Common use of Additional Purchase Price Payments Clause in Contracts

Additional Purchase Price Payments. (a) Subject to the terms and conditions set forth in this Section 1.5, Purchaser shall make the following additional payments, if any, to the Seller in consideration for the Interests and Assets, which payments shall be in addition to the Purchase Price (any such additional payment is referred to herein as an "Additional Purchase Price Payment"), as follows: (i) if the aggregate EBITDA (as defined below) of the Subsidiaries equals or exceeds U.S.$*** during calendar year 1999, Purchaser shall pay to the Seller an Additional Purchase Price Payment of $*** for each dollar of aggregate EBITDA between U.S.$*** and U.S.$***, for a possible Additional Purchase Price Payment of U.S.$20,000,000; (ii) for each additional U.S.$*** of aggregate EBITDA of the Subsidiaries during calendar year 1999 above U.S.$***, Purchaser shall pay to the Seller an Additional Purchase Price Payment in the amount of $5,000,000; provided that such Additional Purchase Price Payments under this clause (ii) shall not exceed $15,000,000; (iii) provided that if any amount is owing pursuant to Section 1.5(a)(i) or 1.5(a)(ii) above, Purchaser shall pay to the Seller an Additional Purchase Price Payment equal to that amount of interest (at 4% per annum) that would have accrued on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which amount shall be added to the principal of the Earn-Out Note on the date of issuance; (iv) provided that if any amount is owing pursuant to Section 1.5(a)(i) or (ii) above, Purchaser shall pay to the Seller an Additional Purchase Price Payment equal to that amount of interest (at 8% per annum) that would have accrued on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which Additional Purchase Price Payment shall be paid in cash at the time of issuance of the Earn-Out Note as provided below; (v) if, due to application of the installment sale rules of the United States Internal Revenue Code of 1986, as amended (the "Code"), the determination of the Additional Purchase Price Payments pursuant to clauses (i) and (ii) above causes the gross profit percentage attributed to the payments of Purchase Price reported by the Seller for federal income tax purposes as income received by the Seller in calendar year 1999 (the "1999 Payments") to be higher than originally reported, Purchaser shall pay Seller an Additional Purchase Price Payment hereunder, in an amount equal to the lesser of (y) $250,000 or (z) the amount of interest payable to the Internal Revenue Service with respect to any resulting underpayment of tax on the 1999 Payments, such interest to be computed through that date which is 30 days after the date on which the amount of the Additional Purchase Price Payments payable under clauses (i), (ii) and (iii) above is determined. Any Additional Purchase Price Payment payable pursuant to this Section 1.5 shall be allocated among the Interests and Assets as provided in Schedule 1.3. Any Additional Purchase Price Payment payable pursuant to Sections 1.5(a)(i), 1.5(a)(ii) and 1.5(a)(iii) shall be paid by the Purchaser by the delivery to Seller of a note of the Purchaser substantially in the form attached hereto as Exhibit A (the "Earn-Out Note"), accompanied by an opinion of Trou▇▇▇▇ ▇▇▇d▇▇▇ ▇▇▇, counsel for the Purchaser, dated the date of the Earn-Out Note, in form and substance reasonably satisfactory to Seller. Any Additional Purchase Price Payment payable pursuant to Section 1.5(a)(v) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks within 10 days of Seller's delivery to Purchaser of a detailed calculation of the amount due. Any Additional Purchase Price Payment payable pursuant to Section 1.5(a)(iv) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks on the date of issuance of the Earn-Out Note. As used in this Section 1.5, the term "EBITDA" of the Subsidiaries shall mean the 1999 annual consolidated earnings of the Subsidiaries and, to the extent positive, the earnings of Diabetes Management Services, Inc.'s diabetes supply business (which business specifically excludes DMS' business of providing clinical services or any sales of supplies incidental thereto) ("DMS") (whether or not such business is operated through a Subsidiary) before interest, taxes, depreciation and amortization, as reported at the conclusion of 1999 in audited consolidated financial statements of the Subsidiaries and DMS (excluding any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing). EBITDA shall be derived from the applicable amounts that were determined in accordance with generally accepted accounting principles ("GAAP") applied in a manner consistent with past practices, provided that the costs of the audit of the Financial Statements, as defined in Section 4.3.7, of Seller, the Subsidiaries and DMS for the year ended December 31, 1998 and for any fiscal year prior to December 31, 1998 