Common use of Earn-Out Clause in Contracts

Earn-Out. (a) Earn-Out Shares. In the event Pacific Magtron, Inc. ("PMI"), Pacific Magtron (GA), Inc. ("PMI-GA"), and LiveWarehouse, Inc. ("LW") achieve the Milestones (as defined in Section 4.3(b) below) for any year during the three (3) year period commencing January 1, 2005 and expiring December 31, 2007, Executive shall have the right to receive on March 31 of the immediately following calendar year, the applicable ratable portion of 66,666,666 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 in the aggregate), to be earned at the end of each such year at the rate of 25% for each of the first and second years and 50% for the third year (the "Shares"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to re-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company is terminated for "cause" by the Company (as contemplated by Section 6.1 of this Agreement) prior to the expiration of the initial Employment Period, all of the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with the Company is terminated prior to the expiration of the initial Employment Period for any reason other than "cause," Executive shall be permitted to receive the Shares earned by him prior to such termination, but shall in no event be entitled to receive Shares to be earned after the Termination Date (as defined in Section 6.1 below). Notwithstanding the foregoing, the number of Shares and the price per Share shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the right, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had the right to receive had such adjustment not been so effected. Upon earning the Shares at the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with the terms of an escrow agreement in substantially the form of Exhibit "A" hereto; provided, however, that in the event that the employment of Executive is terminated by the Company prior to the expiration of the initial Employment Period without cause (as contemplated by Section 6.2 of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him no later than the later of (a) the immediately following March 31 or (b) thirty (30) days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject to customary underwriters' cutbacks. Upon receipt of the Shares, Executive will acquire the Shares for his own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended. Executive is an "accredited investor," as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such personal knowledge of the Company's affairs, Executive has asked such questions and received answers to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoing, in the event that the Milestones are not achieved in a given year, the Board of Directors of ACT shall have the right, in its sole and absolute discretion, to grant to Executive all or a portion of the Shares that could have been earned by Executive during such year.

Earn-Out. (a) Earn-Out Shares. In the event Pacific Magtron, Inc. ("PMI"), Pacific Magtron (GA), Inc. ("PMI-GA"), and LiveWarehouse, Inc. ("LW") achieve the Milestones (as defined in Section 4.3(b) below) for any year during the three (3) year period commencing January 1, 2005 and expiring December 31, 2007, Executive shall have the right to receive on March 31 of the immediately following calendar year, the applicable ratable portion of 66,666,666 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 in the aggregate), to be earned at the end of each such year at the rate of 25% for each of the first and second years and 50% for the third year (the "Shares"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to re-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company is terminated for "cause" by the Company (as contemplated by Section 6.1 of this Agreement) prior to the expiration of the initial Employment Period, all of the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with an Earn-Out Milestone is achieved by the Company is terminated prior to applicable Earn-Out Milestone Deadline, Parent shall (i) promptly, but in any event within ten (10) Business Days, notify the expiration Stockholders’ Representative of the initial Employment Period for any reason other than "cause," Executive shall be permitted achievement of such Earn-Out Milestone and (ii) subject to receive Section 8.10, make the Shares earned by him prior to such terminationapplicable cash payment and issue, but shall in no event be entitled to receive Shares to be earned after the Termination Date (as defined in Section 6.1 below). Notwithstanding the foregoing, the number of Shares and the price per Share shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the right, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had the right to receive had such adjustment not been so effected. Upon earning the Shares at the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with Section 2.14(e), the terms applicable aggregate amount of shares of Parent Stock, in each case calculated in accordance with Exhibit B attached hereto, up to an escrow agreement aggregate amount of $355,000,000 (each, an “Earn-Out Payment”, and collectively, the “Earn-Out Payments”), to the applicable Sellers (with respect to the portion of any Earn-Out Payment payable in substantially shares of Parent Stock), and to the form Payment Agent (with respect to the portion of Exhibit "A" heretoany Earn-Out Payment payable in cash), for further distribution to the Sellers, the Contingent Payment Parties and the Contingent Bonus Recipients (if applicable), in accordance with Section 2.13; provided, however, that no Earn-Out Payments shall be made (1) in the event that the employment of Executive is terminated by the Company prior to the expiration either of the initial Employment Period without cause (as contemplated Key Individuals has ceased to be employed by Section 6.2 Parent or one of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him no later than the later of (a) the immediately following March 31 its Affiliates or (b2) thirty (30) days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject if Parent shall have consented to customary underwriters' cutbacks. Upon receipt of the Shares, Executive will acquire the Shares for his own account and not with a view Key Individual providing services to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, Parent or its Affiliates as amended. Executive is an "accredited investor," independent contractor rather than as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such personal knowledge of the Company's affairs, Executive has asked such questions and received answers to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoingan employee, in the event that the Milestones