PURCHASE PRICE ADJUSTMENT & EARN-OUT CLAUSE PACK

Closing Working Capital Adjustment (Sample)

• Target and Mechanic: The Purchase Price will be adjusted dollar-for-dollar to the extent Closing Net Working Capital differs from the Target Net Working Capital of $[TARGET].
• Definitions: Net Working Capital = Current Assets minus Current Liabilities, excluding Cash, Debt, and Transaction Expenses, calculated per GAAP.
• Process: Buyer delivers Closing Statement within [X] days after Closing; Seller has [Y] days to review/objection; disputes to Independent Accountant.

Earn-Out Mechanic (Revenue/EBITDA Variant)

• Performance Metric: Earn-Out based on [Revenue/EBITDA] for periods ending [DATE(S)] with thresholds on Schedule [E].
• Covenants: Buyer will not take actions intended primarily to avoid Earn-Out.
• Cap/Acceleration: Total Earn-Out capped at $[CAP]; acceleration upon change of control.

State-Law Considerations (Arizona)

• Confirm Arizona law treatment of implied covenant obligations in earn-out covenants.
• Arizona courts generally enforce contractual earn-out provisions subject to good faith requirements.

[// GUIDANCE: Align with escrow/holdback terms; ensure funds flow ties to these definitions.]