which Purchaser is required to file with the Securities and Exchange Commission ("Commission") in connection with the Form 8-K report of this transaction shall be deducted in computing 1999 EBITDA. EBITDA shall not include any allocation of overhead of Purchaser to the Subsidiaries other than (i) charges for services actually provided to the Subsidiaries by Purchaser at the request of Lucor Holdings, LLC ("Lucor") which services shall be charged at a rate approximating the costs incurred by Purchaser for providing such services, as set forth below; or (ii) charges for services contemplated in the 1999 Gain▇▇ ▇▇▇ical Budget previously reviewed by Purchaser as the same may subsequently be revised pursuant to this Section 1.5 (the "Budget"), so long as the amount charged to EBITDA for services under this Section (ii) shall not exceed the amount included in the Budget therefor. The costs incurred by Purchaser shall be determined by considering relevant pricing factors, including, without limitation, the number of personnel hours required, the hourly cost of the person or persons providing the services, and the cost of materials, the allocable overhead to the Subsidiaries (including employee benefits) and the cost of capital consumed in providing such services. In addition to amounts to be billed to Subsidiaries, Subsidiaries shall either pay directly or reimburse Purchaser for the amount of all expenses for outside professional services reasonably incurred by Purchaser for and on behalf of Subsidiaries, including, without limitation, public accounting and outside legal services. Any compensation paid or expenses reimbursed by Purchaser under the Lucor Management Agreement shall be charged against EBITDA. If the Purchaser believes the Subsidiaries should make an expenditure that is not contemplated in the Budget or is greater than the amount included in the Budget for such item, and Lucor Management does not agree that the expenditure is necessary, the matter will be submitted to the Board of Directors of the Purchaser, and the expenditure will be charged against EBITDA and added to the Budget only if the Board of Directors by a majority vote concludes that the expenditure is necessary. (b) No later than March 31, 2000, Purchaser shall cause to be prepared in accordance with GAAP and delivered to the Seller audited consolidated financial statements of the Subsidiaries (including DMS, whether or not operated through a Subsidiary, but excluding any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing) for the year ended December 31, 1999 (the "Additional Payment Financial Statements"). Payment of all Additional Purchase Price Payments calculated by the Purchaser to be due pursuant to Sections 1.5(a)(i) ,1.5(a)(ii) and 1.5(a)(iii) shall be made pursuant to the Earn-Out Note which shall be executed and delivered by the Purchaser to the Seller within 15 days following the date such Additional Payment Financial Statements are agreed to by Purchaser and Seller or finally resolved as hereinafter provided. The Seller and, on the Seller's behalf, an independent national accounting firm chosen by the Seller) shall have the right at mutually agreed times during normal business hours commencing on the Closing Date and ending 60 days after the receipt of the Additional Payment Financial Statements to inspect the books and records of the Subsidiaries (and DMS). Seller shall notify Purchaser in writing of any objections to the Additional Payment Financial Statements (in reasonable detail) within 65 days after receiving them. If Seller fails to give such notice by such time, Seller shall be deemed to have agreed with the Additional Payment Financial Statements as delivered. If Seller gives such notice by such time, (i) Purchaser shall execute and deliver to the Seller an Earn-Out Note within 15 days following receipt by Purchaser of the Seller's Notice with regard to the undisputed portion of any amounts owed to Seller pursuant to this Section 1.5, and (ii) Seller and Purchaser shall then have 10 business days after such notice to agree on the amounts of the EBITDA. If Seller and Purchaser are not able to agree by such time, the Additional Payment Financial Statements will be submitted to Deloitte & Touche in Atlanta, Georgia (or any successor accounting firm), who shall have responsibility for determining the correct EBITDA, which was derived from the applicable amounts that were determined in accordance with GAAP applied in the manner consistent with reasonable past practices, within 30 days following such submission. Deloitte & Touche's (or any such successor accounting firm's) determination shall be final and binding on Seller and Purchaser. The costs of any such determination shall be shared equally by Seller and Purchaser. (c) During 1999, Purchaser shall keep the Business intact as a separate unit, shall manage it in the ordinary course consistent with past practice, and shall not, without