are not achieved in a given yearsuch Key Individual has ceased to be an independent contractor of Parent or its Affiliates (collectively, the Board “Service Condition”); provided, further, that the Service Condition shall not apply, and Parent shall continue to have the obligation to make the Earn-Out Payments, if the failure of Directors the Service Condition to be satisfied results from (y) the death or Permanent Disability of ACT a Key Individual or (z) a Key Individual’s employment with Parent or its applicable Affiliate being terminated by Parent without “Cause” or by a Key Individual for “Good Reason” (as such terms are defined in the Employment Agreements, which definitions may not be amended, modified, waived or terminated as such terms apply to this Agreement without the prior written consent of the Stockholders’ Representative). Notwithstanding anything to the contrary in this Section 2.12(a), in the event that a Key Individual (A) suffers a Permanent Disability (B) within two (2) years thereafter recovers from such Permanent Disability or is otherwise able to return to the workforce, such Key Individual shall promptly notify Parent of such recovery or ability to return to the workforce and, if Parent or its Affiliates offer such Key Individual a substantially comparable position as such Key Individual held prior to his Permanent Disability, such Key Individual must accept such position or the Service Condition shall not be satisfied and Parent shall have no further obligation to make the right, in its sole and absolute discretion, to grant to Executive all or a portion of the Shares that could have been earned by Executive during such yearEarn-Out Payments.

Earn-Out. (a) Earn-Out Shares. In the event Pacific Magtron, Inc. ("PMI"), Pacific Magtron (GA), Inc. ("PMI-GA"), and LiveWarehouse, Inc. ("LW") achieve the Milestones (as defined in Section 4.3(b) below) for any year during the three (3) year period commencing January From November 1, 2005 and expiring December through October 31, 20072006, Executive shall have the right Seller will be entitled to receive on March 31 an amount equal to 15% (but in no event exceeding $35,000 per month) of the immediately following Excess Monthly Net Income of the Business (the “Participation Amount”). The Buyer shall calculate the Participation Amount on a monthly basis and shall pay Seller the same within 20 calendar year, the applicable ratable portion of 66,666,666 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 in the aggregate), to be earned at days after the end of each such year at the rate of 25% for each of the first and second years and 50% for the third year (the "Shares"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to re-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company is terminated for "cause" by the Company (as contemplated by Section 6.1 month. For purposes of this Agreement) prior to the expiration , “Excess Monthly Net Income of the initial Employment Period, all of Business” shall mean the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with the Company is terminated prior to the expiration of the initial Employment Period for any reason other than "cause," Executive shall be permitted to receive the Shares earned by him prior to such termination, but shall in no event be entitled to receive Shares to be earned after the Termination Date (as defined in Section 6.1 below). Notwithstanding the foregoing, the number of Shares and the price per Share shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the right, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had the right to receive had such adjustment not been so effected. Upon earning the Shares at the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with the terms of an escrow agreement in substantially the form of Exhibit "A" hereto; provided, however, that in the event that the employment of Executive is terminated by the Company prior to the expiration of the initial Employment Period without cause (as contemplated by Section 6.2 of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him no later than the later of (a) the immediately following March 31 or (b) thirty (30) days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject to customary underwriters' cutbacks. Upon receipt of the Shares, Executive will acquire the Shares for his own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended. Executive is an "accredited investor," as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers monthly net income of the Company concerning attributable to the financial and other affairs Business (whether operated in a division of the CompanyCompany or in a separate subsidiary, and which in any case is hereinafter referred to as the “Retail Division”) in excess of $100,000, calculated in a manner consistent with the past practice of such division. Notwithstanding anything to the extent deemed necessary contrary in light of such personal knowledge of the Company's affairs, Executive has asked such questions and received answers to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoing, in no event shall the event that total amount earned or paid under this paragraph exceed $35,000 per month. Seller’s right to receive the Milestones are Participation Amount shall cease as of October 31, 2006 without any further action of the parties. The Excess Monthly Net Income of the Business for July and August 2005 is shown on EXHIBIT I hereto. Excess Monthly Net Income of the Business for each calendar month thereafter shall be determined in the same manner used by the parties to determine Excess Monthly Net Income of the Business for July and August 2005. Seller’s authorized professional representative, but not achieved in a given yearSeller, the Board of Directors of ACT shall have the right, upon reasonable notice and at a date and time mutually agreed upon by the parties, but in its sole and absolute discretionany event within 30 days of such notice, to grant enter the premises of Buyer twice during the period starting on November 1, 2005 and ending on December 31, 2006 for the purpose of auditing Buyers books of account, documents, records, papers and files, with respect the Business only, (the “Documents”) relating to Executive all or a portion the calculation of the Shares that could have Participation Amount. Any such examination shall be designed and conducted with the least possible disruption to Buyer as reasonably possible. The cost of any such examination shall be borne by Seller, unless the Participation Amount for any quarter has been earned understated by Executive during five percent (5%) or more, in which case the cost of such yearexamination shall be borne by Buyer.

