Incredimail 2011 Annual Report Download - page 164

(e) However, if the Shareholder Representative delivers such Milestone Objection Notice within the Milestone Objection Period, then the
dispute regarding such amount shall be resolved in the same manner as set forth in Section 1.12(e) and (f) hereof, mutatis mutandis .
(f) Promptly following the final determination of the amount of the Contingent Payment, Purchaser shall pay such amount to the Paying Agent
for distribution to the Participating Securityholders pursuant to Section 1.9(e).
(g) If the amount of the Contingent Payment as determined by the Reviewing Accountant is closer to the amount as set forth in the Milestone
Objection Notice than to the amount as set forth in the Earn-out Statement, then two-
thirds of the fees and expenses of the Reviewing Accountant shall be borne by
Purchaser and one-third thereof shall be borne by the Participating Securityholders by way of reduction of the Contingent Payment. Otherwise, one-
third of such fees
and expenses shall be borne by Purchaser and two-
thirds thereof shall be borne by the Participating Securityholders by way of reduction of the Contingent
Payment. To the extent that the amount of the Contingent Payment is not high enough to absorb such reduction, the balance shall be considered Section 10.5
Damages.
(h) Milestones : Set forth below are the Milestones:
(i) Net Revenue : The Company shall have generated Net Revenue during the Earn-out Period greater than***. “ Net Revenue ”
shall mean the sales of the Company, net of taxes, commissions, allowances and fees, determined in accordance with GAAP, as consistently applied by the Company
but excluding any Search Related Revenue. “ Search Related Revenue ” shall mean revenue generated by Google (or other search-
engine) searches performed by
users of the Company’s products.
(ii) New Installs : At least *** new “PC” and “Mac” customers shall have installed the Company’
s product (determined pursuant to
the Company’s historical methodology consistently applied) (“ New Installs ”) during the Earn-out Period, provided
that (i) such New Installs are acquired directly by
the Company and not through third-party distribution or business development partnerships (“ Direct Users ”) and (ii) at least *** of the amount of the Company’
s
customer acquisition costs (“media buy”) (as determined pursuant to the Company’s historical methodology consistently applied) during the Earn-
out Period will be
spent in Canada, France, Germany, the United Kingdom and the United States.
(iii) EBITDA : The Company shall have generated EBITDA during the Earn-
out Period of at least *** while adhering to the
Company’s business plan, a copy of which is attached hereto as Exhibit E , as may be revised with the approval by Parent (the “ Business Plan ”),
without materially
shifting resources among general and administrative expenses, sales and marketing expenses, and research and development expenses. “ EBITDA ”
shall mean net
income plus
the sum of the following expenses: interest, tax and depreciation and amortization, determined in accordance with GAAP, as consistently applied by the
Company but excluding any stock-based compensation expense, Search Related Revenue and Search Related Expenses. “ Search Related Expenses ”
shall mean the
material expenses incurred to generate Search Related Revenue.
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