Take Away Provisions . . .

are agreements between an investor and management that entitle the investor to penalize management when the company does not achieve agreed upon results. The penalty is often the reduction in management’s shareholdings or in its ability to operate the company independently. Take away provisions are most prevalent in financings where the company sells a controlling interest to the investors and management contracts with the investor to maintain operating control so long as company results are acceptable. They are also common in earnups, leveraged buyouts and other transactions where management’s participation is predicated upon it achieving certain results. See: Earnouts, Earnups, LBO (Leveraged Buyout), Management Agreements, Operating Covenants, Shareholders’ Agreements, Structure, Voting Trusts.