Earnout Clause Samples
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Earnout. (a) After the Closing, subject to the terms and conditions set forth herein, the Eligible Earnout Recipients (as defined below) shall have the contingent right to receive an additional aggregate number of Pubco Ordinary Shares equal to (i) Fifty-Seven Million Five Hundred Thousand U.S. Dollars ($57,500,000), divided by (ii) the Redemption Price (subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closing, including to account for any equity securities into which such shares are exchanged or converted) (the “Earnout Shares”), with each Eligible Earnout Recipient receiving its Earnout Pro Rata Portion of such Earnout Shares, as additional consideration based on the Trading Price of Pubco Ordinary Shares during the five (5) year period after the Closing (the “Earnout Period”) or the achievement of certain clinical milestones specified below during the Earnout Period. If an Eligible Earnout Recipient transfers, sells, or otherwise disposes of any Pubco Ordinary Shares received as Merger Consideration (other than Excluded Transfers) prior to the issuance of the Earnout Shares, such Eligible Earnout Recipient’s participation in the Earnout Shares shall decrease proportionally to the number of such shares no longer held by such Eligible Earnout Recipient at the time of the Triggering Event. The Eligible Earnout Recipients shall be entitled to receive 100% of the Earnout Shares (and their right to receive such Earnout Shares shall vest and become due and issuable) upon the first of the following circumstances to occur to during the Earnout Period (each, a “Triggering Event”):
(i) the Trading Price equaling or exceeding $11.50 per share for five (5) consecutive Trading Days (the “Share Price Milestone”); or
(ii) the beginning of a Phase 3 clinical trial with the FDA (or approval by the FDA of a Biologics License Application without the need for a Phase 3 clinical trial) for the Target Companies’ clinical development program for the ▇▇▇▇▇▇▇ syndrome or any other clinical development program for Pharmaceutical Products developed by a Target Company (the “Clinical Milestone” and together with the Share Price Milestone, the “Earnout Milestones”). The share price threshold set forth above is referred to herein as the “Share Price Target”, and such Share Price Target shall be subject to equitable adjustment for share splits, share dividends, combinations, recapitalizations and the like after the Closin...
Earnout. (a) Within forty-five (45) days after the end of an Earnout Year, the Purchaser shall deliver to the Seller a statement (the “Earnout Statement”), together with reasonable supporting detail, showing the Purchaser’s good faith calculation for such Earnout Year of the (i) Gross Profit, (ii) Gross Profit Margin Percentage and (iii) resulting Earnout Amount. The Gross Profit and Gross Profit Margin Percentage shall be calculated in accordance with the policies, principles and procedures set forth on Exhibit F.
(b) Subject to the Disclosure Limitations, the Seller and its Representatives shall be permitted reasonable access to review and obtain copies of the books and records of the Business and any work papers (subject to customary access letters and confidentiality undertakings) related to the preparation of the Earnout Statement. The Seller and its Representatives may make reasonable inquiries of the Purchaser and its accountants regarding questions or disagreements, and the Purchaser shall, and shall use its reasonable best efforts to cause any such accountants to, cooperate with and respond to such inquiries. At the request of the Seller, and subject to the Disclosure Limitations, the Purchaser shall make available its personnel who are knowledgeable about the information contained in, and the preparation of, the Earnout Statement, to the Seller to advise and assist the Seller in its review of the Earnout Statement and any objections or disputes with respect thereto.
(c) Within thirty (30) days after delivery of the Earnout Statement to the Seller, if the Seller has any objections to the Earnout Statement, the Seller shall deliver to the Purchaser a statement setting forth its objections thereto (an “Earnout Objections Statement”). Any Earnout Objections Statement shall specify in reasonable detail the nature of any disagreement so asserted, the proposed correct amount for each such item and the resulting Earnout Amount. If an Earnout Objections Statement is not delivered to the Purchaser within thirty (30) days after delivery of the Earnout Statement to the Seller, the Earnout Statement shall be final, binding and non-appealable by the Parties. If an Earnout Objections Statement is properly and timely delivered, the portion of the Earnout Statement not subject to dispute pursuant to the Earnout Objections Statement shall be final, binding and non-appealable by the Parties. At any time during such thirty (30) day period, the Seller may deliver a written no...