obtaining the prior written consent of Seller, take any of the following actions: (i) liquidate, consolidate, dissolve or merge any material Subsidiary or DMS with or into another company other than another Subsidiary, including without limitation, into a subsidiary or affiliate of Purchaser; (ii) cause a material change in the nature of the Business as presently conducted by the Subsidiaries and DMS; (iii) transfer assets or incur liabilities in the Subsidiaries or DMS except in the ordinary course of business consistent with past practice; (iv) remove from the premises of the Subsidiaries (other than to the premises of the Purchaser) any books or records of the Business reasonably necessary for the continuation of the operation of the Business; or (v) fail to honor or perform its obligations under the Lucor Management Agreement.

Additional Purchase Price Payments. (a) Subject to the terms and conditions set forth in this Section 1.5, Purchaser shall make the following additional payments, if any, whatever changes or modifications to the Seller EBITDA Profit Targets or corresponding Earn Out Payments that the Parties, in consideration the exercise of their reasonable business judgment, agree mutually it is appropriate to make from time to time to reflect or adjust for changed circumstances, i. e., acquisitions, added product lines, etc., or otherwise, the Interests and Assets, which payments Sellers shall be in addition afforded the opportunity to the Purchase Price (any such additional payment is referred to herein earn and be paid additionally for their Shares as an "Additional Purchase Price Payment"), as follows: (i) if the aggregate EBITDA (as defined below) of the Subsidiaries equals or exceeds U.S.$*** during calendar year 1999, Purchaser shall pay to the Seller an Additional Purchase Price Payment of $*** hereinafter provided for each dollar of aggregate EBITDA between U.S.$*** Fiscal Years (“FY”) 2009, 2010 and U.S.$***2011, for a possible Additional Purchase Price Payment of U.S.$20,000,000; (ii) for each additional U.S.$*** of aggregate respectively, an “Earn Out Payment” based on the EBITDA of the Subsidiaries during calendar year 1999 above U.S.$***, Purchaser shall pay to Company for 2009 and the Seller an Additional Purchase Price Payment in the amount of $5,000,000; provided that such Additional Purchase Price Payments under this clause (ii) shall not exceed $15,000,000;cumulative EBITDA for FY 2010 and FY 2011. (iiib) provided that if any amount is owing pursuant to Section 1.5(a)(i) or 1.5(a)(ii) aboveMore particularly, Purchaser shall pay to in accordance with the Seller an Additional Purchase Price Payment equal to that amount of interest (at 4% per annum) that would have accrued Earn Out Table attached as Schedule 3.3(b), for FY 2009, based on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which amount shall be added to the principal of the Earn-Out Note on the date of issuance; (iv) provided that if any amount is owing pursuant to Section 1.5(a)(i) or (ii) above, Purchaser shall pay to the Seller an Additional Purchase Price Payment equal to that amount of interest (at 8% per annum) that would have accrued on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which Additional Purchase Price Payment shall be paid in cash at the time of issuance of the Earn-Out Note as provided below; (v) if, due to application of the installment sale rules of the United States Internal Revenue Code of 1986, as amended (the "Code"), the determination of the Additional Purchase Price Payments pursuant to clauses (i) and (ii) above causes the gross profit percentage attributed to the payments of Purchase Price reported by the Seller for federal income tax purposes as income received by the Seller in calendar year 1999 (the "1999 Payments") to be higher than originally reported, Purchaser shall pay Seller an Additional Purchase Price Payment hereunder, in an amount equal to the lesser of (y) $250,000 or (z) the amount of interest payable to the Internal Revenue Service with respect to any resulting underpayment of tax on the 1999 Payments, such interest to be computed through that date which is 30 days after the date on which the amount of the Additional Purchase Price Payments payable under clauses (i), (ii) and (iii) above is determined. Any Additional Purchase Price Payment payable pursuant to this Section 1.5 shall be allocated among the Interests and Assets as provided in Schedule 1.3. Any Additional Purchase Price Payment payable pursuant to Sections 1.5(a)(i), 1.5(a)(ii) and 1.5(a)(iii) shall be paid by the Purchaser by the delivery to Seller of a note of the Purchaser substantially in the form attached hereto as Exhibit A (the "Earn-Out Note"), accompanied by an opinion of Trou▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇d▇▇▇ ▇▇▇, counsel ▇▇▇ and the percentage of that EBITDA Profit Target achieved by the Company for that Fiscal Year (i.e. Levels 1 through 