Common use of Contingent Consideration Clause in Contracts

Contingent Consideration. Additional consideration of up to a maximum of $5,000,000 (the "Maximum Contingent Consideration") may be paid by the Purchaser based on a combination of 2005 and 2006 EBITDA (and, to the extent applicable, 2007 EBITDA), as follows: (a) $1,500,000 in Contingent Consideration shall be payable if the Target Companies achieve at least $5,000,000 in EBITDA in 2005; in the event that the Target Companies achieve EBITDA of less than $5,000,000, no Contingent Consideration shall be payable pursuant to this Section 1.7(a). Any Contingent Consideration payable pursuant to this Section 1.7(a) (the "2005 Contingent Consideration") will be payable on or before February 15, 2006. (b) So long as the Target Companies achieve EBITDA in 2005 of at least $4,000,000, additional Contingent Consideration shall be payable only if the Target Companies achieve EBITDA in 2006 (and, if applicable, 2007), as follows: (i) The amount of the Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2006 of $6,000,000, and $3,500,000 if the Companies achieve EBITDA in 2006 of at least $8,000,000, and the Contingent Consideration of up to $3,500,000 shall be prorated for any EBITDA in 2006 between $6,000,000 and $8,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(i) (the "2006 Contingent Consideration") will be payable on or before February 15, 2007. (ii) In the event that the 2006 Contingent Consideration, if any, equals less than $3,500,000, the difference between $3,500,000 and the 2006 Contingent Consideration (the "Balance") may be earned as follows: the amount of Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2007 of $7,500,000 or less, the full amount of the Balance if the Target Companies achieve EBITDA in 2007 of at least $10,000,000, the Contingent Consideration, up to the full amount of the Balance, shall be prorated for any EBITDA in 2007 between $7,500,000 and $10,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(ii) (the "2007 Contingent Consideration") will be payable on or before February 15, 2008. For purposes of clarity, if the Target Companies fail to achieve at least $4,000,000 in EBITDA in 2005, no Contingent Consideration shall be payable whatsoever. (c) The Contingent Consideration shall be allocated among the MAG Holders in accordance with the MAG Allocation. The Contingent Consideration shall be payable, at the election of the Purchaser, (i) in cash, or (ii) if there has been no IPO as of the date that any payment of Contingent Consideration becomes due, in Series 3 Stock at the Series 3 Stock Price or (iii) if there has been an IPO as of the date of payment, in Common Stock at the IPO Price. The MAG Holders shall have the right to require payment in cash of each amount of Contingent Consideration payable pursuant to this Section 1.7 an amount equal to up to 10% of the Cash Equivalents Balance as of the end of the calendar year immediately prior to the applicable payment; provided, however, irrespective of the foregoing limitation on cash payments, in no case shall any payment pursuant to this Section 1.7 be made such that not less than 20% of the Contingent Consideration amount due is paid in cash. (d) Notwithstanding the foregoing provisions of this Section 1.7, on or before April 15, 2006, the Purchaser shall have the irrevocable option to make a one-time cash payment of $2,500,000 in full satisfaction of all amounts owing in connection with the contingent consideration described in this Section 1.7(b) above.