Earnout. (a) If, at any time during the six (6) years following the Closing, the VWAP of New Pubco Class A Common Stock is greater than or equal to $12.50 for any twenty (20) Trading Days within a period of thirty (30) consecutive Trading Days (the date when the foregoing is first satisfied, the “First Earnout Achievement Date”):
(i) New Pubco shall promptly issue to each holder of Blocker Shares outstanding immediately prior to the Blocker Merger Effective Time such holder’s Blocker Pro Rata Portion of a number of validly issued, fully-paid and nonassessable New Pubco Shares equal to the product of (A) the quotient of (1) the number of Participating Company Units owned by Blocker as of immediately prior to the Closing but following the Company Equity Reclassification, divided by (2) the Pre-Closing Outstanding Units, multiplied by (B) 9,000,000; and
(ii) the Company shall, and New Pubco shall cause the Company to, promptly issue to each Pre-Closing Company Equityholder (other than Blocker or any holder of Blocker Shares) a number of additional validly issued, fully-paid and nonassessable Participating Company Units equal to the product of (A) the quotient of (1) the number of Participating Company Units owned by such Pre-Closing Company Equityholder as of immediately following the Company Equity Reclassification, divided by (2) the Pre-Closing Outstanding Units, multiplied by (B) 9,000,000.
(b) If, at any time during the six (6) years following the Closing, the VWAP of New Pubco Class A Common Stock is greater than or equal to $15.00 for any twenty (20) Trading Days within a period of thirty (30) consecutive Trading Days (the date when the foregoing is first satisfied, the “Second Earnout Achievement Date”):
(i) New Pubco shall promptly issue to each holder of Blocker Shares outstanding immediately prior to the Blocker Merger Effective Time such holder’s Blocker Pro Rata Portion of a number of validly issued, fully-paid and nonassessable New Pubco Shares equal to the product of (A) the quotient of (1) the number of Participating Company Units owned by Blocker as of immediately prior to the Closing but following the Company Equity Reclassification, divided by (2) the Pre-Closing Outstanding Units, multiplied by (B) 9,000,000; and
(ii) the Company shall, and New Pubco shall cause the Company to, promptly issue to each Pre-Closing Company Equityholder (other than Blocker or any holder of Blocker Shares) a number of additional validly issued, fully-paid and nonassessa...
Earnout. (a) As additional consideration for the Membership Interests, Buyer shall issue to Sellers additional Buyer Preferred Securities in accordance with their respective Pro Rata Shares equal to the following amounts upon the achievement by or on behalf of Buyer (or the Company) of the following events (each, a “Milestone Event”) (each payment, a “Milestone Payment,” and collectively, the “Milestone Payments”):
(i) $10,000,000 at such time as the Company generates $5,000,000.00 of cumulative revenue for the Buyer following the Closing (the “Revenue Milestone”); and
(ii) $10,000,000 at such time as the Company achieves cumulative Adjusted EBITDA of $6,000,000.00 (the “EBITDA Milestone”).
(b) For the avoidance of doubt, (i) the number of shares of Buyer Preferred Securities to be issued to Sellers shall be determined based on a fixed value of $1.00 per share, consistent with the value used at the Closing, and not based on the value of the Buyer Preferred Securities at the time of issuance to Sellers; and (ii) revenue shall be calculated in accordance with GAAP.
(c) Within thirty (30) days after the end of each fiscal quarter or as soon as reasonably practicable thereafter, ▇▇▇▇▇ shall prepare and deliver to Sellers a statement setting forth, and specifying in reasonable detail, Buyer’s determination of revenue and Adjusted EBITDA of the Company determined in accordance with GAAP on a basis consistent with its past practices (the “Quarterly Statement”).
(d) ▇▇▇▇▇ shall promptly notify Seller Representative in writing after it becomes aware that a Milestone Event has been achieved and such notice shall set forth the effective date of such achievement of a Milestone Event (such date being the “Milestone Achievement Date”), and the parties shall execute any such further instruments to consummate the issuance of the applicable Buyer Preferred Securities as soon as reasonably practicable thereafter.
(e) Until each Milestone Event has occurred, Buyer shall (i) use commercially reasonable efforts to manage the operations of Buyer and the Company and their respective businesses on a basis consistent with past practice and (ii) use commercially reasonable efforts to maintain complete and accurate books and records indicating the revenue and EBITDA of the Company. Subject to the foregoing, Seller understands that Buyer and its Affiliates will be free to operate the Company as they determine in their reasonable discretion. In addition, Buyer, on behalf of itself and its Affi...
