispute any amounts or elements contained in any Earn-Out Statement, including the Final Earn-Out Statement, once any such Earn-Out Statement has been delivered to the Seller Representative (except to the extent that any such disputed amounts or elements relate to or arise out of any pending Dispute)Products.