5 reflecting the Purchaser, dated the date percentage of the Earn-Out Note, in form and substance reasonably satisfactory EBITDA Profit Target achieved from 100% to Seller. Any Additional Purchase Price Payment payable pursuant 80%) the Sellers will be entitled to Section 1.5(a)(v) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks within 10 days of Seller's delivery an Earn Out Payment for that Fiscal Year that corresponds on the Earn Out Table to Purchaser of a detailed calculation the percentage of the amount dueEBITDA Profit Target achieved by the Company. Any Additional Purchase Price Payment payable pursuant Accordingly, if the Company were to Section 1.5(a)(iv) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks on achieve the date of issuance of the Earn-Out Note. As used in this Section 1.5, the term "EBITDA" of the Subsidiaries shall mean the 1999 annual consolidated earnings of the Subsidiaries and, to the extent positive, the earnings of Diabetes Management Services, Inc.'s diabetes supply business (which business specifically excludes DMS' business of providing clinical services or any sales of supplies incidental thereto) ("DMS") (whether or not such business is operated through a Subsidiary) before interest, taxes, depreciation and amortization, as reported at the conclusion of 1999 in audited consolidated financial statements of the Subsidiaries and DMS (excluding any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing). EBITDA shall be derived from the applicable amounts that were determined in accordance with generally accepted accounting principles ("GAAP") applied in a manner consistent with past practices, provided that the costs of the audit of the Financial Statements, as defined in Section 4.3.7, of Seller, the Subsidiaries and DMS for the year ended December 31, 1998 and for any fiscal year prior to December 31, 1998 which Purchaser is required to file with the Securities and Exchange Commission ("Commission") in connection with the Form 8-K report of this transaction shall be deducted in computing 1999 EBITDA. EBITDA shall not include any allocation of overhead of Purchaser to the Subsidiaries other than (i) charges for services actually provided to the Subsidiaries by Purchaser at the request of Lucor Holdings, LLC ("Lucor") which services shall be charged at a rate approximating the costs incurred by Purchaser for providing such services, as set forth below; or (ii) charges for services contemplated in the 1999 Gain▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇ical Budget previously reviewed ▇▇▇ ▇▇▇▇▇▇ of $2,800,000 USD for FY 2009, the Sellers would be entitled to be paid the Level 1 Earn Out Payment for that Fiscal Year in the amount of $4,000,000 USD, whereas, for example, if the Company were to achieve an EBITDA of 88% of the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for that Fiscal Year, the Sellers would only be entitled to receive 88% of the Level 1 Earn Out Payment, or $3,520,000 USD. On the other hand, if the EBITDA of the Company for FY 2009 is less than 80% of the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, Sellers would not be entitled to be paid any Earn Out Payment for that Fiscal Year. (c) In accordance with the Earn Out Table, the Earn Out Payment which the Sellers are entitled to be paid for FY 2010, if any, shall be equal to the greater of: (A) the percentage of the Level 1 Earn Out Payment on the Earn Out Table that corresponds to the percentage of the Level 1 EBITDA Profit Target actually achieved by Purchaser as the same may subsequently Company by reason of (x) its operations in FY 2010 plus (y) the amount, if any, by which the Company exceeded the Level 1 EBITDA Profit Target for 2009 (the “2009 EBITDA Excess”) or (B) provided that the EBITDA for FY 2009 was not less than the Level 5 EBITDA Profit Target for such Fiscal Year on the Earn Out Table and that the EBITDA for FY 2010 was more than the Level 1 EBITDA Profit Target for such Fiscal Year on the Earn Out Table, (x) the percentage of the cumulative Earn Out Payment on the Earn Out Table that corresponds to the percentage of the Level 1 cumulative EBITDA Profit Target actually achieved by the Company by reason of its cumulative operations in FY 2009 and FY 2010 less (y) the aggregate amount of the Earn Out Payment, if any, which the Sellers were entitled to be revised paid (prior to any offsets pursuant to Section 3.3(f)) for FY 2009. If the EBITDA of the Company for FY 2010 (after giving effect to the 2009 EBITDA Excess) is less than 80% of the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for FY 2010, Sellers would not be entitled to be paid any Earn Out Payment for that Fiscal Year. (d) In accordance with the Earn Out Table, the Earn Out Payment which the Sellers are entitled to be paid for FY 2011, if any, shall be equal to the greater of: (A) the percentage of the Level 1 Earn Out Payment on the Earn Out Table that corresponds