Earn-Out. If, following the Closing, a minimum average monthly gross revenue of $1.2 million (athe “Revenue Target”) during the three-month period immediately preceding the 90-day anniversary of the Closing Date (the “Earn-Out Shares. In the event Pacific Magtron, Inc. ("PMI"), Pacific Magtron (GA), Inc. ("PMI-GA"), and LiveWarehouse, Inc. ("LW"Period”) achieve the Milestones at a minimum 28% Gross Margin (as defined in Section 4.3(bbelow)(the “Margin Target”) below) for any year during has been earned from the three operations of the Business, then Xxxxxxx Xxxx (3) year period commencing January 1, 2005 and expiring December 31, 2007, Executive shall have being the Stockholder to whom the entire right to receive on March 31 of the immediately following calendar year, the applicable ratable portion of 66,666,666 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 in the aggregate), to be earned at the end of each such year at the rate of 25% for each of the first and second years and 50% for the third year (the "Shares"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to reEarn-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company is terminated for "cause" by the Company (as contemplated by Section 6.1 of this Agreement) prior to the expiration of the initial Employment Period, all of the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with the Company is terminated prior to the expiration of the initial Employment Period for any reason other than "cause," Executive shall be permitted to receive the Shares earned by him prior to such termination, but shall in no event be entitled to receive Shares to be earned after the Termination Date Out Payment (as defined in below) has been allocated pursuant to Section 6.1 below)2.7) shall be paid the Earn-Out Target Payment. If the Business during the Earn-Out Period fails to achieve the Revenue Target and the Margin Target, Xxxxxxx Xxxx shall receive the same percentage of the Earn-Out Target Payment as the actual revenues achieved therefrom bears to the Revenue Target, provided that the average monthly revenues for the Earn-Out Period are not less than $750,000 and the Margin Target is achieved with respect to such revenues. Notwithstanding the foregoing, the number Earn-Out Target Payment shall be paid (i) in the event that gross revenues from the Business in the month of Shares August 2007 is at least $1.5 million and the price per Share Margin Target is met, (ii) in the event the gross revenues from the Business during any calendar month of the Earn-Out Period is at least $1.5 million (the “Super Revenue Target”) and the Margin Target is met or (iii) upon termination of Xxxxxxx Xxxx without “cause” or resignation of Xxxxxxx Xxxx for “good reason” during the Earn-Out Period (each as defined in the Xxxx Employment Agreement). The payment made to Xxxxxxx Xxxx under this Section 2.10 is sometimes hereinafter referred to as the “Earn-Out Payment.” For the absence of doubt, only one Earn-Out Payment shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the right, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had the right to receive had such adjustment not been so effectedpayable. Upon earning the Shares at the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with the terms of an escrow agreement in substantially the form of Exhibit "A" heretoAs used herein “Gross Margin” shall mean advertising revenues minus publisher payments; provided, however, that in the event that the employment of Executive is terminated by the Company prior as a condition to the expiration payment of the initial Employment Earn-Out Payment pursuant to clause (i) above only, write-offs for bad debts shall not exceed 5% of revenues during the Earn-Out Period. Xxxxxxx Xxxx shall have the full authority to conduct the Business, including the management of day-to-day affairs thereof, during the Earn-Out Period without cause (as contemplated by Section 6.2 in a manner consistent with the conduct of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement the Business before the closing; provided such Business is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him no later than the later of (a) the immediately following March 31 or (b) thirty (30) conducted in accordance with applicable Laws. Within 15 days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject to customary underwriters' cutbacks. Upon receipt end of the SharesEarn-Out Period, Executive will acquire the Shares for his own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended. Executive is an "accredited investor," as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such personal knowledge of the Company's affairs, Executive has asked such questions and received answers to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoingor, in the event that the Milestones are not achieved Earn-Out Payment is earned in a given yearthe month of August 2007 pursuant to clause (i) above, on or before September 17, 2007, the Board chief financial officer of Directors Parent shall calculate and provide a written report to Xxxxxxx Xxxx disclosing the actual results and the amount of ACT shall have the rightRevenue Target or Super Revenue Target, as appropriate, and Margin Target achieved, and pay any amount that is due and owing to Xxxxxxx Xxxx hereunder no later than 60 days after the end of the Earn-Out Period or, in its sole the event that the Earn-Out Payment is earned in the month of August 2007 pursuant to clause (i) above, as follows: on October 1, 2007, an amount equal to $800,000 and absolute discretion, to grant to Executive all or a portion the remainder of such Earn-Out Payment within 3 Business Days of the Shares receipt by Parent or its Affiliates of each additional 5% (or, with respect to the final payment, such lesser percentage) of the Super Revenue Target realized until the receipt by Parent or its Affiliates of 95% of the Super Revenue Target, at which time remainder of the full Earn-Out Payment shall be paid within 3 Business Days. Unless written objection is received by the Parent within 30 days the report of the CFO shall be final and binding on the parties, absent manifest error. All amounts and calculations required shall in each case be determined in accordance with GAAP. Notwithstanding the foregoing, the CEO or CFO may accelerate the Earn-Out Payment to the extent that could have the Revenue Target has been earned by Executive during such yearachieved.

