Earnout Clause Samples
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Earnout. (a) The Purchaser shall pay to the Shareholders earnout payments, each in an amount equal to seventy percent (70%) of Earnout Period Revenues generated in each Earnout Period, in accordance with this Section 3.6 (each such payment, an “Earnout Payment”). Notwithstanding the foregoing provisions of this Section 3.6(a), in no event shall the aggregate Earnout Payments payable hereunder be less than zero or greater than Nine Million Eight Hundred Thousand Dollars ($9,800,000).
(b) Within ninety (90) days following the end of the First Earnout Period and the Second Earnout Period, as the case may be, the Purchaser shall prepare and deliver to the Shareholders a report setting forth its calculation of the Earnout Payment for such applicable Earnout Period, including a statement of the Earnout Period Revenues for such applicable Earnout Period (the “Earnout Report”). The Purchaser shall provide a reasonable level of supporting documentation for the Earnout Payment and any additional information reasonably requested by the Shareholders related thereto together with the Earnout Report. The Earnout Payment for the applicable Earnout Period shall represent only a right to receive a cash payment from the Purchaser, subject to the terms set forth herein, and shall not be deemed an interest in any security or certificate or entitle the holders thereof to any rights of any kind other than as specifically set forth herein. No interest is payable with respect to any Earnout Payment to the extent timely paid when due.
(c) The Shareholders shall have thirty (30) days following receipt of the applicable Earnout Report delivered pursuant to Section 3.6(b) during which to notify the Purchaser of any dispute of any item contained therein or related thereto, which notice shall set forth in detail the basis for such dispute. The Purchaser and the Shareholders shall cooperate in good faith to resolve any such dispute as promptly as possible. Upon such resolution, a Final Earnout Report shall be prepared in accordance with the agreement of the Purchaser and the Shareholders and the calculation of the applicable Earnout Payment, if any, based thereon, shall constitute the applicable Final Earnout Payment and be final and binding upon the Parties. In the event the Shareholders do not notify the Purchaser of any such dispute within such thirty (30)-day period or notify the Purchaser within such period that they do not dispute any item contained therein, the applicable Earnout Report d...
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. (i) From and after the period commencing on the six month anniversary of the Closing until December 31, 2025, (the “First Calculation Period”), in the event that over any twenty (20) consecutive Trading Days within any thirty (30)-Trading Day period during the First Calculation Period the daily VWAP of the shares of Parent Common Stock is greater than or equal to US$15.00 per share (the “First Earnout Event”), promptly (but in any event within ten (10) Business Days) after the occurrence of the First Earnout Event, the Persons that were Company Securityholders immediately prior to the Effective Time (the “Earnout Securityholders”) shall be entitled to receive, their Pro Rata Portion, as set forth in the Closing Consideration Spreadsheet, of one third of the Incentive Merger Consideration as additional consideration for the Merger.
(ii) From and after the six month anniversary of the Closing until December 31, 2027 (the “Second Calculation Period”), in the event that over any twenty (20) Trading Days within any thirty (30)-Trading Day period during the Second Calculation Period the daily VWAP of the shares of Parent Common Stock is greater than or equal to US$20.00 per share (the “Second Earnout Event”), promptly (but in any event within ten (10) Business Days) after the occurrence of the Second Earnout Event, Earnout Securityholders shall be entitled to receive, their Pro Rata Portion, as set forth in the Closing Consideration Spreadsheet, of an additional one third of the Incentive Merger Consideration as additional consideration for the Merger.
(iii) From and after the six month anniversary of the Closing until December 31, 2029 (the “Third Calculation Period”), in the event that over any twenty (20) Trading Days within any thirty (30)-Trading Day period during the Third Calculation Period the daily VWAP of the shares of Parent Common Stock is greater than or equal to US$25.00 per share (the “Third Earnout Event” and, together with the First Earnout Event and Second Earnout Event, each a “Earnout Event” and together, the “Earnout Events”), promptly (but in any event within ten (10) Business Days) after the occurrence of the Third Earnout Event, the Earnout Securityholders shall be entitled to receive, their Pro Rata Portion, as set forth in the Closing Consideration Spreadsheet, of an the final one third of the Incentive Merger Consideration, as additional consideration for the Merger.
Earnout. (i) At the Acquisition Merger Effective Time, (A) the Company shall issue and deposit with the Escrow Agent a number of New Company Units equal to the Maximum Seller Earnout (the “Earnout Units”) and (B) Pubco shall issue and deposit with the Escrow Agent (x) a number of shares of Pubco Class B Common Stock equal to the Maximum Seller Earnout (the “Seller Earnout Shares”) and (y) a number of shares of Pubco Class A Common Stock equal to the sum of (I) Maximum Sponsor Earnout and (II) the Maximum ▇▇▇▇▇▇▇▇▇ Earnout (collectively, the “Pubco Earnout Shares” and, together with the Seller Earnout Shares, the “Earnout Shares”), in each case, to be held in escrow in accordance with the terms of the Escrow Agreement and this Section 3.01(c).