Contingent Consideration. Additional consideration In addition to the Share Consideration and the Cash Consideration, the Purchaser shall pay a contingent payment (collectively, the “Contingent Consideration”) to the Company. The Contingent Consideration may not modified without the consent of up to a maximum Adamjee. The Contingent Consideration shall be based on the Purchaser’s achievement of $5,000,000 financial targets based on Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA Target”), if such EBITDA Targets are achieved by the Company for the fiscal year beginning June 16, 2005 through June 15, 2006 (the "Maximum “Contingent Consideration") may be paid by the Purchaser based on a combination of 2005 and 2006 EBITDA (and, to the extent applicable, 2007 EBITDAConsideration Period”), as follows: (a) $1,500,000 in the Contingent Consideration shall be payable if is an amount equal to Forty Percent (40%) of the Target Companies achieve at least $5,000,000 in EBITDA in 2005; in the event that the Target Companies achieve EBITDA of less than $5,000,000, no Contingent Consideration shall be payable pursuant to this Section 1.7(a). Any Contingent Consideration payable pursuant to this Section 1.7(a) (the "2005 Contingent Consideration") will be payable on or before February 15, 2006Target. (b) So long as the Target Companies achieve EBITDA in 2005 of at least The payment owned under this Section 1.7 shall not exceed Five Hundred Thousand Dollars ($4,000,000, additional 500,000). The Contingent Consideration earned under this Section 1.7 shall be calculated at the end of each calendar month following the Closing (subject to adjustment at the end of MSSI’s fiscal year) and shall be payable only if as follows: One Hundred Percent (100%) to the Target Companies achieve EBITDA Company in 2006 Ten Thousand Dollar (and$10,000) monthly installments (the “Monthly Installments”), with the first Monthly Installment to be made on July 31, 2005 (for the period from June 16, 2005 to July 15, 2005) and on the last day of each month thereafter, if applicable. It is expressly understood that the Monthly Installments are advance payments of the Contingent Consideration, 2007)which will be paid monthly, as follows: (i) The in arrears, based on the Contingent Consideration calculations made on a rolling basis commencing on June 16, 2005. In the event the estimated Contingent Consideration amount for any monthly measurement period is less than $10,000, then the payment for such month shall only be the estimated amount of the Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2006 of $6,000,000earned for such month, and $3,500,000 if the Companies achieve EBITDA in 2006 of at least $8,000,000, and unless the Contingent Consideration amounts for previous months exceeded $10,000 for such previous month. For purposes of up clarification, if the estimated Contingent Consideration for the period from June 16, 2005 through July 15, 2005 is $15,000, then $10,000 would be paid on July 31, 2005 and the excess ($5,000) would be carried forward to the next monthly measurement period in which the Contingent Consideration is less than $3,500,000 10,000. If the estimated Contingent Consideration for the period from August 16 through September 15, 2005 is only $5,000, then the payment for September 30, 2005 would nonetheless be $10,000 ($5,000 carry-over for July 2005 and $5,000 for August 2005). The Monthly Payments shall be prorated for any EBITDA in 2006 between $6,000,000 and $8,000,000directed to a bank account to be specified by the Company from time to time. Any Contingent Consideration payable pursuant to this Section 1.7(b)(i) (The final payment of the "2006 Contingent Consideration") will be payable on or before February 15, 2007. (ii) In balance of the event that the 2006 Contingent Consideration, if any, equals less than $3,500,000, the difference between $3,500,000 and the 2006 Contingent Consideration (the "Balance") may be earned as follows: the amount of Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2007 of $7,500,000 or lessmade on September 16, the full amount of the Balance if the Target Companies achieve EBITDA in 2007 of at least $10,000,000, the Contingent Consideration, up to the full amount of the Balance, shall be prorated for any EBITDA in 2007 between $7,500,000 and $10,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(ii) (the "2007 Contingent Consideration") will be payable on or before February 15, 2008. For purposes of clarity, if the Target Companies fail to achieve at least $4,000,000 in EBITDA in 2005, no Contingent Consideration shall be payable whatsoever2006. (c) The All computations of EBITDA with respect to the Contingent Consideration Period and the amount of bonus hereunder (the “Calculated Amounts”) shall be allocated among undertaken by MSSI’s regular independent accounting firm (the MAG Holders “MSSI