Earn-Out Holdback Clause Samples
An Earn-Out Holdback clause establishes that a portion of the purchase price in a business acquisition will be withheld and paid out later, contingent on the target company achieving specific financial or operational milestones post-closing. Typically, the buyer retains this holdback amount in escrow or as a deferred payment, releasing it to the seller only if agreed-upon performance targets—such as revenue or EBITDA thresholds—are met within a defined period. This clause serves to align the interests of both parties, incentivize continued performance, and protect the buyer from overpaying if the business underperforms after the sale.
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Earn-Out Holdback. Buyer shall be entitled to holdback 20% of each Earn-Out Payment, if any, payable to the Earn-Out Sellers for a Calculation Period during the Earn-Out Period (the “Earn-Out Holdback”), as partial security for Losses payable to a Buyer Indemnified Party pursuant to Article X. Subject to the limitations set forth in Article X (including the Basket, the Cap and Environmental Cap), Buyer shall be entitled to satisfy any resulting Losses payable to a Buyer Indemnified Party pursuant to Article X from the Earn-Out Holdback in accordance with clause (b) below. Following (i) the twelve (12) month anniversary of the Closing or (ii) the date of closure of the LUST Matter, whichever is later (the “Holdback Period”) (but no later than 10 business days thereafter), Buyer shall pay to the Earn-Out Sellers any remaining Earn-Out Holdback (that was not previously used as offset by Buyer to satisfy Losses in accordance with clause (b) below), less the estimated amount of any unresolved Claim made by a Buyer Indemnified Party in accordance with Article X prior to expiration of the Holdback Period, which amount may continue to be held by Buyer and applied for offset in accordance with clause (b) below through resolution of such Claim.
Earn-Out Holdback. (a) In accordance with Sections 8(b) and (c) of this Exhibit “L”, Development Manager shall be entitled to receive up to $*** in Earn-Out Development Fees if the Mission Bay Earn-Out Lots are sold to Alexandria and up to $*** in Earn-Out Development Fees if the Mission Bay Earn-Out Lots are sold to a person other than Alexandria. Development Manager agrees to refund to the applicable Owners, up to a maximum of $*** of any Earn-Out Development Fees paid to Development Manager (“Maximum Earn-Out Refund”) to the extent MB Owner does not achieve the “Excess Targeted Return”. The “Excess Targeted Return” shall be calculated based on the excess, if any, of (i) the net present value of actual and pro-forma Net Sale Proceeds from the Remaining MB Target Lots (the “Adjusted NPV”) over (ii) the net present value of the “Net Sales Proceeds” (as hereinafter defined) from the “Remaining MB Target Lots” (as hereinafter defined) in the Pro-Forma (the “Pro-forma NPV”). “Net Sales Proceeds” shall mean Gross Sales Proceeds less seller closing costs from such sale, including transfer taxes, surveys, title insurance and any brokerage commission. The “Remaining MB Target Lots” include six parcels at the Mission Bay Project that are not under contract or a signed letter of intent as of the Closing Date. If Development Manager is terminated under this Agreement for any reason, Development Manager shall have no future obligation to pay to Owner any future portion of the Maximum Earn-Out Refund, provided that Owner shall be entitled to retain any previous payments on account of the Maximum Earn-Out Refund previously received by Owner. The Remaining MB Target Lots and the Pro-Forma NPV are presented below (a summary schedule presenting the calculations is included as Schedule L-5 attached hereto): N4 P1 *** *** *** Parcel 3 *** *** *** Parcel 4 *** *** *** Parcel 6 *** *** *** Parcel 40 *** *** *** Parcels 33/34 *** *** *** Totals *** ***