Earn-Out. (a) Earn-Out SharesPayment. In addition to the event Pacific MagtronInitial Consideration, Inc. ("PMI")Merger Sub and the Acquiror agree to pay, Pacific Magtron (GA)as set forth below, Inc. ("PMI-GA")if and when earned, and LiveWarehouse, Inc. ("LW") achieve the Milestones (as defined in Section 4.3(b) below) for any year during the three (3) year period commencing January 1, 2005 and expiring December 31, 2007, Executive shall have the right to receive on March 31 of the immediately following calendar year, the applicable ratable portion of 66,666,666 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 in the aggregate), to be an earned at the end of each such year at the rate of 25% for each of the first and second years and 50% for the third year payout amount (the "Earn-Out Payment") equal to shares of Acquiror Common Stock having a Fair Market Value equal to $3,500,000 (subject to adjustment as set forth below) (the "Earn-Out Shares") if the Net Product Revenues during the fifteen (15) month period commencing on April 1, 2006 and ending June 30, 2007 (the "Earn-Out Period") equals or exceeds $4,200,000 (the "Target Revenue"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to re-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company is terminated for "cause" by the Company (as contemplated by Section 6.1 of this Agreement) prior to the expiration of the initial Employment Period, all of the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with the Company Target Revenue is terminated prior to less than $4,200,000, then the expiration of the initial Employment Period for any reason other than "cause," Executive Earn-Out Payment shall be permitted to receive the Shares earned reduced by him prior to such termination, but shall in no event be entitled to receive Shares to be earned after the Termination Date (as defined in Section 6.1 below). Notwithstanding the foregoing, the number of Shares and the price per Share shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the right, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had that the right to receive had such adjustment not been so effected. Upon earning actual Net Product Revenue (the Shares at "Actual Revenue") is less than the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with the terms of an escrow agreement in substantially the form of Exhibit "A" heretoTarget Revenue; provided, howeverhowever if the Actual Revenue is less than $1,200,000 then the Earn-Out Payment shall be reduced to zero (0). In addition, the Earn-Out Payment will be reduced dollar for dollar for expenses that in exceed the expense budget for the Earn-Out Period as agreed upon by Acquiror and the Company. In no event shall the Earn-Out Payment exceed $3,500,000. The Earn-Out Shares shall be issued by the Acquiror within fifteen (15) days of the determination that the employment of Executive is terminated by the Company prior Target Revenue amount has been achieved, whether or not fifteen (15) months shall have passed from April 1, 2006. Subject to the expiration of condition that the initial Employment Period without cause (as contemplated by Section 6.2 of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him no later than the later of (a) the immediately following March 31 or (b) Stockholders' Agent provides Acquiror with written evidence that within thirty (30) days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject to customary underwriters' cutbacks. Upon receipt of the Shares, Executive will acquire the Shares for his own account and not with a view to their distribution within the meaning of Section 2(11) Closing Date 100% of the Securities Act of 1933, as amended. Executive is an "accredited investor," as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers unanimous written consent of the Company concerning Stockholders authorized the financial and other affairs following allocation of the CompanyEarn-Out Payment, if any: (A) the first $875,000 of Earn-Out Shares, if any, shall be paid to the Company Stockholders, and (B) the remaining balance, if any, of the $3,500,000 of Earn-Out Shares or such lessor amount, if any, shall be paid to the extent deemed necessary in light of such personal knowledge of an escrow account to be established by the Company's affairscurrent management. In the event written evidence of such authorization is not provided, Executive has asked such questions and received answers the Earn-Out Payment shall be paid to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoing, in the event that the Milestones are not achieved in a given year, the Board of Directors of ACT shall have the right, in its sole and absolute discretion, to grant to Executive all or a portion of the Shares that could have been earned by Executive during such yearCompany's Stockholders.

