Earnout Protections Sample Clauses
The Earnout Protections clause is designed to safeguard the interests of parties involved in an earnout arrangement, typically in mergers and acquisitions. It sets out specific measures to ensure that the conditions for earnout payments—such as financial targets or performance milestones—are not manipulated or unfairly influenced after the transaction closes. For example, it may restrict the buyer from making significant operational changes that could negatively impact the seller’s ability to achieve the earnout. This clause ultimately ensures fairness and transparency in the calculation and payment of earnouts, protecting the seller from actions that could unjustly reduce their potential compensation.
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Earnout Protections. (i) Except as otherwise permitted by this Section 2.16(e), Parent will not take any action the principal purpose of which is to circumvent or adversely affect the Company’s ability to achieve the milestones required for the Earnout Consideration to be delivered; provided, however, that Parent’s obligation under this Section 2.16(e)(i) shall be subject in all respects to the prudent business judgment of Parent’s board of directors or management in connection with the business and operations of Parent and its Subsidiaries (including the Interim Surviving Entity and the Final Surviving Entity), taken as a whole, and nothing in this Agreement shall obligate Parent to (A) operate the Interim Surviving Entity or the Final Surviving Entity as a separate business; or (B) make any investments in any of the Company’s operations in China.
(ii) Parent shall fund the operations of the Final Surviving Entity (or the Interim Surviving Entity, as applicable) in a manner that is materially consistent with the annual operating plan in the form provided to Parent by the Company and attached to Schedule 2.16 (the “Operating Plan”), with such changes as may be agreed upon by Parent and the management of the Final Surviving Entity (or the Interim Surviving Entity, as applicable), with the affirmative consent of ▇▇▇▇▇ ▇▇ or, if he is no longer an employee of Parent or one of its Subsidiaries, another person that was a current employee of the Company on the Closing (▇▇. ▇▇ or such other employee, the “Management Representative”), which consent shall not be unreasonably withheld, conditioned or delayed.
(iii) Notwithstanding the foregoing or anything to the contrary in the Operating Plan, it is understood and agreed that Parent shall have the right to cease or reduce funding the operations other than ordinary course operating expenses) of the Final Surviving Entity (or the Interim Surviving Entity, as applicable) at any time if, in Parent’s prudent and reasonable business judgment, (A) the aggregate costs of the Company’s operations are more than 15% above the Operating Plan (as may be modified pursuant to Section 2.16(e)(ii)) for a particular fiscal quarter as of the end of such fiscal quarter (other than the first fiscal quarter following the Closing); (B) construction of the New York Manufacturing Facility or the Second Line is delayed by two or more quarters from that contemplated by the Operating Plan (as may be modified pursuant to Section 2.16(e)(ii)); (C) the funding conte...
Earnout Protections. (i) During the period beginning on the Closing Date and ending on December 31, 2007, Parent shall conduct the Company Business in an operating unit of Parent (the "COMPANY BUSINESS UNIT"). The Company Business Unit will, during such period, use separate business unit level accounting systems and have the ability to produce a business unit level profit and loss statement.
(ii) It is Parent's current intention following the Closing to operate the Company Business consistent with past practice with a view to achieving the Company's 2007 revenue plan; provided, however, that the parties acknowledge and agree that Parent shall have the ability to react in Parent's sole discretion to changes in business conditions as they occur, including, without limitation, by taking actions (i) to achieve synergies the availability of which cannot be known as of the date hereof and (ii) in reaction to the prolonged failure of the Company Business Unit to execute against its business objectives.
(1) Parent shall in good faith, subject to Parent's reasonable business judgment, support and assist in the sale of the Company's Beyond, VoComm or Telephony solutions to its current and prospective customers provided such sales are consistent with past practices; and
(2) Parent shall in good faith, subject to Parent's reasonable business judgment, support and assist the Company in conducting good faith negotiations (i) to enter into new customer agreements which would allow the Company Business Unit to secure new business or (ii) to secure extensions or renewals of customer agreements in existence on the date hereof, provided that any such new, extended or renewed agreement is on terms substantially consistent with past practices; and
(3) Parent agrees that SCHEDULE 8.3 represents the operating plan for the Company Business Unit. Parent also agrees that if the prior quarter's revenue is no less than 95% of the operating plan, then the subsequent quarter's expense target will be set at no less than 97.5% of the operating plan. Parent and the Company agree that notwithstanding the above, the expense targets can be changed to reflect the benefit of any identified efficiencies or synergies
(iii) In the event during the period beginning on the Closing Date and ending on December 31, 2007, Parent sells directly conflicting solutions to Company client deployments in existence as of the Effective Time, the revenue from such sales will be credited to Revenues for purposes of determining achiev...
Earnout Protections. (i) Parent shall provide sufficient resources to the Company, consistent with the Company’s current operating plan as provided to Parent, to allow the Company to fulfill its obligations under the VF Contract, the TM Contract, and any Campaign Contract; provided, however, that the parties acknowledge and agree that Parent shall have (A) the ability to react in Parent’s good faith discretion to business conditions as they occur or as they become known and (B) to integrate the businesses in order to optimize the performance of the combined business. Parent will not take any action the principal purpose of which is to circumvent or adversely affect the Company’s ability to achieve the Earnout ▇▇▇▇▇▇▇▇ Target.