Earnout. (a) Sponsor hereby agrees that if, at the end of the Earn-Out Period no Earn-Out Vesting Event shall have occurred, then Sponsor shall, no later than ten (10) Business Days following the end of the Earn-Out Period, contribute, transfer, assign, convey and deliver to PubCo, and PubCo shall acquire and accept from Sponsor all of Sponsor’s right, title, and interest in, to and under, the Earn-Out Shares, for nil consideration (such Earn-Out Shares so contributed, transferred assigned, conveyed and delivered to PubCo by Sponsor, the “Earn-Out Forfeiture Shares”).
(b) PubCo and Sponsor acknowledge and agree that (i) each Earn-Out Forfeiture Share, when so contributed, transferred assigned, conveyed and delivered to PubCo by Sponsor in accordance with Section 7.2(a), shall be and be deemed to have been (x) surrendered and forfeited to PubCo by Sponsor for nil consideration and (y) cancelled by PubCo immediately upon surrender and forfeiture and cease to be issued and outstanding; and (ii) any other PubCo Shares which are not Earn-Out Forfeiture Shares shall continue to be issued and outstanding and owned by Sponsor for its own account.
(c) In addition to and not in place of the transfer restrictions set forth in Article V (and, for the avoidance of doubt, not limited by the exceptions or conditions set forth therein), subject to the consummation of the Initial Merger and the Acquisition Merger, Sponsor covenants and agrees that it shall not, during the period commencing on the Acquisition Effective Time and ending on the earlier to occur of (i) an Earn-Out Vesting Event or (ii) the last day of the Earn-Out Period (the “Earn-Out Restricted Period”), effect, undertake, enter into or publicly announce any Transfer with respect to any Earn-Out Shares. For the avoidance of doubt, Sponsor shall retain all of its rights as a shareholder of PubCo with respect to the Earn-Out Shares during the Earn-Out Restricted Period, including, without limitation, the right to vote any Earn-Out Shares that are entitled to vote, the right to appoint a proxy with respect to any vote of any Earn-Out Shares, and the right to receive any dividends or distributions in respect of such Earn-Out Shares. The foregoing restrictions in this Section 7.2(c) shall not apply to (i) Transfers of Earn-Out Shares in the event of completion of an Unqualified Liquidation Event; or (ii) Transfers required by Law. If any Transfer is made contrary to the provisions of this Section 7.2(c), such purported Tra...
Earnout. (a) Buyer acknowledges that Seller and Affiliates of Seller have commenced the process of negotiating to lease space at the Property to ▇▇▇▇▇▇▇ Fabrics and Goody's (the "New Tenants"). Attached hereto as Exhibit K is a chart showing the estimated size of premises which would be leased by each of such tenants and the projected per square foot and aggregate first year fixed annual rentals for each New Tenant (the "Chart"). In the event that:
(i) the Buyer (or an Affiliate of Buyer) shall acquire title to the Property pursuant to this Agreement; and
(ii) Seller shall, no later than ninety (90) days after the date of Closing, cause to be delivered to Buyer a letter of intent to lease space at the Property executed by one of the New Tenants for space of at least the size indicated on the Chart and at a fixed annual rental rate of at least the rate indicated on the Chart for the respective New Tenant; and
(iii) Buyer (or an Affiliate of Buyer) and one or more of the New Tenants shall fully execute and unconditionally delivered a lease of retail space at the Property (the "New Lease") on or before two hundred and forty (240) days after the date of Closing (except as otherwise provided in subsection (d) herein) for premises of a size and first year fixed annual rental rate for the respective New Tenant as indicated on the Chart; and
(iv) the New Tenant shall, on or before one (1) year after the date of Closing, open for business in its new premises and commence the payment of fixed annual rent (except as otherwise provided in subsection (d) herein); then Seller shall be deemed to have earned a fee on account thereof in the sum of One Hundred Thousand ($100,000.00) Dollars (the "Earn-Out Fee"). The Earnout Fee shall be payable in full by Buyer upon satisfaction of the foregoing conditions.
