Ticking Fee Provision

Summary

This Ticking Fee clause increases the purchase price if the transaction fails to close or become effective by a certain date because of failure to obtain required antitrust (or other regulatory) clearance or approval by such date. This template includes practical guidance and drafting notes. The reference date typically would be an initial drop dead date that is subject to extension either automatically or at the election of one or more parties in the event all closing conditions other than obtaining the required regulatory clearance or approval have been satisfied, in order to accommodate the longer antitrust review process. For an example of such a clause to extend the drop dead date, see Termination Provisions (M&A Transaction). The rationale for including a ticking fee clause is to inspire the buyer, which is typically the party responsible for making any required antitrust (or other regulatory) filings, to obtain the required clearances and approvals as quickly as possible, and can be a useful incentive mechanism even where a "hell or high water" clause or other similar covenants are not included. For a full listing of related antitrust clause content, see Antitrust Clauses in M&A Agreements Resource Kit​. References to "the Company" refer to the target company, to "Seller" refer to the selling party, to "Parent" or "Buyer" refer to the acquiring party (depending on whether the transaction is structured as a reverse triangular merger or a straight acquisition), and to "the Agreement" refer to the principal agreement setting forth the details of the transaction; such terms should be conformed as appropriate to the terms otherwise being used to refer to such persons. The clause uses the phrase "the transactions contemplated by this Agreement"– this can be replaced with the appropriate defined term (e.g., "the Transaction" or "the Merger") used to refer to the M&A transaction to which the principal agreement relates.