Contingency Consideration Clause Samples
A Contingency Consideration clause defines how additional payments or adjustments to the contract price will be made if certain specified events or conditions occur after the initial agreement. Typically, this clause outlines the specific contingencies—such as achieving sales targets, regulatory approvals, or performance milestones—that trigger further compensation, and details the calculation and timing of such payments. Its core practical function is to allocate risk and reward between parties by linking part of the contract value to future, uncertain outcomes, thereby aligning incentives and addressing uncertainties at the time of contracting.
Contingency Consideration. (a) Buyer shall issue to PDC shares of Buyer Common Stock as follows (the “Contingency Consideration”):
(i) One Million (1,000,000) shares of Buyer Common Stock in the event that the Buyer Common Stock has a Trading Price of Twelve Dollars and Fifty Cents ($12.50) or above per share for twenty (20) Trading Days out of thirty (30) consecutive Trading Days on or prior to the fifth anniversary of the Closing (the “First Stock Target”) (and such 1,000,000 shares, the “First Tier Contingency Consideration”); and
(ii) Two Million (2,000,000) shares of Buyer Common Stock in the event that the Buyer Common Stock has a Trading Price of Fifteen Dollars ($15.00) or above per share for twenty (20) Trading Days out of thirty (30) consecutive Trading Days on or prior to the fifth anniversary of the Closing (the “Second Stock Target” and, together with the First Stock Target, the “Stock Targets”) (and such 2,000,000 shares, the “Second Tier Contingency Consideration”).
(b) For purposes of this Section 1.3, (i) “Trading Day” shall mean any day on which the Buyer Common Stock is traded and/or quoted on the Nasdaq Stock Market LLC (the “Nasdaq”) or, if the Nasdaq is not the principal trading market for the Buyer Common Stock, then on the principal securities exchange or securities market on which the Buyer Common Stock is then traded; and (ii) “Trading Price” shall mean Table of Contents on any particular Trading Day (A) if the Buyer Common Stock is quoted on the Nasdaq or listed or quoted on another principal trading market, the closing or last reported price of a share of Buyer Common Stock for such Trading Day on such trading market (as reported by Bloomberg L.P. or a similar organization or agency succeeding to its functions of reporting prices), or (B) in the event no trading price is established for the Buyer Common Stock for a Trading Day, the greater of (A) the last price established for the Buyer Common Stock in the most recent preceding Trading Day on which the Buyer Common Stock was traded or (B) the last bid for the Buyer Common Stock in the most recent preceding Trading Day in which the Buyer Common Stock was traded (in each case, as reported by Bloomberg L.P. or a similar organization succeeding to its functions of reporting prices).
Contingency Consideration. (a) Following the Closing, in addition to the consideration to be received pursuant to Section 1.01(c) and 2.02 and as part of the overall Aggregate Consideration, the Blocker Holder and the Company Unitholders shall be issued additional ParentCo Common Shares, as follows:
(i) Seven Million Five Hundred Thousand (7,500,000) ParentCo Common Shares, in the aggregate, if, at any time prior to or as of the second anniversary of the Closing (the “First Deadline”), the VWAP is greater than or equal to Twelve Dollars ($12.00) over any twenty (20) trading days within any thirty (30) trading day period (the “First Share Target”) (such 7,500,000 ParentCo Common Shares, the “First Level Contingency Consideration”).
(ii) Seven Million Five Hundred Thousand (7,500,000) ParentCo Common Shares, in the aggregate, if, at any time prior to or as of the date that is thirty (30) months after the Closing (the “Second Deadline”), the VWAP is greater than or equal to Fourteen Dollars ($14.00) over any twenty (20) trading days within any thirty (30) trading day period (the “Second Share Target”) (such 7,500,000 ParentCo Common Shares, the “Second Level Contingency Consideration”).
(iii) Seven Million Five Hundred Thousand (7,500,000) ParentCo Common Shares, in the aggregate, if, at any time prior to or as of the date that is forty-two (42) months after the Closing (the “Third Deadline” and, together with the First Deadline and Second Deadline, the “Deadlines”), the VWAP is greater than or equal to Sixteen Dollars ($16.00) over any twenty (20) trading days within any thirty (30) trading day period (the “Third Share Target” and, together with the First Share Target and Second Share Target, the “Share Targets”) (such 7,500,000 ParentCo Common Shares, the “Third Level Contingency Consideration” and together with the First Level Contingency Consideration and Second Level Contingency Consideration, the “Contingency Consideration”) For the avoidance of doubt, each of the First Level Contingency Consideration, Second Level Contingency Consideration and Third Level Contingency Consideration is issuable only once in accordance with the terms of this Section 2.03(a) and the maximum amount of Contingency Consideration is 22,500,000 ParentCo Common Shares, in the aggregate.
(b) If any of the Share Targets set forth in Section 2.03(a) shall have been achieved, within five (5) Business Days following the achievement of the applicable Share Target, ParentCo shall issue the applicable Contingency...