Accountants”) in accordance with GAAP consistently applied, and reported to the MAG AllocationMembers by a written notice. The MSSI shall supply the Members at least quarterly (or more frequently if calculated by MSSI) with calculations of the Contingent Consideration shall be payable, at the election of the Purchaser, for each calendar quarter. Within ninety (i90) in cash, or (ii) if there has been no IPO as of the date that any payment of Contingent Consideration becomes due, in Series 3 Stock at the Series 3 Stock Price or (iii) if there has been an IPO as of the date of payment, in Common Stock at the IPO Price. The MAG Holders shall have the right to require payment in cash of each amount of Contingent Consideration payable pursuant to this Section 1.7 an amount equal to up to 10% of the Cash Equivalents Balance as of days after the end of the calendar year immediately prior Contingent Consideration Period, MSSI shall deliver to the applicable payment; provided, however, irrespective Company and Adamjee a copy of the foregoing limitation MSSI Financial Statements and a statement setting forth in reasonable detail its computation of the Calculated Amounts. If, within thirty (30) days after delivery by MSSI to the Company of such statements, or if the Company gives written notice to MSSI disputing the computation of the Calculated Amounts or otherwise disputing such statements (a “Dispute Notice”), the MSSI Accountants and the independent certified public accountants retained by the Company (the “Company’s Accountants”) to dispute the statement at the Company’s expense, shall undertake to reach an agreement as to the Calculated Amounts and shall notify the Company and MSSI in writing as to such agreement. Any such agreement by such accountants shall be conclusive and binding on cash paymentsthe parties hereto. If within ten (10) days after the matter is referred to them, the Company’s Accountants and the MSSI Accountants are unable to agree as to the Calculated Amounts, such accountants jointly shall promptly select a third independent certified public accounting firm (the “Third Accountant”). The Third Accountant shall, within thirty (30) days after the matter is referred to it, notify the Company and MSSI in no case writing of its determination of the Calculated Amounts. Any such determination by the Third Accountant shall any payment pursuant be conclusive and binding on the parties hereto. If the Company does not deliver a Dispute Notice to this Section 1.7 be made such that not less than 20% of MSSI within the prescribed timeframe, the Calculated Amounts for the Contingent Consideration amount due Period shall be conclusive and binding on the parties hereto. The fees and expenses of the Third Accountant, and all other costs associated with any dispute in which a Third Accountant is appointed, shall be paid in cash. by the non-prevailing party (d) Notwithstanding as determined by the foregoing provisions Third Accountant), except that each of this Section 1.7MSSI, on or before April 15the one hand, 2006and the Company, on the Purchaser other hand, shall have the irrevocable option to make a one-time cash payment of $2,500,000 in full satisfaction of all amounts owing be responsible for its own attorneys' fees, accountants' fees and other expenses incurred in connection with the contingent consideration described in dispute. For purposes of this Section 1.7(b) aboveAgreement, the non-prevailing party shall be considered to be the party whose proposed Calculated Amount is not substantially adopted by the Third Accountant.

Contingent Consideration. Additional consideration of up to a maximum of $5,000,000 (the "Maximum Contingent Consideration") may be paid by the Purchaser based on a combination of 2005 and 2006 EBITDA (and, to the extent applicable, 2007 EBITDA), as follows: (a) $1,500,000 Promptly (and in Contingent Consideration shall be payable if the Target Companies achieve at least $5,000,000 in EBITDA in 2005; in the any event that the Target Companies achieve EBITDA of less than $5,000,000, no Contingent Consideration shall be payable within two (2) Business Days) following a Final Earn-Out Payment Statement being deemed final and binding pursuant to Section 1.3(e) of this Section 1.7(aAnnex A, Buyer shall pay to Seller (by wire transfer of immediately available funds to an account designated in writing by Seller) an amount (not to exceed $130 million) in cash equal to one-half (1/2) of the product of (i) Excess EBITDA, multiplied by (ii) the Earn-Out Multiple (such amount, the “Earn-Out Payment”). Any Contingent Consideration payable pursuant to this Section 1.7(aFor illustration purposes only, (A) if Actual EBITDA was $100 million, then the Earn-Out Payment would be $92.5 million (representing one-half of the "2005 Contingent Consideration"product of (i) will $25 million, multiplied by (ii) 7.40), and (B) if