to the percentage of the Level 1 EBITDA Profit Target actually achieved by the Company by reason of (x) its operations in FY 2011 plus (y) the amount, if any, by which the Company exceeded the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for 2010 after taking into effect the 2009 EBITDA Excess, if any (the “2010 EBITDA Excess”); or (B) provided that the EBITDA for each of FY 2009 and FY 2010 (after adding the 2009 EBITDA Excess, if any) was not less than the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for each such Fiscal Year on the Earn Out Table and that the EBITDA for FY 2011 was more than the Level 1 EBITDA Profit Target for such Fiscal Year on the Earn Out Table, (x) the percentage of the Three Year Total of Earn Out Payments on the Earn Out Table that corresponds to the percentage of the Level 1 Three Year Total EBITDA Profit Target actually achieved by the Company by reason of its cumulative operations in FY 2009, FY 2010 and FY 2011, less (y) the aggregate amount of the Earn Out Payments, if any, which the Sellers were entitled to be paid for FY 2009 and FY 2010 (prior to any offsets pursuant to Section 3.3(f)). If the total of the EBITDA actually achieved by the Company for FY 2009, FY 2010 and FY 2011 is less than 80% of the Three Year Total EBITDA Profit Target, and the EBITDA for FY 2011 (after giving effect to the 2010 EBITDA Excess) is less than 80% of the ▇▇▇▇▇ ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ for FY 2011, the Sellers would not be entitled to be paid any Earn Out Payment for that year. (e) In no event will the Sellers be entitled to be paid more than (i) the corresponding Level 1 Earn Out Payment on the Earn Out Table for FY 2009 or (ii) the corresponding Level 1 cumulative EBITDA Profit Target for FY 2010 or (iii) under this Section 3.3, Earn Out Payments aggregating more than $15,000,000 USD. (f) Any Earn Out Payment that is payable pursuant to this Section 1.5 (3.3 shall be paid to each of the "Budget")Sellers, so long as commensurate with the amount charged Sellers’ Allocations, within 120 days after the end of the Fiscal Year for which such Earn Out Payment is payable. The Purchaser shall issue a statement to the Sellers setting forth the calculation of the EBITDA for services under this Section (ii) shall not exceed the amount included in the Budget therefor. The costs incurred by Purchaser shall be determined by considering relevant pricing factors, including, without limitation, the number of personnel hours required, the hourly cost of the person or persons providing the services, that Fiscal Year and the cost of materials, the allocable overhead to the Subsidiaries (including employee benefits) and the cost of capital consumed in providing such services. In addition to amounts to be billed to Subsidiaries, Subsidiaries shall either pay directly or reimburse Purchaser for the amount of all expenses for outside professional services reasonably incurred the Earn Out Payment, if any, to which the Sellers are entitled in accordance with the provisions of this Section 3.3 (the “Earn Out Payment Statement”). Notwithstanding anything herein to the contrary, any Earn Out Payment to be paid by Purchaser for and on behalf of Subsidiaries, including, without limitation, public accounting and outside legal services. Any compensation paid or expenses reimbursed by Purchaser under the Lucor Management Agreement shall be charged against EBITDA. If the Purchaser believes hereunder shall in all events be subject to an offset for any outstanding claims for indemnification by the Subsidiaries should make an expenditure that is not contemplated in the Budget or is greater than the amount included in the Budget for such item, and Lucor Management does not agree that the expenditure is necessary, the matter will be submitted Purchaser pursuant to the Board of Directors of the Purchaser, and the expenditure will be charged against EBITDA and added to the Budget only if the Board of Directors by a majority vote concludes that the expenditure is necessaryArticle IX. (bg) No later than March 31Absent manifest error, 2000, Purchaser shall cause to be prepared in accordance with GAAP and delivered to the Seller audited consolidated financial statements determination of the Subsidiaries (including DMS, whether or not operated through a Subsidiary, but excluding Earn Out Payment for any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing) for the year ended December 31, 1999 (the "Additional Payment Financial Statements"). Payment of all Additional Purchase Price Payments calculated by the Purchaser to be due pursuant to Sections 1.5(a)(i) ,1.5(a)(ii) and 1.5(a)(iii) Fiscal Year shall be made pursuant to the Earn-Out Note which shall be executed final, conclusive and delivered by the Purchaser to the Seller within 15 days following the date such Additional Payment Financial Statements are agreed to by Purchaser and Seller or finally resolved