Earnout Payments Clause Samples
The Earnout Payments clause defines the terms under which additional payments may be made to the seller after the closing of a business transaction, contingent on the business achieving certain financial or operational targets. Typically, this clause outlines the specific metrics (such as revenue or EBITDA) that must be met, the time period over which performance is measured, and the calculation and timing of any resulting payments. Its core function is to bridge valuation gaps between buyer and seller by tying a portion of the purchase price to the future performance of the acquired business, thereby aligning incentives and managing risk.
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Earnout Payments. (a) [***] Sellers and AWAC shall be entitled to additional consideration from Purchaser (any such additional consideration an “Earnout Amount”) determined as follows:
(i) [***]
(ii) [***] [***] shall be delivered to the Representative for allocation among and delivery to the Sellers, AWAC and the participants in the Phantom Equity Plan in accordance with Schedule I to this Agreement and Schedule I to the Phantom Equity Plan. At Purchaser’s option, up to [***] may be satisfied by the issuance to Sellers, AWAC and the participants in the Phantom Equity Plan of unregistered shares of Parent Common Stock (allocated in accordance with Schedule I to this Agreement and Schedule I to the Phantom Equity Plan, which allocation shall be set forth in written instructions from the Representative to Purchaser) having an aggregate Fair Market Value equal to such portion of such Earnout Amount. For purposes of the preceding sentence, Fair Market Value will be determined as of the [***] Final Earnout Amount Determination Date. The shares of Parent Common Stock issued in satisfaction of any portion of an Earnout Amount are referred to as “Earnout Shares” and, together with the Initial Shares, as the “Parent Shares”. In no event will any Parent Shares be issued hereunder if the issuance of such Parent Shares would cause (A) the sum of (1) the total number of Parent Shares issued pursuant to this Agreement, (2) the number of shares of Parent Common Stock, if any, owned by Sellers, AWAC and the participants in the Phantom Equity Plan immediately prior to the Closing and (3) the shares of Parent Common Stock, if any, issued to Sellers, AWAC and the participants in the Phantom Equity Plan pursuant to employment-related incentive grants to exceed 19.9% of the number of shares of Parent Common Stock outstanding immediately prior to the Closing or (B) the voting power of the securities described in the preceding clauses (A)(1) through (3) to exceed 19.9% of the voting power of the voting securities of Parent outstanding immediately prior to the Closing. [***] Sellers and AWAC acknowledge and agree that neither Purchaser nor any other Person makes any guarantee or representation to Sellers nor to AWAC that any Earnout Amount will be realized. Any Earnout Amount that is paid in cash or Earnout Shares to Sellers or AWAC or their designees shall be treated as a component of the Purchase Price.
(b) Purchaser shall at its expense deliver to Representative within 90 days after the complet...
Earnout Payments. After the Closing, subject to the terms and conditions set forth herein, the Sellers shall have the contingent right to receive up to an additional Four Million (4,000,000) shares of Pubco Common Stock with each such share valued at $10.00 per share (each an “Earnout Share”) (with such shares having an aggregate value of up to Forty Million Dollars ($40,000,000)), as consideration based on (i) Pubco and its Subsidiaries meeting certain financial milestones, during the calendar years 2023 and 2024 with respect to the EBITDA Earnout Targets (each such calendar year, an “EBITDA Earnout Year” and such two-year calendar period, the “EBITDA Earnout Period”), if the Adjusted EBITDA requirements as set forth in this Section 1.19 are met and (ii) the performance of the Pubco Common Stock during the five (5) year period after the Closing (the “Price Earnout Period”, and together with the EBITDA Earnout Period, the “Earnout Periods”).
(i) In the event that the Adjusted EBITDA for the calendar year ending December 31, 2023 (the “2023 Adjusted EBITDA”) is equal to or greater than Twenty Million Dollars ($20,000,000) (the “2023 EBITDA Earnout Target”) then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million and Five Hundred Thousand (1,500,000) Earnout Shares having an aggregate value equal to Fifteen Million Dollars ($15,000,000) (the “2023 EBITDA Earnout Payment”), as additional consideration.
