Earnout Clauses Agreement

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Phone: {{phone}}

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EARNOUT CLAUSES AGREEMENT

This Earnout Clauses Agreement (hereinafter referred to as the "Agreement") is entered into on this {{date_of_agreement}}

BETWEEN:

{{buyer_company_name}}, a company duly incorporated in accordance with the laws of South Africa, with its registered office at {{buyer_company_address}} (hereinafter referred to as "the Buyer");

AND

{{seller_company_name}}, a company duly incorporated in accordance with the laws of South Africa, with its registered office at {{seller_company_address}} (hereinafter referred to as "the Seller").

(The Buyer and Seller are hereinafter collectively referred to as "the Parties" and individually as "a Party")

1. DEFINITIONS

1.1 “Acquisition Agreement” means the Sale of Business Agreement entered into between the Parties on or about {{date_of_acquisition_agreement}} pertaining to the sale of the business known as “{{acquired_business_name}}”.

1.2 “Earnout Period” means the period commencing on {{earnout_start_date}} and ending on {{earnout_end_date}}.

1.3 “Earnout Target” means the specific financial or operational metric(s) that must be achieved for the Earnout Payment to be made, as detailed in Clause 2.2.

1.4 “Earnout Payment” means the additional payment to be made by the Buyer to the Seller, as calculated in accordance with Clause 2.

1.5 “Financial Statements” means the audited financial statements of the Acquired Business for each financial year during the Earnout Period, prepared in accordance with International Financial Reporting Standards (IFRS) or Generally Accepted Accounting Principles (GAAP) as applicable in South Africa.

2. EARNOUT PAYMENT

2.1 In addition to the purchase price specified in the Acquisition Agreement, the Buyer shall pay to the Seller an Earnout Payment subject to the achievement of the Earnout Target(s) during the Earnout Period.

2.2 The Earnout Target(s) shall be based on {{description_of_earnout_target_metric}}, with a threshold of {{threshold_value}} (e.g., EBITDA of ZAR {{ebitda_target}}, Revenue of ZAR {{revenue_target}}, or {{other_metric_target}}).

2.3 The Earnout Payment shall be calculated as follows: {{earnout_payment_calculation_formula}} (e.g., X% of the amount by which actual EBITDA exceeds the EBITDA Target, up to a maximum of ZAR {{maximum_earnout_payment}}).

2.4 The maximum aggregate Earnout Payment payable under this Agreement shall not exceed ZAR {{maximum_earnout_payment}}.

3. CALCULATION AND REPORTING

3.1 Within {{number_of_days}} days after the end of each financial year during the Earnout Period, the Buyer shall provide the Seller with draft Financial Statements of the Acquired Business, together with a detailed calculation of the Earnout Target achievement and the resultant Earnout Payment.

3.2 The Seller shall have {{number_of_days_for_review}} days from receipt of the documents referred to in Clause 3.1 to review and comment on the Financial Statements and Earnout Payment calculation. If the Seller does not raise any objections within this period, the calculation shall be deemed final and binding.

3.3 In the event of a dispute regarding the Earnout Payment calculation, the Parties shall endeavour to resolve the dispute amicably. If no resolution is reached within {{number_of_days_for_dispute_resolution}} days, the dispute shall be referred to an independent auditor agreed upon by both Parties, whose decision shall be final and binding.

4. PAYMENT OF EARNOUT

4.1 Any Earnout Payment due to the Seller shall be paid within {{number_of_days_for_payment}} days after the final determination of the Earnout Payment for the relevant financial year.

4.2 All payments shall be made in South African Rand (ZAR) to the bank account specified by the Seller.

5. OPERATION OF THE ACQUIRED BUSINESS

5.1 During the Earnout Period, the Buyer undertakes to operate the Acquired Business in good faith and in a manner consistent with its historical operations, taking into account prudent business practices, and shall not take any action with the primary intent of avoiding or reducing the Earnout Payment.

5.2 The Buyer shall provide the Seller with reasonable access to the books and records of the Acquired Business for purposes of verifying the Earnout Target achievement, upon reasonable prior notice.

6. GOVERNING LAW AND JURISDICTION

6.1 This Agreement shall be governed by and construed in accordance with the laws of South Africa.

6.2 The Parties hereby irrevocably submit to the non-exclusive jurisdiction of the High Court of South Africa, {{province_of_jurisdiction}} Division, in respect of any dispute arising out of or in connection with this Agreement.

7. GENERAL PROVISIONS

7.1 This Agreement constitutes the entire agreement between the Parties with regard to the Earnout Clauses and supersedes all prior agreements, understandings, and negotiations, whether written or oral, between the Parties regarding the subject matter hereof.

7.2 No amendment or variation of this Agreement shall be effective unless made in writing and signed by both Parties.

7.3 No waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the Party waiving its rights.

8. SIGNATURES

IN WITNESS WHEREOF, the Parties have executed this Earnout Clauses Agreement on the date first above written.

FOR THE BUYER:

___________________________

Name: {{buyer_signatory_name}}

Title: {{buyer_signatory_title}}

Date: {{buyer_signature_date}}

FOR THE SELLER:

___________________________

Name: {{seller_signatory_name}}

Title: {{seller_signatory_title}}

Date: {{seller_signature_date}}