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An Earnout Agreement is commonly used in business acquisition transactions where there is uncertainty about the target company's future performance or disagreement about its valuation. This document, structured under Qatar law, bridges the gap between buyer and seller expectations by linking part of the purchase price to future performance. The agreement typically outlines specific financial or operational targets that, if met, trigger additional payments to the seller. As a key transaction document in Qatar's business landscape, the Earnout Agreement must comply with local commercial laws, tax regulations, and financial reporting requirements. It includes detailed provisions for calculating earnout payments, operating covenants, financial reporting obligations, and dispute resolution mechanisms. This type of agreement is particularly relevant in transactions involving growth companies, businesses with unproven potential, or situations where seller confidence in future performance exceeds buyer projections.

1. Parties: Identification of the buyer, seller, and any guarantors or other relevant parties

2. Background: Context of the transaction, including reference to the main purchase agreement and rationale for the earnout structure

3. Definitions: Key terms used throughout the agreement, including financial metrics, calculation periods, and specific industry terminology

4. Earnout Structure: Overview of the earnout mechanism, including total potential value and duration

5. Calculation of Earnout Payments: Detailed methodology for calculating earnout payments, including relevant financial metrics and formulas

6. Payment Terms: Timing, currency, and mechanics of earnout payments, including any minimum or maximum thresholds

7. Business Operation Requirements: Obligations regarding the operation of the business during the earnout period

8. Financial Reporting and Audit Rights: Requirements for financial reporting and rights of parties to verify calculations

9. Seller Protections: Provisions protecting the seller's interest in achieving earnout targets

10. Acceleration Events: Circumstances triggering immediate payment or adjustment of earnout (e.g., change of control, sale of business)

11. Dispute Resolution: Procedures for resolving disputes regarding calculations or performance

12. Governing Law and Jurisdiction: Specification of Qatar law as governing law and relevant jurisdiction provisions

13. General Provisions: Standard contract clauses including notices, amendments, and assignment