(ii) Upon receipt of the Earnout Shares and Earnout Units, the Escrow Agent shall place the Earnout Shares and Earnout Units into one or more escrow accounts in accordance with the Escrow Agreement, and such Earnout Shares and Earnout Units shall be earned, released and delivered as follows:
(A) On the occurrence of Earnout Triggering Event I, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “First Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “First Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(B) On the occurrence of Earnout Triggering Event II, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) fifteen million (15,000,000) (the “Second Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) fifteen million (15,000,000) (the “Second Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(C) On the occurrence of Earnout Triggering Event III, Pubco and the Company shall cause the Escrow Agent to release to each Earnout Participant (1) a number of New Company Units equal to (x) ten million (10,000,000) (the “Third Earnout Units”) multiplied by (y) its Earnout Pro Rata Portion and (2) a number of shares of Pubco Class B Common Stock equal to (x) ten million (10,000,000) (the “Third Earnout Shares”) multiplied by (y) its Earnout Pro Rata Portion.
(D) Promptly following the filing of Pubco’s Form 10-K w...
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. (a) After the Closing, subject to the terms and conditions set forth herein, the Sellers shall have the contingent right to receive in the aggregate up to an additional Three Million Two Hundred Thousand (3,200,000) Pubco Ordinary Shares (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” and, together with the Exchange Shares, the “Consideration Shares”) as additional consideration based on Pubco achieving certain Net Revenue milestones for each of the fiscal years 2023 and 2024 (each, a “Net Revenue Earnout Year”; such period, the “Earnout Period”). The Sellers’ right to receive the Earnout Shares shall vest and become due and issuable as follows:
(i) In the event that the Net Revenue of Pubco as reported in the audited financial statements set forth in the annual report of Pubco for the fiscal year ended December 31, 2023 filed with the SEC is equal to or exceeds One Hundred Seventy Million Dollars ($170,000,000) (the “2023 Net Revenue Earnout Milestone”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million Six Hundred Thousand (1,600,000) of the Earnout Shares (the “First Tranche”), with each Seller receiving its Pro Rata Share thereof.
(ii) In the event that the Net Revenue of Pubco as reported in the audited financial statements set forth in the annual report of Pubco for the fiscal year ended December 31, 2024 filed with the SEC is equal to or exceeds Two Hundred Million Dollars ($200,000,000) (the “2024 Net Revenue Earnout Milestone” and, together with the 2023 Net Revenue Earnout Milestone, the “Net Revenue Earnout Milestones”), then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million Six Hundred Thousand (1,600,000) of the Earnout Shares (the “Second Tranche”), with each Seller receiving its Pro Rata Share thereof. In the event that the applicable Earnout Milestones are not met during the applicable periods, the Sellers shall not be entitled to receive the applicable portion of the Earnout Shares.
(b) Any Earnout Shares issued hereunder to Sellers shall be subject to the same restrictions and lock-up period(s) applicable to the Exchange Shares.
(c) As soon as practicable (but in any event within twenty (20) Business Days) after the c...
Earnout. (a) The Company Stockholders and the Engaged Option Holders shall be entitled to receive their pro rata portion of such number of Company Contingent Shares, fully paid and free and clear of all Liens other than applicable federal and state securities law restrictions, as set forth below upon satisfaction of any of the following conditions (each, an “Company Earnout Condition”):
(i) 7,000,000 Company Contingent Shares if the closing price of the Surviving Pubco Common Stock equals or exceeds $12.00 per share on any twenty (20) trading days in a thirty (30)-trading-day period at any time after the Closing Date and no later than 60 months following the Closing Date;
(ii) 2,250,000 Company Contingent Shares if the closing price of the Surviving Pubco Common Stock equals or exceeds $15.00 per share on any twenty (20) trading days in a thirty (30)-trading-day period at any time after the Closing Date and no later than 60 months following the Closing Date; and
(iii) 1,250,000 Company Contingent Shares if the closing price of the Surviving Pubco Common Stock equals or exceeds $18.00 per share on any twenty (20) trading days in a thirty (30)-trading-day period at any time after the Closing Date and no later than 60 months following the Closing Date.