Actual EBITDA was $200 million, then the Earn-Out Payment would be payable on or before February 15, 2006$130 million because the Earn-Out Payment is capped at $130 million. (b) So Notwithstanding the foregoing, and so long as shares of Buyer Class A Stock are listed on a national securities exchange, Buyer may, as determined by Buyer in its sole discretion, pay to Seller the Target Companies achieve EBITDA in 2005 of at least $4,000,000Earn-Out Payment as follows, additional Contingent Consideration and such payment, if elected, shall be payable only if made promptly (and in any event within two (2) Business Days) following the Target Companies achieve EBITDA Final Earn-Out Payment Statement referred to in 2006 (and, if applicable, 2007), as followsSection 1.2(a) of this Annex A being deemed final and binding: (i) The an amount in cash (by wire transfer of immediately available funds to an account designated in writing by Seller) equal to one-half (1/2) of the Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2006 of $6,000,000, and $3,500,000 if the Companies achieve EBITDA in 2006 of at least $8,000,000, and the Contingent Consideration of up to $3,500,000 shall be prorated for any EBITDA in 2006 between $6,000,000 and $8,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(i) (the "2006 Contingent Consideration") will be payable on or before February 15, 2007.Earn-Out Payment; and (ii) In in satisfaction of the event that other one-half (1/2) of the 2006 Contingent Consideration, if any, equals less than $3,500,000Earn-Out Payment, the difference between $3,500,000 issuance by Buyer to Seller of such number of validly issued, fully paid and non-assessable shares of the 2006 Contingent Consideration Buyer Class A Stock determined by dividing (x) fifty percent (50%) of the Earn-Out Payment by (y) the intraday volume weighted average price of one share of Buyer Class A Stock, as reported by Bloomberg, LP, over the ten (10) trading days ending on the trading day immediately preceding the date on which the Final Earn-Out Payment Statement is deemed final (the "Balance") may be earned as follows: the amount of Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2007 of $7,500,000 or less, the full amount of the Balance if the Target Companies achieve EBITDA in 2007 of at least $10,000,000, the Contingent Consideration, up to the full amount of the Balance, shall be prorated for any EBITDA in 2007 between $7,500,000 and $10,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(ii) (the "2007 Contingent Consideration") will be payable on or before February 15, 2008. For purposes of clarity, if the Target Companies fail to achieve at least $4,000,000 in EBITDA in 2005, no Contingent Consideration shall be payable whatsoever. (c) The Contingent Consideration shall be allocated among the MAG Holders in accordance with the MAG Allocation. The Contingent Consideration shall be payable, at the election of the Purchaser, (i) in cash, or (ii) if there has been no IPO as of the date that any payment of Contingent Consideration becomes due, in Series 3 Stock at the Series 3 Stock Price or (iii) if there has been an IPO as of the date of payment, in Common Stock at the IPO Price. The MAG Holders shall have the right to require payment in cash of each amount of Contingent Consideration payable pursuant to this Section 1.7 an amount equal to up to 10% of the Cash Equivalents Balance as of the end of the calendar year immediately prior to the applicable payment“Earn-Out Buyer VWAP”); provided, however, irrespective if the foregoing number of shares, together with the Buyer Shares, is greater than a number representing nineteen and nine tenths percent (19.9%) of the foregoing limitation on cash paymentsshares of Buyer Class A Stock outstanding as of such date (such number, in no case shall any payment the “Earn-Out Stock Threshold”), then the number of shares of Buyer Class A Stock to be delivered pursuant to this Section 1.7 1.2(b)(ii) of this Annex A shall be made reduced to the Earn-Out Stock Threshold and, in such that not less than 20% event, Buyer shall pay to Seller the Earn-Out Excess Stock Amount in cash (by wire transfer of immediately available funds to an account designated in writing by Seller). For purposes hereof, “Earn-Out Excess Stock Amount” shall mean the number of shares of Buyer Class A Stock in excess of the Contingent Consideration amount due is paid in cashEarn-Out Stock Threshold that would have been issued under the preceding sentence but for the proviso thereto, multiplied by the Earn-Out Buyer VWAP. (d) Notwithstanding the foregoing provisions of this Section 1.7, on or before April 15, 2006, the Purchaser shall have the irrevocable option to make a one-time cash payment of $2,500,000 in full satisfaction of all amounts owing in connection with the contingent consideration described in this Section 1.7(b) above.

