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1. Parties: Identification and details of all contracting parties
2. Background: Context of the transaction and purpose of the earnout arrangement
3. Definitions: Key terms used throughout the agreement including financial, accounting and performance-related definitions
4. Earnout Calculation: Formula and methodology for calculating earnout payments, including specific metrics and thresholds
5. Payment Terms: Timing, method, and conditions for earnout payments, including any adjustments or deductions
6. Performance Metrics: Detailed specification of targets and measurements that trigger earnout payments
7. Accounts and Records: Requirements for maintaining and providing access to financial records and supporting documentation
8. Dispute Resolution: Procedures for resolving disagreements about calculations or performance metrics
9. Governing Law and Jurisdiction: Specification of English and Welsh law as governing law and relevant jurisdiction
1. Employment Conditions: Terms linking earnout to continued employment of key personnel, including non-compete and non-solicitation provisions
2. Anti-dilution Provisions: Protections against share value dilution where earnout involves share-based payments
3. Acceleration Provisions: Circumstances triggering early payment, such as change of control or business sale
4. Tax Provisions: Specific arrangements for tax treatment and allocation of tax liabilities
5. Security Arrangements: Provisions for securing earnout payments through escrow or other mechanisms
1. Schedule 1 - Calculation Examples: Detailed examples showing how earnout calculations will work in various scenarios
2. Schedule 2 - Performance Criteria: Detailed metrics, measurement methodologies, and specific targets for each period
3. Schedule 3 - Financial Definitions: Comprehensive definitions of financial terms and accounting principles to be applied
4. Schedule 4 - Form of Payment Notice: Template for formal payment notifications and supporting documentation requirements
5. Schedule 5 - Excluded Items: List of items to be excluded from earnout calculations (e.g., extraordinary items, one-off events)
Agreed Form
Base Purchase Price
Business
Business Day
Buyer
Completion
Completion Date
Confidential Information
Consideration
Earnout Amount
Earnout Calculation
Earnout Notice
Earnout Payment Date
Earnout Period
Earnout Statement
EBITDA
Encumbrance
Expert
Financial Year
Group
Independent Accountant
Key Performance Indicators
Material Adverse Change
Measurement Period
Net Revenue
Performance Targets
Purchase Price
Reference Accounts
Sale Agreement
Seller
Shares
Target Company
Target Performance
Tax
Transaction Documents
Working Capital
Calculation of Earnout
Payment Terms
Performance Metrics
Accounting Principles
Information Rights
Conduct of Business
Protection of Goodwill
Non-Competition
Confidentiality
Access to Records
Dispute Resolution
Expert Determination
Warranties
Tax Treatment
Set-off Rights
Assignment
Notices
Force Majeure
Anti-dilution
Acceleration Events
Change of Control
Management Continuity
Financial Statements
Audit Rights
Working Capital Adjustments
Third Party Rights
Governing Law
Jurisdiction
Entire Agreement
Severability
Variations
Costs
Counterparts
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