Contingency Consideration. In addition to the Purchase Price, Seller may be entitled to receive additional consideration (the "earnout"). The earnout will be based on fifty percent (50%) of the differential between the Initial Value and the Ending Value as defined below:
(a) Initial Value: $31,800,000
(b) Ending Value: Either (i) if an initial public offering of NTRC (defined as Buyer's market research business, the Division's business and the business of any company acquired by Buyer which is involved in the provision of market research) common stock occurs or if NTRC is sold prior to December 31, 1998, the average market capitalization of NTRC over the first 30 days of trading adjusted for any dilution caused by such a public stock offering or the aggregate consideration received for NTRC (including the assumption of any funded debt), or (ii) if an initial public offering of NTRC common stock does not occur and NTRC is not sold prior to December 31, 1998, the average analyst estimate of NTRC's net income for the year ending December 31, 1999 multiplied by NCO's preceding 30 day average 1999 EPS multiple (based on analyst estimates) at December 31, 1998. At Seller's discretion, Seller may delay calculation of the Ending Value as calculated in (b) (ii) above until January 31, 1999 or February 28, 1999 in order to obtain a more favorable preceding 30 day average multiple of NCO's 1999 estimated EPS. If an initial public offering of NTRC common stock does not occur or if NTRC is not sold prior to December 31, 1998 and Seller elects at any time prior to April 30, 1999 not to accept the Ending Value as calculated in (b) (ii) above, Seller may elect to convert to an alternative earnout calculation as follows: on March 31, 1999, Seller will be paid seven (7) times the amount by which the Division's 1998 EBITDA exceeds 120% of the Division's 1997 EBITDA. For purposes of this calculation, the Division's 1997 EBITDA will be $1,891,000 or the Division's actual 1997 EBITDA, whichever is greater. In addition, on March 31, 2000, Seller will be paid seven (7) times the amount by which the Division's 1999 actual EBITDA exceeds 110% of the Division's actual 1998 EBITDA. In all instances in which an earnout calculation involves the use of EBITDA, such EBITDA shall be normalized by adding back any acquisition-related or other extraordinary non-recurring expenses. Seller may elect (at any time before April 30, 2000) to be paid the earnout, if any, in either cash or in the form of a convertible note, c...
Contingency Consideration. (a) Within forty five (45) days after each of the first and second anniversaries of the Closing Date, JetPay shall prepare and deliver, or cause to be prepared and delivered, to the Sellers a statement (each, a “Net Revenue Statement”), which shall set forth in reasonable detail the Net Revenue for the twelve months ended on the first anniversary of the Closing Date and second anniversary of the Closing Date, respectively, calculated in accordance with the Agreed-Upon Determination Principles. JetPay shall also provide to the Sellers interim calculations of the Company’s Net Revenue for each calendar quarter within forty five (45) days after the end of such quarter, commencing with the first calendar quarter ending after the Closing.
(b) During the thirty (30) days following delivery of a Net Revenue Statement, the Sellers shall review the Net Revenue Statement, and during normal business hours and upon reasonable notice, shall have access to JetPay’s books and records and the working papers related to the preparation of the Net Revenue Statement in the JetPay’s offices in Pennsylvania. Each Net Revenue Statement will become final, binding and conclusive upon JetPay and the Sellers (a) on the 30th day following the Sellers’ receipt thereof, unless JetPay receives from the Sellers prior to such 30th day, written notice of the Sellers’ disagreement (a “Revenue Dispute Notice”) with the determination of Net Revenue or (b) on such earlier date as the Sellers notify JetPay that it does not dispute the Net Revenue Statement. Any Revenue Dispute Notice will specify in reasonable detail the nature and dollar amount of any disagreement as to the calculation of Net Revenue. The Revenue Dispute Notice shall be limited to disputes or objections based on errors in the final calculations contained in the Net Revenue Statement. If the Sellers timely deliver a Revenue Dispute Notice, then the determination of the Net Revenue Statement (in accordance with the resolution described in clause (x) or (y) below, as applicable) will become final, binding and conclusive upon JetPay and the Sellers on the first to occur of (x) within ten (10) days of the date on which JetPay and the Sellers resolve in writing all differences they have with respect to the Net Revenue Statement or (y) within ten (10) days of the date on which all of the disputed items on the Net Revenue Statement that are not resolved by JetPay and the Sellers in writing are finally resolved in writing by the Accoun...
Contingency Consideration. (a) Following the Closing, in addition to the consideration to be received pursuant to Section 1.01(c) and 2.02 and as part of the overall Aggregate Consideration, the Blocker Holder and the Company Unitholders shall be issued Fifteen Million (15,000,000) ParentCo Common Shares, in the aggregate (the “Contingency Consideration”), if, at any time prior to or as of the second anniversary of the Closing, the VWAP is greater than or equal to Thirteen Dollars ($13.00) over any twenty (20) trading days within any thirty (30) trading day period (the “Share Target”).
(b) If the Share Target set forth in Section 2.03(a) shall have been achieved, within five (5) Business Days following the achievement of the Share Target, ParentCo shall issue the Contingency Consideration to the Blocker Holder and each Company Unitholder as specified on the Payment Spreadsheet.
(c) If a Change of Control of the ParentCo occurs prior to the second anniversary of the Closing and the Contingency Consideration that is issuable pursuant to Section 2.03(a) remains unissued as of immediately prior to the consummation of such Change of Control, the Contingency Consideration shall immediately vest and the Company Unitholders and the Blocker Holder shall be entitled to receive the Contingency Consideration prior to the consummation of such Change of Control (payable to the Company Unitholders and the Blocker Holder as specified on the Payment Spreadsheet). For the purposes of this Agreement, a “Change of Control” shall have been deemed to occur with respect to ParentCo upon:
Contingency Consideration