(ii) In the event that the Adjusted EBITDA for the calendar year ending December 31, 2024 (the “2024 Adjusted EBITDA”) is equal to or greater than Thirty Million Dollars ($30,000,000) (the “2024 EBITDA Earnout Target”, and together with the 2023 Earnout Target, the “Earnout Targets”) then, subject to the terms and conditions of this Agreement, the Sellers shall be entitled to receive One Million and Five Hundred Thousand (1,500,000) Earnout Shares having an aggregate value TABLE OF CONTENTS equal to Fifteen Million Dollars ($15,000,000) (the “2024 EBITDA Earnout Payment”, and together with the 2023 EBITDA Earnout Payment, the “EBITDA Earnout Payments”), as additional consideration. Notwithstanding the foregoing, (i) in the event that the 2023 EBITDA Earnout Target is not met for the 2023 calendar year but the 2024 EBITDA Earnout Target is met for calendar year 2024, then the Sellers shall be entitled to receive the 2023 EBITDA Earnout Payment under this Section 1.19 as if the 2023 EBITDA Earnout Target had been met in the ...
Earnout Payments. The Company shall, and shall cause the Companies and their respective Affiliates to, comply with the terms and conditions of Section 1.7 of the Dakota Merger Agreement. The Company will act in good faith and not intentionally interfere or influence or otherwise take any action not in the ordinary course of business in such a way as to prevent or delay the payment of the Dakota Earnout, or cause such payment to be greater than the amount that would otherwise have been payable pursuant to Dakota Merger Agreement had the Company not taken such action. The Company hereby acknowledges its assumption of all of the obligations of Envoy relating to earnout payments under the CPS Merger Agreement.
Earnout Payments. (a) The terms below shall have the following respective meanings for the purposes of this Section 2.3:
Earnout Payments. (a) For the period beginning on the Closing Date and lasting until the eighteen month anniversary of the Closing Date (the “Earnout Period”), Buyer shall pay to the Seller, at the end of each fiscal quarter, in accordance with this Section 2.07, an amount (each an “Earnout Payment” and together the “Earnout Payments”) calculated by multiplying the Total ClearStory Revenues for such period by 30%. Notwithstanding anything herein to the contrary, as relates to the first $750,000 in accrued Earnout Payments (“Initial Earnout Payment”), such Initial Earnout Payment shall be held-back by Buyer and shall not be paid until twelve months after the Closing Date (“Initial Earnout Due Date”); provided, however, that Buyer shall have the right to offset against such Initial Earnout Payment any Damages owed by Seller to the Buyer as and to the extent set forth in Article XI. After payment of any such Damages and resolution of any such unresolved claim, any amount of the Initial Earnout Payments remaining owed to the Seller with respect to such claim shall be promptly paid to Seller by the Buyer. For avoidance of doubt, the parties acknowledge and agree that only the Initial Earnout Payment shall be subject to Buyer’s right of offset as aforesaid and nothing in the immediately preceding sentence shall affect the timing of, or Seller’s right to receive, any Earnout Payment other than the Initial Earnout Payment.
Earnout Payments. (a) In addition to the other amounts owed by Purchaser to Seller pursuant to this Agreement, Purchaser shall pay to Seller a payment for each of the calendar years ended December 31, 2010 (the “2010 Contingency Payment”), December 31, 2011 (the “2011 Contingency Payment”), and December 31, 2012 (the “2012 Contingency Payment” and, collectively with the 2010 Contingency Payment and the 2011 Contingency Payment, the “Contingency Payments”) if such Contingency Payments are due pursuant to the terms hereof. All Contingency Payments shall be calculated in accordance with the Historical Manner of Determination.
