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1. Parties: Identification of all parties to the agreement, including the buyer, seller, and any guarantors
2. Background: Context of the transaction, reference to the main purchase agreement, and purpose of the earnout arrangement
3. Definitions and Interpretation: Definitions of key terms including Earnout Period, Target Performance Metrics, Calculation Methods, and Payment Terms
4. Earnout Structure: Detailed explanation of the earnout mechanism, including performance metrics, targets, and calculation methodology
5. Payment Terms: Timing, method, and currency of earnout payments, including any minimum or maximum limits
6. Performance Measurement: Specific methods for measuring and verifying performance metrics, including accounting principles to be applied
7. Seller Protections: Provisions protecting the seller's interest in achieving earnout targets, including operational covenants
8. Verification and Audit Rights: Procedures for verifying calculations and rights to audit relevant financial information
9. Dispute Resolution: Process for resolving disputes related to earnout calculations or payment obligations
10. Tax Provisions: Treatment of earnout payments for tax purposes and allocation of tax responsibilities
11. Confidentiality: Provisions regarding the confidentiality of business information accessed during the earnout period
12. General Provisions: Standard clauses including notices, amendments, governing law, and jurisdiction
1. Foreign Exchange Compliance: Required when the agreement involves cross-border payments or foreign parties, detailing FEMA compliance
2. Securities Law Compliance: Necessary when either party is a listed company, addressing SEBI regulations and disclosure requirements
3. Industry-Specific Provisions: Additional provisions required for regulated industries like banking, insurance, or telecommunications
4. Parent Company Guarantee: Included when a parent company guarantee is required to secure earnout payments
5. Change of Control Provisions: Specific provisions addressing the impact of change in control during the earnout period
6. Employee Retention Provisions: Required when the earnout is linked to retention of key employees or management
7. Acceleration Events: Provisions for early payment or adjustment of earnout in specific circumstances like sale or IPO
1. Schedule 1 - Performance Metrics Definition: Detailed definition and calculation methodology for each performance metric
2. Schedule 2 - Earnout Calculation Examples: Illustrative examples of earnout calculations under different scenarios
3. Schedule 3 - Form of Earnout Statement: Template for periodic earnout calculations and reporting
4. Schedule 4 - Accounting Principles: Specific accounting principles and policies to be applied in calculations
5. Schedule 5 - Excluded Events: List of events that are excluded from impacting earnout calculations
6. Schedule 6 - Key Employee Positions: List of key positions relevant to the earnout if applicable
7. Appendix A - Dispute Resolution Procedure: Detailed procedures for resolving disputes related to earnout calculations
8. Appendix B - Compliance Certificates: Forms of various compliance certificates required under the agreement
Adjusted EBITDA
Affiliate
Applicable Law
Base Purchase Price
Business
Business Day
Calculation Date
Calculation Period
Change of Control
Completion Date
Confidential Information
Dispute Notice
Earnout Amount
Earnout Calculation
Earnout Event
Earnout Notice
Earnout Payment
Earnout Period
Earnout Statement
EBITDA
Escrow Account
Escrow Agent
Excluded Events
Expert
Financial Statements
Force Majeure Event
GAAP
Gross Revenue
Independent Accountant
Initial Consideration
Key Employees
Material Adverse Effect
Maximum Earnout Amount
Measurement Period
Minimum Threshold
Net Revenue
Notice Period
Operating Profit
Performance Metrics
Performance Targets
Purchase Agreement
Reference Date
Review Period
Seller Representative
Specified Accounts
Target
Target Business
Target Group
Target Performance
Tax
Transaction
True-up Payment
Valuation Date
Working Capital
Definitions
Purchase Price Structure
Earnout Mechanism
Performance Metrics
Calculation Methods
Payment Terms
Conditions Precedent
Seller Covenants
Buyer Covenants
Operating Restrictions
Information Rights
Audit Rights
Verification Procedures
Business Protection
Non-Competition
Confidentiality
Tax Matters
Regulatory Compliance
Representations and Warranties
Force Majeure
Change of Control
Assignment
Dispute Resolution
Governing Law
Jurisdiction
Notices
Amendment
Severability
Entire Agreement
Waiver
Further Assurance
Costs and Expenses
Third Party Rights
Counterparts
Technology
Manufacturing
Healthcare
Professional Services
Retail
E-commerce
Financial Services
Real Estate
Media and Entertainment
Telecommunications
Pharmaceutical
Consumer Goods
Industrial Products
Software and IT Services
Legal
Finance
Corporate Development
Mergers & Acquisitions
Tax
Compliance
Treasury
Corporate Strategy
Business Development
Operations
Financial Planning & Analysis
Integration
Chief Executive Officer
Chief Financial Officer
General Counsel
Head of Mergers & Acquisitions
Corporate Development Director
Finance Director
Legal Counsel
Investment Banking Director
Transaction Advisory Partner
Due Diligence Manager
Corporate Finance Manager
Tax Director
Integration Manager
Business Development Director
Commercial Director
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