the end of any such calendar year as
follows:
2
(a)
With respect to calendar year 2007, $685,000 ("2007 Target Earnout"), if
the Division's actual EBITDA for 2007 ("2007 Actual EBITDA") equals $951,000
("2007 Target EBITDA"). Notwithstanding any other provision of this Section 1.5,
it is agreed that 2007 Target Earnout and 2007 Target EBITDA will be adjusted to
amounts equal to the numbers in the preceding sentence multiplied by a fraction,
the numerator of which shall be the number of days between the Closing Date and
December 31, 2007, and the denominator of which is 365. 2007 Actual EBITDA will
be EBITDA of the Division for the period from the Closing Date to December 31,
2007.
(b)
With respect to calendar year 2008, $922,000 ("Year 2008 Target Earnout"),
if the Division's actual EBITDA for 2008 ("Year 2008 Actual EBITDA") equals
$1,279,000 ("2008 Target EBITDA");
(c)
With respect to calendar year 2009, $1,185,000 ("2009 Target Earnout"), if
the Division's actual EBITDA for 2009 ("2009 Actual EBITDA") equals $1,644,000
("2009 Target EBITDA").
(d)
If the Division achieves more than 70% but less than 100% of any Target
EBITDA for Years 2007, 2008 or 2009, the earnout payments payable to Seller in
connection with such year shall be computed by multiplying the applicable Target
Earnout by a fraction, the numerator of which is the amount by which the
applicable actual EBITDA exceeds 70% of the applicable Target EBITDA and the
denominator of which is the difference between the applicable Target EBITDA and
70% of the applicable Target EBITDA. For illustration purposes only, if
hypothetically year 2007 actual EBITDA is $800,000 (before any adjustment for
proration) the total earnout payment for 2007 would be computed as follows:
3
2007 Target Earnout
$685,000
(A)
2007 Target EBITDA
$951,000
Numerator:
2007 Actual EBITDA
$800,000
70% of 2007 Target EBITDA
(666,000)
Difference
$135,000
(B)
Denominator:
2007 Target EBITDA
$951,000
70% of 2007 Target EBITDA
(666,000)
Difference
$285,000
(C)
Fraction (B divided by C)
47.02%
(D)
Earnout To Be Paid (A x D)
$322,000
(e)
No earnout payments shall be made with respect to 2007, 2008 or 2009 for
any such period in which the Division achieves 70% or less of Target EBITDA for
2007, 2008 or 2009, respectively.
(f)
If the Division achieves more than 100% of Target EBITDA for years 2007,
2008 or 2009, total earnout payment for such year shall be equal to the sum of
the Target Earnout for such year plus 80% of the difference between the actual
EBITDA achieved and the Target EBITDA.
(g)
In the event the determination of the earnout for any applicable period has
not become final within sixty (60) days from the end of any applicable period by
reason of the implementation by Seller of the procedures for objecting to a
Determination set forth in Section 1.7, then the amount of the earnout set forth
in the Determination shall be paid within such sixty (60)-day period. The
balance of the earnout, if any, shall be