(b) On each March 31 following each of the calendar years ended December 31, 2010, December 31, 2011 and December 31, 2012 (each a “Determination Date”), Purchaser shall deliver to Seller (i) a complete copy of the consolidated audited financial statements of Purchaser for the most recently completed calendar year, (ii) a written statement setting forth the applicable Contingency Payment due for such calendar year, (iii) a written detailed calculation of the applicable Contingency Payment pursuant to the terms of this Section 2.5 (including a detailed calculation of Purchaser’s determination of Revenue and Gross Profit for the applicable calendar year) and (iv) with the exception of the 2010 Contingency Payment which shall be paid pursuant to Section 2.5(c) below, a payment, if any, in the amount of the applicable Contingency Payment reflected in such calculation. The statements, calculations and determinations delivered by Purchaser pursuant to the previous sentence shall be final and binding on the Parties unless Seller shall, within thirty (30) days following the delivery of such items, deliver to Purchaser written notice of disagreement with any such items. Such disagreement shall be resolved pursuant to the dispute resolution procedures set forth in Section 2.4. In the event the disagreement is arbitrated, the report of the Accounting Arbitrator shall be final and binding upon Purchaser and Seller. All Contingency Payments and the Estimated Contingency Payment (as defined below) shall be paid in cash by wire transfer of immediately available funds to an account designated in writing by Seller.
(c) On December 31, 2010, Purchaser shall deliver to Seller (i) a statement setting forth its good faith estimate of the Contingency Payment for the calendar year concluded on such date (the “Estimated Contingency Payment”); (ii) a detailed calculation of the E...
Earnout Payments. (a) The Merger Consideration shall include, if earned, up to two additional payments (each, an “Earnout Payment”, and collectively, the “Earnout Payments”) based upon the Surviving Corporation’s Adjusted Earnings as follows:
Earnout Payments. (a) The Company Holders shall be entitled to an Earnout Payment with respect to each Earnout Period, payable solely in Earnout Shares, on or before each Earnout Payment Date, if (and only if) the Company’s Profit Adjusted Earnout Revenue for such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period) is equal to or greater than the Minimum Earnout Revenue Target for such Earnout Period; such Earnout Payment to be calculated as follows:
(i) if Profit Adjusted Earnout Revenue in an Earnout Period is less than the Minimum Earnout Revenue Target for such Earnout Period, then the Company Holders shall not be entitled to an Earnout Payment with respect to such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period).
(ii) if Profit Adjusted Earnout Revenue in an Earnout Period is equal to or greater than the Maximum Earnout Revenue Target for such Earnout Period, then the Company Holders shall be entitled to an Earnout Payment with respect to such Earnout Period equal to 100% of the Earnout Shares for such Earnout Period.
(iii) if Profit Adjusted Earnout Revenue in an Earnout Period is equal to or greater than the Minimum Earnout Revenue Target for such Earnout Period but less than the Maximum Earnout Revenue Target for such Earnout Period, then the Company Holders shall be entitled to an Earnout Payment with respect to such Earnout Period (subject to Section 2.3(b) in the case of the First Earnout Period) equal to the product of (x) the number of Earnout Shares for such Earnout Period multiplied by (y) the sum of (i) 0.33 and (ii) the product of 0.67 multiplied by a fraction, the numerator of which is the amount by which Profit Adjusted Earnout Revenue in such Earnout Period exceeds the Minimum Earnout Revenue Target for such Earnout Period and the denominator of which is the Earnout Spread for such Earnout Period.
(b) The Company Holders shall be entitled to a catch-up opportunity applicable to the Earnout Payment that the Company Holders may be entitled to receive for the First Earnout Period (if and only to the extent the full amount of Earnout Shares for the First Earnout period were not earned with respect to the First Earnout Period in accordance with Section 2.3(a)), which catch-up shall be calculated at the time of the calculation of the Earnout Payment for the Second Earnout Period as follows:
(i) if Profit Adjusted Earnout Revenue in the Second Earnout Period is less than or equal to $35,000,000, t...
Earnout Payments. In connection with the INJ Treasury Strategy (as defined below), the Executives will have the opportunity to earn additional consideration (such consideration, if any, the “Earnout Payments”) based on the achievement of certain milestones in accordance with the terms and calculations set forth on this Section 5.
Earnout Payments. Seller agrees that all payments shown as due in the third quarter of 1998 on the schedule identified in clause (ii) of Section 3.30 shall either (i) be paid by Seller on or prior to the Closing or (ii) be fully reflected as liabilities on the Closing Balance Sheet.