Earn-In Clause
A provision in a contract where the buyer earns a gradually increasing ownership interest in an asset or company by fulfilling certain conditions or making additional payments.
Implications
A contractual provision that allows a party to increase its ownership stake in a project or company over time based on certain conditions or milestones, often used in joint ventures, partnerships, and investment agreements to align interests and reward performance.
Example
Example: In a mining joint venture, an investor agrees to an earn-in clause that increases their ownership percentage as they contribute additional funding and the project reaches specific development stages.
Related Terms
Different from an earnout clause, which typically involves payments contingent on performance, an earn-in clause involves gaining a larger ownership share based on meeting certain conditions.
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