Contingent Consideration. Additional consideration Six Million One Hundred and Five (6,000,105) shares of up Parent Common to be issued to the Company Shareholders on a maximum of $5,000,000 pro-rata basis, as set forth in Schedule 3.5 (the "Maximum Contingent Securities") to be deposited into an escrow account (the "Contingent Consideration Escrow Account") on the Closing Date and Three Hundred and Fifteen Thousand Dollars ($315,000) (collectively "Contingent Consideration") may ), to be paid by deposited into the Purchaser based Contingent Consideration Escrow Account on or before March 31, 2005, pursuant to the terms of the Contingent Consideration Escrow Agreement attached hereto as Exhibit B as additional consideration for the Merger. The cash and shares of stock deposited in the Contingent Consideration Escrow Account shall be released and distributed to the Company Shareholders on a combination pro-rata basis, as set forth in Schedule 3.5, upon the satisfaction of 2005 the following conditions: 3.3.3.1 If the Surviving Entity's 2004 EBITDA exceeds Eight Hundred Thousand Dollars ($800,000) for the fiscal year 2004 ("2004 Tier 1 Goal"), then as of date on which Parent files its Form 10-SKB or 10-K, as required, for fiscal year 2004, or April 15, 2005, whichever is earlier, the $315,000 cash and 2006 EBITDA (and, 1,500,105 shares of Contingent Securities shall be released and distributed to the extent applicable, 2007 EBITDA), as follows: (a) $1,500,000 in Contingent Consideration shall be payable if the Target Companies achieve at least $5,000,000 in EBITDA in 2005; in Company Shareholders. In the event that the Target Companies achieve 2004 EBITDA of is equal to or greater than 75% but less than $5,000,000100% of the 2004 Tier 1 Goal, no then that portion of the Contingent Consideration shall be payable pursuant that is equal to this Section 1.7(a). Any Contingent Consideration payable pursuant to this Section 1.7(a) (the "2005 Contingent Consideration") will be payable on or before February 15, 2006. (b) So long as percentage of the Target Companies achieve EBITDA in 2005 of at least $4,000,000, additional Contingent Consideration shall be payable only if performance goal actually obtained by the Target Companies achieve EBITDA in 2006 (and, if applicable, 2007), as follows: (i) The amount of Company multiplied by the Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2006 of $6,000,000, and $3,500,000 if the Companies achieve EBITDA in 2006 of at least $8,000,000, and released from the Contingent Consideration of up Escrow Account and distributed to $3,500,000 shall be prorated for any EBITDA in 2006 between $6,000,000 and $8,000,000the Company Shareholders. Any Contingent Consideration payable pursuant to this Section 1.7(b)(i) (the "2006 Contingent Consideration") will be payable on or before February 15, 2007. (ii) In the event that the 2006 Contingent Consideration, if any, equals 2004 EBITDA is less than $3,500,00075%, the difference between $3,500,000 and the 2006 Contingent Consideration (the "Balance") may be earned as follows: the amount of Contingent Consideration shall be $0 in the event that the Target Companies achieve EBITDA in 2007 of $7,500,000 or less, the full amount of the Balance if the Target Companies achieve EBITDA in 2007 of at least $10,000,000, the Contingent Consideration, up to the full amount of the Balance, shall be prorated for any EBITDA in 2007 between $7,500,000 and $10,000,000. Any Contingent Consideration payable pursuant to this Section 1.7(b)(ii) (the "2007 Contingent Consideration") will be payable on or before February 15, 2008. For purposes of clarity, if the Target Companies fail to achieve at least $4,000,000 in EBITDA in 2005, no Contingent Consideration shall be payable whatsoever. (c) The Contingent Consideration shall be allocated among the MAG Holders in accordance with the MAG Allocation. The Contingent Consideration shall be payable, at the election of the Purchaser, (i) in cash, or (ii) if there has been no IPO as of the date that any payment of Contingent Consideration becomes due, in Series 3 Stock at the Series 3 Stock Price or (iii) if there has been an IPO as of the date of payment, in Common Stock at the IPO Price. The MAG Holders shall have the right to require payment in cash of each amount of Contingent Consideration payable pursuant to this Section 1.7 an amount equal to up to 10% of the Cash Equivalents Balance as of the end of the calendar year immediately prior to the applicable payment; provided, however, irrespective of the foregoing limitation on cash payments, in no case shall any payment pursuant to this Section 1.7 be made such that not less than 20% of then the Contingent Consideration amount due is paid in cashfor 2004 Tier 1 Goal shall be released from the Contingent Consideration Escrow Account and returned to Parent. 