(b) Buyer or its affiliated entity purchasing the Property shall have the unqualified right, in its sole and absolute discretion, to refuse to enter into any lease with any New Tenant for any reason whatsoever without incurring any obligation to Seller for the payment of the Earnout Fee or any other consideration with respect to such New Tenant. Except as otherwise provided in subsection (d) herein, if for any reason whatsoever the conditions set forth in subsection (a) are not fulfilled within the time periods set forth in subsection (a), no Earn-Out Fee or other compensation shall be payable to Seller or any of its Affiliates with respect to the leasing of the Property, and Sel...
Earnout. (a) Following the Closing, and as additional contingent consideration for the Mergers and the other Transactions, within ten (10) Business Days after the occurrence of an Earnout Event, PubCo shall issue or cause to be issued to such shareholders of the Company (the “Earnout Participants,” as listed on the Schedule I attached hereto) pro rata the following additional shares of PubCo Ordinary Shares (which shall be equitably adjusted for share subdivisions, share consolidations, share dividends, reorganizations, recapitalizations, reclassifications, combination, exchange of shares or other like change or transaction with respect to PubCo Ordinary Shares occurring on or after the date hereof, the “Earnout Shares” as set forth on Schedule I), upon the terms and subject to the conditions set forth in this Agreement and the other Ancillary Agreements:
(i) upon the occurrence of Earnout Event I, a one-time issuance of 15,000,000 Earnout Shares; and
(ii) upon the occurrence of Earnout Event II, a one-time issuance of 20,000,000 Earnout Shares.
(b) For the avoidance of doubt, the Earnout Participants shall be entitled to receive Earnout Shares upon the occurrence of each Earnout Event.
(c) No Earnout Shares issuable pursuant to this Section 2.8, if any, shall be released to any Company Shareholder who is required to file notification pursuant to the HSR Act or under any applicable antitrust or other competition Laws of any non-U.S. jurisdictions (collectively, “Foreign Antitrust Laws”) until any applicable waiting period pursuant to the HSR Act or Foreign Antitrust Laws has expired or been terminated (provided, that any such Company Shareholder has notified PubCo of such required filing pursuant to the HSR Act or Foreign Antitrust Laws in connection therewith following reasonable advance notice from PubCo of the reasonably anticipated issuance of Earnout Shares).
Earnout. (i) During the period commencing on the Business Combination Closing through the fifth anniversary following the Business Combination Closing (the “Earnout End Date”), unless the closing price of the Company’s Class A Shares (or any successor class of common shares listed on The New York Stock Exchange or The Nasdaq Stock Market) equals or exceeds $12.25 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30 consecutive trading day period or the Company completes a liquidation, merger, share exchange or other similar transaction that results in all of its common shareholders having the right to exchange their common equity for consideration in cash, securities or other property which equals or exceeds $12.25 per share (as adjusted for share splits, dividends, reorganizations, recapitalizations and the like) (each an “Earnout Condition”), on the Earnout End Date or promptly thereafter (the “Earnout Forfeiture Date”), each BSOF Entity acknowledges and agrees that it shall surrender for no consideration any and all rights to such number of Class B Shares (including any Class A Shares into which such Class B Shares are convertible) equal to 30.0% of the number of Class B Shares held by such BSOF Entity immediately following the closing of the IPO (after accounting for any forfeitures required pursuant to Section 1(c) hereto) (the “Earnout Shares”). For the avoidance of doubt, the number of Earnout Shares immediately following the closing of the IPO shall be 157,500 Class B Shares.
(ii) Each BSOF Entity agrees that it shall not Transfer (as defined herein) any Earnout Shares until the earlier of (i) the date on which one or more of the Earnout Conditions has been satisfied and (ii) the Earnout Forfeiture Date. For the avoidance of doubt, the foregoing lock-up provisions are in addition to the lock-up provisions applicable to each BSOF Entity’s Class B Shares contained elsewhere in this Agreement. Any attempted Transfer of Earnout Shares prior to the earlier of (i) the date on which one or more of the Earnout Conditions has been satisfied and (ii) the Earnout Forfeiture Date, or any attempted Transfer of Earnout Shares pursuant to an agreement entered into prior to such date, shall be prohibited and void ab initio.