as hereinafter provided. The Seller and, binding on the Seller's behalf, an independent national accounting firm chosen by the SellerParties unless within thirty (30) shall have the right at mutually agreed times during normal business hours commencing on the Closing Date and ending 60 days after the receipt of the Additional Earn Out Payment Financial Statements to inspect Statement, the books and records of the Subsidiaries (and DMS). Seller Sellers shall notify the Purchaser in writing of any objections disagreement therewith, specifically identifying the item(s) and amount(s) in dispute and the basis for such dispute (the “Earn Out Dispute Notice”). The Parties shall use commercially reasonable efforts to reach agreement with respect to such disputed items within thirty (30) days following the delivery of the Earn Out Dispute Notice, or such longer period as may be agreed upon by the Parties (the “Earn Out Resolution Period”). (h) If the Parties fail to resolve any disputes with respect to the Additional Earn Out Payment Financial Statements as identified in the Earn Out Dispute Notice within the Earn Out Resolution Period, the dispute(s) shall be submitted for resolution within ten (in reasonable detail10) within 65 days after receiving them. If Seller fails to give such notice by such time, Seller shall be deemed to have agreed with the Additional Payment Financial Statements as delivered. If Seller gives such notice by such time, (i) Purchaser shall execute and deliver to the Seller an Earn-Out Note within 15 days following receipt by Purchaser expiration of the Seller's Notice with regard to the undisputed portion of any amounts owed to Seller pursuant to this Section 1.5Earn Out Resolution Period to, and (ii) Seller and Purchaser shall then have 10 business days after such notice to agree on the amounts of the EBITDA. If Seller and Purchaser are not able to agree by such timefinally determined by, the Additional Payment Financial Statements will be submitted to Deloitte & Touche in Atlanta, Georgia (or any successor accounting firm), who shall have responsibility for determining the correct EBITDA, which was derived from the applicable amounts that were determined Arbitration Tribunal in accordance with GAAP applied Section 11.5 hereof. The Arbitration Tribunal’s determination of such dispute(s) shall be made in the a manner consistent with reasonable past practices, within 30 the principles set forth in this Section 3.3 in a written opinion delivered not later than thirty (30) days following after submission to such submissionArbitration Tribunal. Deloitte & Touche's (or any such successor accounting firm's) determination shall be final and binding on Seller and Purchaser. The costs of any Any such determination shall be shared equally by Seller final, conclusive and Purchaserbinding on the Parties. (c) During 1999, Purchaser shall keep the Business intact as a separate unit, shall manage it in the ordinary course consistent with past practice, and shall not, without obtaining the prior written consent of Seller, take any of the following actions: (i) liquidate, consolidate, dissolve or merge any material Subsidiary or DMS with or into another company other than another Subsidiary, including without limitation, into a subsidiary or affiliate of Purchaser; (ii) cause a material change in the nature of the Business as presently conducted by the Subsidiaries and DMS; (iii) transfer assets or incur liabilities in the Subsidiaries or DMS except in the ordinary course of business consistent with past practice; (iv) remove from the premises of the Subsidiaries (other than to the premises of the Purchaser) any books or records of the Business reasonably necessary for the continuation of the operation of the Business; or (v) fail to honor or perform its obligations under the Lucor Management Agreement.

Additional Purchase Price Payments. (a) Subject to the terms and conditions set forth in this Section 1.5, Purchaser shall make the following additional payments, if any, to the Seller in consideration for the Interests and Assets, which payments shall be in addition to the Purchase Price (any such additional payment is referred to herein as an "Additional Purchase Price Payment"), as follows: (i) if the aggregate EBITDA (as defined below) of the Subsidiaries equals or exceeds U.S.$*** during calendar year 1999, Purchaser shall pay to the Seller an Additional Purchase Price Payment of $*** for each dollar of aggregate EBITDA between U.S.$*** and U.S.$***, for a possible Additional Purchase Price Payment of U.S.$20,000,000; (ii) for each additional U.S.$*** of aggregate EBITDA of the Subsidiaries during calendar year 1999 above U.S.