A future consideration clause refers to an agreement within a contract where the parties commit to provide a benefit or fulfillment of obligations at a later date rather than immediately. This type of clause allows for flexibility and adaptation to evolving circumstances or additional negotiations as the contract progresses.
The purchase price for the Remaining Transferred Equity Interests shall be the Future Consideration to be paid in accordance with and subject to the terms and conditions of Section 2.14.
Future Consideration. The aggregate consideration for the Remaining Transferred Equity Interests to be sold, conveyed, transferred, assigned and delivered to the Buyer at each Remaining Closing shall be an amount equal to the Future Consideration and at each Remaining Closing, the Buyer shall pay to each Seller his/her portion of the Future Consideration (if any) as set forth in Schedule 4.3(b).
Notwithstanding any other provisions of this Agreement: (i) the maximum aggregate Future Consideration which the Buyer shall be liable to pay to the Sellers Representative (or the Sellers) shall be $200 million, in the aggregate, and if the Sellers Representative (or the Sellers) have received Future Consideration of $200 million in aggregate, they shall not be entitled to receive any further Future Consideration for any reason whatsoever; (ii) the Buyer may at any time following the First Closing by written notice to the Sellers Representative require the Sellers to transfer to the Buyer all Remaining Transferred Equity Interests which have not already been sold, conveyed, transferred, assigned and delivered to the Buyer at a prior Remaining Closing (the “Relevant Remaining Equity Interests”) for an amount equal to $200 million less an amount equal to all Future Consideration (if any) previously paid to the Sellers (the “Remaining Amount”). Following receipt of such notice, the Sellers shall sell, convey, transfer, assign and deliver to the Buyer all such Relevant Remaining Equity Interests on the date specified in such notice for consideration equal to the Remaining Amount, whereupon the Sellers shall no longer be entitled to receive any further Future Consideration, the Sellers and Sellers Representative shall have no further rights under this Section 2.14, and the Buyer shall have no further obligations or liabilities under this Section.
Within 15 Business Days after delivery of the Future Consideration Statement, the Sellers Representative may dispute the Future Consideration Statement by delivering to the Buyer a written notice (a “Dispute Notice”) setting forth in reasonable detail the basis for each such disputed item and certifying that all such disputed items are being disputed in good faith. If the Sellers Representative does not so timely deliver a Dispute Notice, the applicable Future Consideration Statement shall be deemed irrevocably accepted by the Sellers Representative.
“Merger Consideration” means the Closing Consideration, the Final Deferred Consideration, if applicable, and any portion of the Future Consideration that becomes payable pursuant to Exhibit A.
Potential future consideration related to acquisitions: Non-cash expenses related to valuation adjustments of earn-out and milestone payments tied to recent acquisitions
Only after the conclusion of technical analyses by a multidisciplinary group will any projects arising from the agreement have official estimates of cost and return, necessary for future consideration by internal approval bodies, in accordance with the Company's governance.
The total future consideration for the acquisition could potentially reach US $80 million in one-time contingent value rights (“earn-outs”), of which US $10 million in earn-outs could be payable up to the successful completion of a Phase 2 study. All earn-outs are payable in cash and/or Zealand equity at Zealand’s discretion, are linked to the lead asset only, and contingent on certain future successful development, regulatory, and commercial-related milestones. There is also a potential mid-single digit royalty on global net sales from the lead asset.
Potential Future Consideration The actual number of shares that will be issued under the Purchase Agreements pursuant to certain purchase price adjustment, deferred payment and earnout provisions, as applicable, will depend on (i) the amount of any such purchase price adjustment, (ii) the extent of fulfillment of the applicable earnout targets, (iii) the share issuance price at the time of any such payment, and (iv) whether there are any offsetting indemnification claims or other applicable offsets. In certain cases, the Company in its discretion may elect to pay any such purchase price adjustment, deferred payment and/or earnout payments either in cash or Common Stock, including in the event that any issuance of Common Stock in respect of any such payments would require the Company to obtain shareholder approval pursuant to Nasdaq Listing Rule 5635(d). The shares issued or to be issued pursuant to the respective Purchase Agreements were issued in private placements pursuant to the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D promulgated under the Securities Act (“Regulation D”), without general solicitation, made only to and with “accredited investors” as defined in Regulation D, or under Regulation S promulgated under the Securities Act (“Regulation S”), made only to and with recipients of such shares that are not “U.S. Persons” as defined in Regulation S.