(b) Each Company Earnout Condition will be evaluated on a stand-alone basis, without reference to any other Company Earnout Condition. If a Company Earnout Condition is satisfied, within five (5) Business Days after the last trading day in such thirty-day period, Surviving Pubco shall instruct the Exchange Agent to issue the Company Contingent Shares earned therefrom to each Company Stockholder and Engaged Option Holder in such amounts equal to each Company Stockholder’s and Employee Option Holder’s Applicable Percentage multiplied by such number of Company Contingent Shares corresponding to the applicable Company Earnout Condition (the “Earnout Instruction”), with no action being required on the part of the Company Stockholders.
(c) Until the Company Contingent Shares are issued in accordance with this Section 4.04, (i) the right to receive any Company Contingent Shares is not transferable except by operation of Law relating to descent and distribution, divorce and community property of such Company Stockholder or Engaged Option Holder, and does not constitute an equity or ownership interest in Surviving Pubco, and (ii) the Company Stockholders and Engaged Option Holders shall not have any rights as a shareholder of Su...
Earnout. During the period between the Closing Date and the seven-year (7-year) anniversary of the Closing Date, subject to the terms and conditions set forth in this Agreement, the Persons who are Company Shareholders immediately prior to the Exchange Effective Time and who have participated in the Exchange (“Exchanging Shareholders”) shall have the contingent right to receive in aggregate such number of shares of PubCo Common Stock equivalent to ten percent (10%) of the issued and outstanding equity interests of PubCo Common Stock as of the Closing (the “Earnout Shares”) (as adjusted to take into account any stock split, reverse stock-split, stock dividend or similar events effected with respect to PubCo Common Stock), and each Exchanging Shareholder’s Pro Rata Share of the Earnout Shares will vest upon achievement of certain share prices and milestones as follows:
(a) One-fourth (1/4th) of such Exchanging Shareholder’s Pro Rata Share of the Earnout Shares shall vest upon the volume weighted average price (“VWAP”) of PubCo Common Stock exceeding, for at least twenty (20) Trading Days during any consecutive thirty (30) Trading Day period, $12.00;
(b) One-fourth (1/4th) of such Exchanging Shareholder’s Pro Rata Share of the Earnout Shares shall vest upon the VWAP of PubCo Common Stock exceeding, for at least twenty (20) Trading Days during any consecutive 30 Trading Day period, $14.00;
(c) One-fourth (1/4th) of such Exchanging Shareholder’s Pro Rata Share of the Earnout Shares shall vest upon the VWAP of PubCo Common Stock exceeding, for at least twenty (20) Trading Days during any consecutive thirty (30) Trading Day period, $16.00; and
(d) One-fourth (1/4th) of such Exchanging Shareholder’s Pro Rata Share of the Earnout Shares shall vest upon the VWAP of PubCo Common Stock exceeding, for at least twenty (20) Trading Days during any consecutive thirty (30) Trading Day period, $18.00.
Earnout. (a) On the Closing Date, Parent shall deposit all of the Escrowed Earnout Shares with the Escrow Agent, to be held in an escrow account for the purpose of distributing such shares to the Company Stockholders upon the achievement of certain targets, as described in this Section 2.8, provided that 7.5% of such Escrowed Earnout Shares shall be part of the Escrowed Indemnity Shares and placed in a separate escrow account in satisfaction of the indemnity set forth in Article VII hereof in accordance with Section 2.10 hereof. The Escrowed Earnout Shares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) of the Company Disclosure Statement and in accordance with the terms and conditions of this Section 2.8 and an agreement to be entered into at the Closing between Parent, the Escrow Representative, and Continental Stock Transfer & Trust Company (the “Escrow Agent”) (or another escrow agent mutually agreed to by Parent and the Company), in customary form and substance as reasonably agreed to by Parent and the Company (the “Escrow Agreement”).
(b) Subject to Section 2.8(e) hereof, if between the first and the third anniversary of the Closing Date, the Closing Price of Parent Common Stock equals or exceeds $20.00 per share (the “First Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release one Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “First Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocated to the Company Stockholders in accordance with Section 2.6(c) hereof and Section 2.6(c) of the Company Disclosure Statement (the “First Target Shares”).
(c) Subject to Section 2.8(e) hereof, if between the second and the fourth anniversary of the Closing Date, the Closing Price of Parent Common Stock equals or exceeds $24.50 per share (the “Second Target”) for 20 trading days within any 30 trading day period, then within ten Business Days after the achievement of such target, Parent and the Escrow Representative shall instruct the Escrow Agent to release (i) one Tranche of Escrowed Earnout Shares (which amount may be reduced by up to 7.5% of such shares (the “Second Target Indemnity Shares”) pursuant to Article VII hereof and the Escrow Agreement), which shares shall be allocate...
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...