$***, Purchaser shall pay to the Seller an Additional Purchase Price Payment in the amount of $5,000,000; provided that such Additional Purchase Price Payments under this clause (ii) shall not exceed $15,000,000; (iii) provided that if any amount is owing pursuant to Section 1.5(a)(i) or 1.5(a)(ii) above, Purchaser shall pay to the Seller an Additional Purchase Price Payment equal to that amount of interest (at 4% per annum) that would have accrued on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which amount shall be added to the principal of the Earn-Out Note on the date of issuance; (iv) provided that if any amount is owing pursuant to Section 1.5(a)(i) or (ii) above, Purchaser shall pay to the Seller an Additional Purchase Price Payment equal to that amount of interest (at 8% per annum) that would have accrued on the Additional Purchase Price Payments payable pursuant to Sections 1.5(a)(i) and (ii) above, if any, had the Earn-Out Note for such Additional Purchase Price Payments been issued on January 1, 2000, which Additional Purchase Price Payment shall be paid in cash at the time of issuance of the Earn-Out Note as provided below; (v) if, due to application of the installment sale rules of the United States Internal Revenue Code of 1986, as amended (the "Code"), the determination of the Additional Purchase Price Payments pursuant to clauses (i) and (ii) above causes the gross profit percentage attributed to the payments of Purchase Price reported by the Seller for federal income tax purposes as income received by the Seller in calendar year 1999 (the "1999 Payments") to be higher than originally reported, Purchaser shall pay Seller an Additional Purchase Price Payment hereunder, in an amount equal to the lesser of (y) $250,000 or (z) the amount of interest payable to the Internal Revenue Service with respect to any resulting underpayment of tax on the 1999 Payments, such interest to be computed through that date which is 30 days after the date on which the amount of the Additional Purchase Price Payments payable under clauses (i), (ii) and (iii) above is determined. Any Additional Purchase Price Payment payable pursuant to this Section 1.5 shall be allocated among the Interests and Assets as provided in Schedule 1.3. ------------ Any Additional Purchase Price Payment payable pursuant to Sections 1.5(a)(i), 1.5(a)(ii) and 1.5(a)(iii) shall be paid by the Purchaser by the delivery to Seller of a note of the Purchaser substantially in the form attached hereto as Exhibit A (the "Earn-Out Note"), accompanied by an opinion of Trou▇▇▇▇ ▇▇▇d▇▇▇ ▇▇▇Troutman Sanders ---------- LLP, counsel for the Purchaser, dated the date of the Earn-Out ▇▇▇▇ ▇▇ t▇▇ ▇▇▇▇-Out Note, in form and substance reasonably satisfactory to Seller. Any Additional Purchase Price Payment payable pursuant to Section 1.5(a)(v) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks within 10 days of Seller's delivery to Purchaser of a detailed calculation of the amount due. Any Additional Purchase Price Payment payable pursuant to Section 1.5(a)(iv) shall be paid by Purchaser in cash, either by wire transfer or certified or official bank checks on the date of issuance of the Earn-Out Note. As used in this Section 1.5, the term "EBITDA" of the Subsidiaries shall mean the 1999 annual consolidated earnings of the Subsidiaries and, to the extent positive, the earnings of Diabetes Management Services, Inc.'s diabetes supply business (which business specifically excludes DMS' business of providing clinical services or any sales of supplies incidental thereto) ("DMS") (whether or not such business is operated through a Subsidiary) before interest, taxes, depreciation and amortization, as reported at the conclusion of 1999 in audited consolidated financial statements of the Subsidiaries and DMS (excluding any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing). EBITDA shall be derived from the applicable amounts that were determined in accordance with generally accepted accounting principles ("GAAP") applied in a manner consistent with past practices, provided that the costs of the audit of the Financial Statements, as defined in Section 4.3.7, of Seller, the Subsidiaries and DMS for the year ended December 31, 1998 and for any fiscal year prior to December 31, 1998 which Purchaser is required to file with the Securities and Exchange Commission ("Commission") in connection with the Form 8-K report of this transaction shall be deducted in computing 1999 EBITDA. EBITDA shall not include any allocation of overhead of Purchaser to the Subsidiaries other than (i) charges for services actually provided to the Subsidiaries by Purchaser at the request of Lucor Holdings, LLC ("Lucor") which services shall be charged at a rate approximating the costs incurred by Purchaser for providing such services, as set forth below; or (ii) charges for services contemplated in the 1999 Gain▇▇ ▇▇▇ical Gainor Medical Budget previously reviewed by Purchaser as the same may subsequently m▇▇ ▇▇▇sequently be revised pursuant to this Section 1.5 (the "Budget"), so long as the amount charged to EBITDA for services under this Section (ii) shall not exceed the amount included in the Budget