Earnout. (i) The Sellers will be entitled to receive a contingent purchase price payment of up to $1,000,000 (the "EARNOUT") in accordance with the provisions of this section 2(e). The Earnout shall be payable with respect to the Company's fiscal year ending December 31, 1998 and the amount of the Earnout payment for such fiscal year will be equal to two times the amount (if any) by which the Company's Adjusted EBITAM for such fiscal exceeds $2,200,000; PROVIDED, HOWEVER, that in no event shall the Earnout amount for such fiscal year be more than $1,000,000. The amount of the Earnout to be received by each Seller shall be the Seller's Company Pro Rata Share thereof.
(ii) Within a reasonable time after the conclusion of the fiscal year ending December 31, 1998, but no later than 30 days following the end of such fiscal year, the Purchaser shall deliver to the Sellers' Representative a written notice which shall set forth an estimate of the amount of the Company's Adjusted EBITAM for such fiscal year and an estimate of the Earnout (if any) earned and all calculations made in the determination of such amounts (the "DETERMINATION NOTICE"). The chief financial officer of the Purchaser shall certify the amounts determined and calculations made as set forth in the Determination Notice are true and correct to the best of his knowledge and belief.
(iii) The Earnout shall be payable as follows. 75% of the Earnout (if any) for any such fiscal year will be paid within three business days of the Sellers' Representative's receipt of the Determination Notice, by wire transfer of immediately available funds to an account or accounts designated by the Sellers' Representative in writing. The remaining Earnout (if any) will be paid upon the final determination of the Adjusted EBITAM Statement for the fiscal year ending December 31, 1998 in accordance with this section 2(e), by wire transfer of immediately available funds to an account or accounts designated by the Sellers' Representative in writing. If the amount of the Earnout that is ultimately determined to be payable pursuant to section 2(e)(vi) is less than the amount paid based upon the Determination Notice, then the Sellers shall repay the difference within three business days after such determination.
(iv) For purposes of this Agreement, "ADJUSTED EBITAM" for the Company's fiscal year ending December 31, 1998 means the unaudited net income (excluding extraordinary gains or losses) of the Company (including IMP) for the twelve...
Earnout. (a) After the Closing, subject to the terms and conditions set forth herein, the Class B Sellers’ rights to the Earnout Escrow Property may vest and no longer become subject to potential forfeiture based on the performance of Pubco and its Subsidiaries, including the Target Companies, during the calendar years 2021 and 2022 (each such calendar year, an “Earnout Year”, and such two-year calendar period, the “Earnout Period”) if the requirements as set forth in this Section 2.6 are met.
(i) In the event that the Net Income for the calendar year ended December 31, 2021 (the “2021 Net Income”), as set forth in the audited consolidated income statement of Pubco filed with its Form 20-F or Form 10-K for such calendar year, is equal to or greater than Nineteen Million U.S. Dollars ($19,000,000) (the “First Net Income Target”), then, subject to the terms and conditions of this Agreement, the Class B Sellers’ rights to fifty percent (50%) of the Earnout Escrow Property (the “First Half Earnout Property”) shall vest and shall no longer be subject to forfeiture. If the 2021 Net Income is less than the First Net Income Target, but is equal to or greater than Nine Million Five Hundred Thousand U.S. Dollars ($9,500,000), then the Sellers’ rights to fifty percent (50%) of the First Half Earnout Property shall vest and shall no longer be subject to forfeiture. In all other cases, the First Half Earnout Property will be forfeited.
(ii) In the event that the Net Income for the calendar year ended December 31, 2022 (the “2022 Net Income”), as set forth in the audited consolidated income statement of Pubco filed with its Form 20-F or Form 10-K for such calendar year, is equal to or greater than Twenty-One Million, Eight Hundred Fifty Thousand U.S. Dollars ($21,850,000) (the “Second Net Income Target”, and together with the First Net Income Target, the “Earnout Target”), then, subject to the terms and conditions of this Agreement, the Class B Sellers’ rights to the remaining Earnout Escrow Property (after giving effect to any forfeitures under clause (i) above for the 2021 Net Income being less that the First Net Income Target, the “Second Half Earnout Property”) shall vest and shall no longer be subject to forfeiture. If the 2022 Net Income is less than the Second Net Income Target, but is equal to or greater than Ten Million Nine Hundred Twenty Five Thousand U.S. Dollars ($10,925,000), then the Class B Sellers’ rights to fifty percent (50%) of the Second Half Earnout Propert...