(ii) In the event that during the Earnout Period, Parent shall consummate an Acquisition Transaction, and in connection with such Acquisition Transaction, either the TM Contract or the VF Contract is terminated, that portion of the Earnout ▇▇▇▇▇▇▇▇ Target that is attributable to such terminated contract shall be deemed to have been achieved in full.
(iii) In the event that during the Earnout Period, there shall be an amendment to or renegotiation of either the TM Contract or the VF Contract that would adversely affect the Company’s ability to generate ▇▇▇▇▇▇▇▇, including any adverse change in the Company’s deliverables or requirements under such contracts, Parent shall make commensurate adjustment to the ▇▇▇▇▇▇▇▇ Target.
Earnout Protections. Buyer will not take any action the principal purpose of which is to circumvent or adversely affect Seller’s ability to receive the Earnout Consideration. During the Earnout Period, Buyer will (i) operate the Business in a manner reasonably calculated to maximize the Seller’s ability to receive the Earnout Consideration; (ii) devote sufficient resources to the Business to allow it to operate in a manner materially consistent with how it was operated by Seller prior to the Closing; (iii) operate the Business separate from its other businesses; and (iv) not dispose of any of the material assets of the Business without Seller’s prior written consent.
Earnout Protections. 11.1 During the Earnout Period:-
11.1.1 the Purchaser shall provide to the Institutional Vendors’ Representatives within 30 Business Days of the end of each quarter a copy of the management accounts for the Combined Business for that quarter; and
11.1.2 the Institutional Vendors’ Representatives shall be entitled to attend as observers only (but not to vote at or participate in) each of the quarterly management meetings held by the Combined Business.
11.2 The Institutional Vendors shall procure that each of the Vendors’ Institutional Representatives will following Completion, save with the prior written consent of the Purchaser:-
11.2.1 keep confidential and not communicate or divulge to any person; and/or
11.2.2 not make use or permit the use of; the management accounts or any other confidential information which it obtains pursuant to or as a result of the provisions of Clause 11.1.
11.3 The Purchaser agrees and undertakes to the Institutional Vendors that during the Earnout Period it shall not without the written consent of the Institutional Vendors’ Representatives:-
11.3.1 take any action the purpose of which is to reduce the amount of the Earnout Consideration or the Further Consideration;
11.3.2 pass any resolution for the winding up of any member of the Combined Group; and the Purchaser shall procure that no member of the Combined Group does any such thing.
11.4 The Purchaser shall procure that (unless the Institutional Vendors’ Representatives otherwise agree in writing) during the Earnout Period:
11.4.1 each member of the Combined Group shall carry on business in the ordinary course;
11.4.2 no member of the Combined Group shall sell, transfer, lease, or assign or otherwise dispose of all or a substantial part of the business and assets of the Combined Business, or enter into an agreement to do so;
11.4.3 no member of the Combined Group shall enter into any contract, arrangement or transaction with a related party (as defined in Chapter 11 of the Listing Rules of the UK Listing Authority) of the Purchaser otherwise than on arm’s length terms; and
11.4.4 no member of the Combined Group shall defer to any later financial year the realisation of any income properly attributable to any financial year within the Earnout Period or attribute to any earlier financial year within the Earnout Period any costs properly attributable to any later financial year without the consent of the Institutional Vendors’ Representatives provided always that (i) the Purch...
Earnout Protections. During the Earnout Periods, the Buyer shall (except with the prior written consent of the Seller Representative which may only be withheld to protect the legitimate interests of the Sellers and the Buyer in achieving the maximum Revenue and Earnout Amount under Section 2.7, above):
(a) Calculate, and cause the Company to calculate, the Revenue in accordance with GAAP;
(b) Not make, and cause the Company not to make, any change in accounting methods or practices that would adversely affect the Revenue unless such changes are required by a Legal Requirement;
(c) Not take any action, and cause the Company to not take any action, that would reasonably be expected to distort unfairly the financial results of the Company and adversely affect the Revenue;
(d) Not allow the Company to (A) cease carrying on the Business in whole or in part, (B) sell any part of the Company or Business, (C) shift any gross revenue generated from the Earnout Customers to any other Person, including any Affiliate of the Company or the Buyer;
(e) Cause the financial results of the Company after the Closing, and after the completion of any reorganization or similar restructuring or acquisition of the assets or equity interests of any other Person after the Closing, to be separately identifiable for the purpose of determining the Earnout Amount and equitably adjust the determination of the Earnout Amount to account for any such reorganization, restructuring or acquisition;
(f) Not interfere with or take any action to impair or adversely affect the relationship of the Company with any of the Earnout Customers;
(g) Supply the Company with adequate working capital to fund the operations of the Business consistent with commercially reasonable business practices; and
(h) Maintain the Company as a separate operating entity with separately identifiable revenue, including, without limitation, separately identifiable revenue for each Earnout Customer, for the purpose of determining the Earnout Amount.