Total consideration for the transaction was approximately $6.5 million, funded with a mixture of cash on hand of $4.6 million, DXP stock valued at approximately $0.9 million and future consideration of $1.0 million. For the nine months ended September 30, 2022, Sullivan contributed sales of $188 thousand and net income of $54 thousand. Goodwill for the transaction totaled approximately $2.3 million.
Cisco is included within our SC business segment. Total consideration for the transaction was approximately $52.3 million, funded with a mixture of cash on hand of $32 million, DXP stock valued at approximately $4.4 million and a draw down of approximately $11 million on the ABL and future consideration of $4.5 million. For the nine months ended September 30, 2022, Cisco contributed sales of $20.6 million and net income of $4.4 million. Goodwill for the transaction totaled approximately $30.4 million.
The Company paid approximately $7.9 million in cash, stock and future consideration.
“Future Consideration” means the Future Payments (as defined on Exhibit A) due to Company Stockholders upon the achievement of the Milestones (as defined in Exhibit A).
Section 2.4 Future Consideration. (a) In addition to payment of the Closing Consideration in accordance with the terms of this Agreement, when any Future Consideration becomes payable in accordance with the terms of Exhibit A, Buyer shall make payment within the applicable time period set forth in Exhibit A of such Future Consideration to the Company Stockholders based on their Pro Rata Share. (b) The right of the Company Stockholders to receive any portion of the Future Consideration (i) is solely a contractual right, will not be evidenced by a certificate and does not constitute a security, or other instrument, (ii) may not be sold, assigned, transferred, pledged, encumbered or in any other manner transferred or disposed of, in whole or in part, other than upon written notice to Carmell pursuant to a Permitted Transfer, and (iii) does not give the Company Stockholders any right to receive interest payments. There is no guaranty or other assurance of any kind that any Future Consideration will be payable hereunder. For purposes of this Agreement, “Permitted Transfer” means: (A) a transfer on death by will or intestacy, (B) a transfer by instrument to an inter vivos or testamentary trust for beneficiaries upon the death of the trustee, (C) a transfer made pursuant to a court order of a court of competent jurisdiction (such as in connection with divorce, bankruptcy or liquidation), (D) a transfer by a partnership or limited liability company through a distribution to its partners or members, as applicable, in each case without consideration or (E) a transfer made by operation of law (including a consolidation or merger) or as pursuant to the dissolution, liquidation or termination of any corporation, limited liability company, partnership or other entity.
Future consideration refers to a term in contractual agreements that implies a promise to perform an act or provide a service at a future date in exchange for a reciprocal promise or service. It is a fundamental aspect of certain contracts where the complete exchange of value does not occur immediately but is instead deferred to a later time. This concept is distinguished by the element of time, where the fulfillment of the contractual terms extends beyond the present.
Future consideration is most appropriately used in scenarios where obligations or deliverables are intended to be fulfilled at a later stage. You should consider incorporating future consideration in your contracts in the following situations:
Writing future consideration into a contract requires clear and precise language to ensure that the intent and timing of the promised actions or exchanges are understood by all parties. Here is a general guideline on how to draft future consideration:
Identify the Parties: Clearly define who the parties involved in the agreement are.
Specify the Consideration: Articulate what exactly is being promised and when it will be delivered or executed.
Include Terms and Dates: Specify the timeline for the consideration, including exact dates or milestones for delivery or performance.
Define Conditions, if any: If applicable, explain any conditions or contingencies that need to be satisfied for the future consideration to take effect.
Clarify Consequences: Outline the consequences for non-performance or failure to deliver as per the future consideration clauses.
Example:
“The Seller agrees to deliver 500 units of Product XYZ to the Buyer on or before March 31, 2024, at the agreed future consideration price of $20 per unit. Payment will be fulfilled by the Buyer on delivery completion.”
Future consideration clauses are commonly found in a variety of contracts, especially where delivery, performance, or payment is delayed beyond the signing of the contract. These include:
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