Earn-Out. (a) Earn-Out Shares. In the event Pacific Magtron, Inc. ("PMI"), Pacific Magtron (GA), Inc. ("PMI-GA"), and LiveWarehouse, Inc. ("LW") achieve the Milestones (as defined in Section 4.3(b) 4.3 below) for any year during the three two (32) year period commencing January 1, 2005 and expiring December 31, 20072006, Executive shall have the right to receive on March 31 of the immediately following calendar year, the applicable ratable portion of 66,666,666 33,333,333 shares of restricted common stock of ACT (priced at $.01 per share, or $666,666 333,333 in the aggregate), to be earned at the end of each such year at the rate of 2550% for each of the first and second years and 50% for the third year (the "Shares"); provided, that in the event the Milestones are not achieved in any year, except as provided below, such ratable portion of Shares shall be forfeited entirely, without any ability to re-earn such Shares in a future year; provided further, that in the event Executive's employment with the Company PMIC is terminated for "cause" by the Company PMIC (as contemplated by Section 6.1 of this Agreement) prior to the expiration of the initial Employment Period, all of the Shares earned or to be earned by Executive shall be forfeited. In the event that Executive's employment with the Company PMIC is terminated prior to the expiration of the initial Employment Period for any reason other than "cause," Executive shall be permitted to receive the Shares earned by him her prior to such termination, but shall in no event be entitled to receive Shares to be earned after the Termination Date (as defined in Section 6.1 below). Notwithstanding the foregoing, the number of Shares and the price per Share shall be adjusted accordingly for stock splits, reverse stock splits and other recapitalizations effected by ACT, so that Executive retains the rightright to receive, after accounting for such adjustment, to receive the same percentage of ACT's outstanding shares of Common Stock as Executive would have had the right to receive had such adjustment not been so effected. Upon earning the Shares at the end of each year, if applicable, the Shares will be placed in escrow with a mutually agreeable escrow agent to be held and released in accordance with the terms of an escrow agreement in substantially the form of Exhibit "A" hereto; provided, however, that in the event that the employment of Executive is terminated by the Company PMIC prior to the expiration of the initial Employment Period without cause (as contemplated by Section 6.2 of this Agreement), Executive terminates this Agreement for Good Reason (as contemplated by Section 6.3 of this Agreement), or this Agreement is terminated due to Executive's death or Disability (as defined below), Executive shall receive any Shares earned by him her no later than the later of (a) the immediately following March 31 or (b) thirty (30) days after the Termination Date. Upon release from escrow, the Shares will include piggyback registration rights, subject to customary underwriters' cutbacks. Upon receipt of the Shares, Executive will acquire the Shares for his her own account and not with a view to their distribution within the meaning of Section 2(11) of the Securities Act of 1933, as amended. Executive is an "accredited investor," as such term is defined in Rule 501(a) promulgated pursuant to the Securities Act of 1933, as amended. Executive acknowledges that Executive has had the opportunity to ask questions of and receive answers from, or obtain additional information from, the executive officers of the Company concerning the financial and other affairs of the Company, and to the extent deemed necessary in light of such personal knowledge of the Company's affairs, Executive has asked such questions and received answers to the full satisfaction of Executive. Executive understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Shares or the fairness of suitability of the investment in the Shares nor have such authorities passed upon or endorsed the merits of the offering of the Shares. Notwithstanding the foregoing, in the event that the Milestones are not achieved in a given year, the Board of Directors of ACT shall have the right, in its sole and absolute discretion, to grant to Executive all or a portion of the Shares that could have been earned by Executive during such year.