therefor. The costs incurred by Purchaser shall be determined by considering relevant pricing factors, including, without limitation, the number of personnel hours required, the hourly cost of the person or persons providing the services, and the cost of materials, the allocable overhead to the Subsidiaries (including employee benefits) and the cost of capital consumed in providing such services. In addition to amounts to be billed to Subsidiaries, Subsidiaries shall either pay directly or reimburse Purchaser for the amount of all expenses for outside professional services reasonably incurred by Purchaser for and on behalf of Subsidiaries, including, without limitation, public accounting and outside legal services. Any compensation paid or expenses reimbursed by Purchaser under the Lucor Management Agreement shall be charged against EBITDA. If the Purchaser believes the Subsidiaries should make an expenditure that is not contemplated in the Budget or is greater than the amount included in the Budget for such item, and Lucor Management does not agree that the expenditure is necessary, the matter will be submitted to the Board of Directors of the Purchaser, and the expenditure will be charged against EBITDA and added to the Budget only if the Board of Directors by a majority vote concludes that the expenditure is necessary. (b) No later than March 31, 2000, Purchaser shall cause to be prepared in accordance with GAAP and delivered to the Seller audited consolidated financial statements of the Subsidiaries (including DMS, whether or not operated through a Subsidiary, but excluding any financial results of any acquisitions by Purchaser or any Subsidiary subsequent to the Closing) for the year ended December 31, 1999 (the "Additional Payment Financial Statements"). Payment of all Additional Purchase Price Payments calculated by the Purchaser to be due pursuant to Sections 1.5(a)(i) ,1.5(a)(ii) and 1.5(a)(iii) shall be made pursuant to the Earn-Out Note which shall be executed and delivered by the Purchaser to the Seller within 15 days following the date such Additional Payment Financial Statements are agreed to by Purchaser and Seller or finally resolved as hereinafter provided. The Seller and, on the Seller's behalf, an independent national accounting firm chosen by the Seller) shall have the right at mutually agreed times during normal business hours commencing on the Closing Date and ending 60 days after the receipt of the Additional Payment Financial Statements to inspect the books and records of the Subsidiaries (and DMS). Seller shall notify Purchaser in writing of any objections to the Additional Payment Financial Statements (in reasonable detail) within 65 days after receiving them. If Seller fails to give such notice by such time, Seller shall be deemed to have agreed with the Additional Payment Financial Statements as delivered. If Seller gives such notice by such time, (i) Purchaser shall execute and deliver to the Seller an Earn-Out Note within 15 days following receipt by Purchaser of the Seller's Notice with regard to the undisputed portion of any amounts owed to Seller pursuant to this Section 1.5, and (ii) Seller and Purchaser shall then have 10 business days after such notice to agree on the amounts of the EBITDA. If Seller and Purchaser are not able to agree by such time, the Additional Payment Financial Statements will be submitted to Deloitte & Touche in Atlanta, Georgia (or any successor accounting firm), who shall have responsibility for determining the correct EBITDA, which was derived from the applicable amounts that were determined in accordance with GAAP applied in the manner consistent with reasonable past practices, within 30 days following such submission. Deloitte & Touche's (or any such successor accounting firm's) determination shall be final and binding on Seller and Purchaser. The costs of any such determination shall be shared equally by Seller and Purchaser. (c) During 1999, Purchaser shall keep the Business intact as a separate unit, shall manage it in the ordinary course consistent with past practice, and shall not, without obtaining the prior written consent of Seller, take any of the following actions: (i) liquidate, consolidate, dissolve or merge any material Subsidiary or DMS with or into another company other than another Subsidiary, including without limitation, into a subsidiary or affiliate of Purchaser; (ii) cause a material change in the nature of the Business as presently conducted by the Subsidiaries and DMS; (iii) transfer assets or incur liabilities in the Subsidiaries or DMS except in the ordinary course of business consistent with past practice; (iv) remove from the premises of the Subsidiaries (other than to the premises of the Purchaser) any books or records of the Business reasonably necessary for the continuation of the operation of the Business; or (v) fail to honor or perform its obligations under the Lucor Management Agreement.