A contract sets a KPI (the measure of the target) and an SPT (the level to reach), and whether actual results reach the SPT decides how much the interest rate, the exchange rate, or another payment term rises or falls. The adjustment takes forms such as a spread added to or subtracted from the fixed rate, or a donation if the target is missed.
Consider a hypothetical example in which an interest rate swap has a notional amount of 10 billion yen and a fixed rate of 1%. The fixed rate is 0.95% in a year the target is met and 1.05% in a year it is not. The fixed-rate payer's payment for one year is then 95 million yen in a year the target is met and 105 million yen in a year it is not.