3.3.3.2 If the Surviving Entity's 2004 EBITDA exceeds $1,625,000 for fiscal year 2004 (d"2004 Tier 2 Goal"), then as of date on which Parent files its Form 10-SKB or 10-K, as required, for fiscal year 2004 or April 15, 2005, whichever is earlier, in addition to the payment set forth in Section 3.3.3.1, an additional 2,250,000 shares of Contingent Securities shall be released and distributed to the Company Shareholders. 3.3.3.3 If the Surviving Entity's revenue for fiscal year 2005 is generated from at least seven (7) Notwithstanding the foregoing provisions separate sales transactions and its 2005 EBITDA exceeds -8- $3,750,000 ("2005 Goal"), then as of this Section 1.7date on which Parent files its Form 10-SKB or 10-K, on as required, for fiscal year 2005 or before April 15, 2006, whichever is earlier, 2,250,000 shares of Contingent Securities, plus any unearned portion of Contingent Consideration under Section 3.3.3.2, shall be released and distributed to the Purchaser Company Shareholders. 3.3.3.4 If during the time that the Contingent Consideration are held in the Contingent Consideration Escrow Account, Parent Common shall have change into a different number of shares by reason of any reclassification, recapitalization, split-up, combination or exchange of shares, or if a stock dividend thereon shall be declared with a record date within said period, the irrevocable option number of shares of the Contingent Securities shall be adjusted accordingly. 3.3.3.5 Subject to make a oneSection 3.3.3.3, any Contingent Consideration remaining in the Contingent Consideration Escrow Account not to be distributed to the Company Shareholders at the time of the determination of the Targets (i.e., the earlier of the date on which Parent files its Form 10-time cash payment of $2,500,000 in full satisfaction of all amounts owing in connection with KSB or 10-K, as required, for fiscal year 2004 or 2005 (respectively) or April 15, 2005 or April 15, 2006 (respectively))shall be released and returned to Parent at such time. 3.3.3.6 The parties agree that Company Shareholders' right to Contingent Consideration requires that Parent take reasonable, good faith efforts to cause Surviving Entity to achieve the contingent consideration described Targets as set forth in this Agreement, and Parent represents and warrants that it has, and will have, no strategy nor take action regarding the operations of Surviving Entity's business that would render the attainment of the Targets unachievable. The parties agree that, until such time as the Company Shareholders have no further right to receive Contingent Consideration, the operating guidelines set forth in the 2004 Integration Plan, which includes an operating budget for fiscal year 2004, shall be followed as the standards for the operation of Surviving Entity. The parties agree that any changes to the 2004 Integration Plan will have to be approved by the Board of Directors of Parent and Alan Mayo as the designated ▇▇▇▇▇▇▇▇tative of the Company Shareholders. Additionally, the parties also agree to prepare a business plan and operating budget for fiscal year 2005 ("2005 Business Plan") no later than December 1, 2004. The operating guidelines set forth in the 2005 Business Plan shall be followed as the standards for the operation of Surviving Entity in fiscal year 2005. 3.3.3.7 For purposes of calculating the EBITDA the following items shall be eliminated from expenses of Company: (i) Transaction Costs; (ii) Non-Operating Expenses; (iii) administrative and general costs incurred by Parent or its Affiliates which are allocated to Surviving Entity (but excluding those administrative and general costs set forth in the 2004 Integration Plan and 2005 Business Plan). Additionally, for purposes of calculating 2004 EBITDA in Section 1.7(b) above3.3.3.1, 3.3.3.2 and 3.