Life Sciences Net Sales Based Earn-Out Clause

Summary

This Life Sciences Net Sales Based Earn-Out Clause requires a buyer to pay additional consideration to a seller in the post-closing period if a company which produces medical or other life science devices achieves a negotiated performance metric. This template includes practical guidance and drafting notes. This template earn-out clause contemplates that the earn-out payment is simply based on achieving a determined level of net sales for the relevant year. Note the extensive definition of "Net Sales," which seeks to exclude from the calculation chargebacks, rebates and other items that may otherwise artificially inflate the level of sales. For sales or net revenue based metrics, see Life Sciences Sales / Net Revenue Based Earn-Out Clause. For a sample clause providing for earn-out payments triggered by the occurrence of an event or milestone, see Life Sciences Milestone Based Earn-Out Clause (EU). For detailed guidance on life sciences transactions, see Life Sciences M&A Transactions and Life Sciences Corporate Transactions Resource Kit. See also these annotated clauses: • Life Sciences FDA Matters Representation and Warranty Clause • Life Sciences Purchase Price Inventory Adjustment Clause • Life Sciences Inventory Count Clause • Life Sciences Inventory / Sufficiency of Assets Representation and Warranty Clause • Life Sciences Medical Device FDA Matters Representation and Warranty Clause • Life Sciences Post-Closing Accounts Receivable Covenant Clause • Life Sciences Post-Closing Price Reporting Covenant Clause • Life Sciences Post-Closing Regulatory Covenant Clause • Life Sciences Post-Closing Transitional Brand License Clause • Life Sciences Post-Closing Transition Covenant Clause • Life Sciences Product Approval Representation and Warranty Clause • Life Sciences Product Liability Representation and Warranty Clause • Life Sciences Survival Clause • Life Sciences Working Capital Adjustment Clause