A proration clause allows for the adjustment of expenses, benefits, or liabilities based on the proportion of time or usage specified in the contract, ensuring equitable distribution among parties. This clause is commonly used in agreements involving shared resources or responsibilities, such as rent, insurance, or utility fees, to account for partial periods of service or usage.
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7 Proration examples
Description
“Time Proration Factor” shall be the number that expresses the portion of the Plan Year period for which the Participant has met the Criteria. The Time Proration Factor shall be calculated as follows:
[Number of full months the Participant met the Eligibility Criteria in the Plan Year + (Total number of days that the Participant met the Criteria in the month they first met the Criteria)/Total number of days in the month that the Participant first met the Criteria)]
The tender offer, the proration period and the withdrawal rights will expire at 5:00 p.m., Eastern Time, on April 5, 2021, unless the tender offer is extended.
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT, NEW YORK CITY TIME, AT THE END OF THE DAY ON NOVEMBER 10, 2022, UNLESS THE OFFER IS EXTENDED (SUCH TIME, AS IT MAY BE EXTENDED, THE “EXPIRATION TIME”).
For the month in which this Agreement becomes effective or terminates, there shall be an appropriate proration of any fee payable on the basis of the number of days that the Agreement is in effect during the month.
Proration. If proration of tendered Shares is required, we will determine the preliminary proration factor promptly following the Expiration Date. Subject to adjustment to avoid the purchase of fractional Shares and subject to the provisions governing conditional tenders described in Section 6, proration for each shareholder tendering Shares (excluding Odd Lot Holders who tender all of their Shares) will be based on the ratio of the number of Shares properly tendered at or below the Purchase Price and not properly withdrawn by the shareholder to the total number of Shares properly tendered at or below the Purchase Price and not properly withdrawn by all shareholders (excluding Odd Lot Holders who tender all of their Shares). Because of the difficulty in determining the number of Shares properly tendered at or below the Purchase Price and not properly withdrawn, and because of the conditional tender procedure described in Section 6, we do not expect that we will be able to announce the final proration factor or commence payment for any Shares purchased pursuant to the Offer until approximately four business days after the Expiration Date, assuming that Shares are tendered by use of the procedures for guaranteed delivery. The preliminary results of any proration will be announced by press release promptly after the Expiration Date. Shareholders may obtain preliminary proration information from the Information Agent and also may be able to obtain the information from their brokers.
If the exchange offer is oversubscribed and Ecolab cannot accept all tenders of Ecolab Common Stock at the exchange ratio, then shares of Ecolab Common Stock that are validly tendered and not withdrawn will generally be subject to proration. Proration for each tendering stockholder will be based on (i) the proportion that the total number of shares of Ecolab Common Stock to be accepted for exchange bears to the total number of shares of Ecolab Common Stock validly tendered and not properly withdrawn and (ii) the number of shares of Ecolab Common Stock validly tendered and not properly withdrawn by that stockholder (and not on that stockholder’s aggregate ownership of shares of Ecolab Common Stock).
If proration of tendered Shares is required, we will determine the proration factor as promptly as practicable following the Expiration Date. Subject to adjustment to avoid the purchase of fractional Shares, proration for each beneficial owner tendering Shares will be based on the ratio of the number of Shares properly tendered and not properly withdrawn by the beneficial owner to the total number of Shares properly tendered and not properly withdrawn by all stockholders.
Proration refers to the process of dividing, distributing, or allocating an amount or quantity proportionately. This term is commonly used in various financial and contractual contexts where a specific value needs to be allocated according to a proportion. Proration ensures that values such as charges, payments, or benefits are fair and accurate based on the time or usage involved.
When should I use Proration?
Proration is typically used in situations where values need to be adjusted due to a partial period or proportionate allocation. Common scenarios include:
Billing: When a customer’s service changes in the middle of a billing cycle, proration adjusts the charges to reflect the actual usage or time period.
Contracts: If a contract begins or ends partway through a period, prorating ensures that payments or services rendered are accurately calculated for that duration.
Dividends: When distributing dividends, proration ensures a fair allocation based on the proportion of time or amount each shareholder holds their shares.
How do I write Proration?
When writing proration in a financial or contractual context, it’s important to clearly specify the method and the basis for proration. Here are some key considerations:
Define the Proration Basis: Clearly state whether the proration is based on time, usage, or another metric.
Detail the Calculation Method: Provide a step-by-step explanation of how the proration will be calculated.
Specify the Affected Period: Indicate the time frame or the specific period that impacts the proration.
For example, in a contract: “The monthly subscription fee will be prorated based on the number of days remaining in the billing cycle at the time of service termination.”
Which contracts typically contain Proration?
Proration is often included in a variety of contracts and agreements, notably:
Lease Agreements: Proration clauses are common in rental agreements to adjust rent based on the move-in or move-out date.
Service Contracts: Many service contracts, particularly utility or subscription services, use proration to calculate end-of-service period charges.
Employment Contracts: In employment agreements, proration might be used to adjust salaries or bonuses based on the duration of service if an employee starts or leaves mid-period.
Sales Contracts: When assets are sold or transferred during a fiscal period, contracts may require proration of expenses or revenues.
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16 example clauses
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