Agreement for Asset Sales from a US Company to a Foreign Entity: Template
Introduction
In the era of globalization, businesses are increasingly expanding beyond national borders, seeking growth and diversification opportunities in foreign markets. Selling assets to a foreign entity can open up new revenue streams, unlock value from underutilized assets, and enable strategic realignments. For instance, a US entity might sell its assets to a foreign entity to pivot its business focus, raise funds for investment, or respond to a lucrative offer from an overseas buyer.
However, cross-border asset sales are complex transactions fraught with potential pitfalls. There are legal and financial implications to consider, cultural and communication barriers to navigate, and regulatory requirements to comply with. This is where a well-drafted asset sale agreement comes into play.
An asset sale agreement is an essential legal instrument that sets out the terms and conditions of the asset sale. It delineates the rights and obligations of each party, specifies the assets being sold, and stipulates the purchase price and payment terms. A well-drafted agreement is crucial to protecting the interests of both parties and ensuring a smooth and successful transaction. It mitigates risks, prevents misunderstandings, and provides a legal framework for resolving any disputes that may arise.
Understanding Asset Sales
An asset sale, in the simplest terms, is a transaction where a company sells its assets to another entity. This type of transaction differs from a stock sale, where ownership of the company’s stock is transferred. In an asset sale, the seller retains ownership of the company, but the assets of the company are transferred to the buyer.
One might ask, why would a company choose to sell its assets rather than its stock? The answer lies in the flexibility and potential benefits that asset sales offer. Companies may decide to sell their assets for a variety of reasons. These can range from wanting to raise capital, divesting from non-core business areas, restructuring the business, or even disposing of underperforming or redundant assets.
An asset sale allows the seller to maintain control over which specific assets are sold and which are retained, providing a higher degree of control over the transaction. On the buyer’s side, an asset purchase can be advantageous as it allows for the acquisition of specific assets without assuming the seller’s liabilities, which would typically be the case in a stock sale.
Types of Assets in an Asset Sale
When we talk about ‘assets’, it’s important to understand that this term covers a broad spectrum of both tangible and intangible items.
Tangible Assets: These are physical and measurable assets that are used in the operation of a business. Tangible assets include things like real estate, equipment, vehicles, and inventory. They are often easier to value given their physical nature and the existence of active markets where these assets are bought and sold.
Intangible Assets: On the other hand, intangible assets are non-physical assets that can be just as valuable, if not more so, than physical assets. These include things like patents, trademarks, copyrights, brand recognition, business methodologies, and goodwill. While they can’t be touched or seen, intangible assets can provide significant value to a company, particularly in today’s knowledge-based economy.
For instance, a technology company might have a patent on a specific piece of technology, which could be worth millions, or even billions, of dollars. Similarly, a company’s brand recognition and reputation (its ‘goodwill’) can be a powerful asset that drives customer loyalty and sales.
Due to their non-physical nature, intangible assets can be more difficult to accurately value and their transfer may be subject to various legal and regulatory considerations. As such, their sale requires careful planning and expert advice.
Whether a company is selling tangible or intangible assets, a clear understanding of what constitutes an asset sale and the types of assets involved is crucial in order to properly structure the transaction and ensure a smooth process for all parties involved.
Key Elements of the Asset Sale Agreement
Drafting an asset sale agreement is an intricate process that requires careful attention to detail. The agreement serves as the backbone of the transaction, providing a detailed blueprint of the terms and conditions under which the assets will be transferred from the seller to the buyer. Here are the key elements that should be included in the agreement:
Parties Involved: The agreement should begin by identifying the parties involved in the transaction. This includes the full legal names and addresses of the seller (in this case, the US entity) and the buyer (the foreign entity). It’s crucial to accurately identify the parties to ensure the enforceability of the agreement.
Asset Description: The agreement should include a comprehensive and detailed description of the assets being sold. This could include tangible assets such as equipment, inventory, and real estate, or intangible assets such as trademarks, patents, or customer lists. Each asset should be described in detail to avoid any ambiguity or misunderstanding.
Asset Valuation: This section of the agreement details how the assets have been valued. The valuation method used should be clearly stated, whether it’s based on the book value, market value, or an appraised value. Any assumptions made during the valuation should also be disclosed.
Assumption of Liabilities: In an asset sale, the buyer typically does not assume the seller’s liabilities unless explicitly agreed upon. The agreement should include a clear statement confirming this, to protect the buyer from unexpected liabilities post-acquisition.
Terms of Payment: The agreement should lay out the detailed terms of how the payment will be made. This includes the total purchase price, the payment schedule, the form of payment (e.g., cash, stock, promissory note), and any contingencies or conditions affecting the payment.
Representations and Warranties: These are statements made by the seller about the assets and their condition. They provide assurance to the buyer about what they are purchasing and can cover a wide range of issues, including the ownership and condition of the assets, compliance with laws, and the accuracy of financial statements.
Indemnity Clauses: These provisions protect the buyer by providing for financial compensation in case of losses arising from breaches of the agreement or misrepresentations by the seller. The scope and limit of the indemnity should be clearly defined.
Confidentiality Provisions: Given the sensitive nature of the information exchanged in an asset sale, the agreement should include provisions requiring both parties to keep certain information confidential. These clauses can help protect trade secrets, customer information, and other proprietary data.
Governing Law and Dispute Resolution: The agreement should specify which law will govern the agreement and how disputes will be resolved. Given the cross-border nature of the transaction, this could involve international law, the law of the seller’s country (U.S. law), or the law of the buyer’s country. The agreement could also specify whether disputes will be resolved through arbitration, mediation, or court proceedings.
Closing Conditions and Date: Finally, the agreement should specify the conditions that must be met for the sale to go through, such as regulatory approvals or the buyer securing financing. It should also state the expected closing date, which is when the assets will be transferred and the payment will be made.
Creating a well-crafted asset sale agreement is a complex task that requires legal expertise, particularly in cross-border transactions. By paying careful attention to these key elements, sellers and buyers can help ensure a smooth transaction and protect their interests.
Tax Implications in a Sale from a US entity to a Foreign Buyer
The sale of assets from a US LLC to a foreign entity can have significant tax implications. Understanding these potential tax consequences is critical for both parties involved in the transaction to ensure compliance with tax laws and to optimize the tax outcomes.
When a US LLC sells its assets, it may be subject to tax on any gain realized from the sale. The gain is typically the difference between the selling price and the tax basis (generally, the cost) of the assets sold. The rate at which this gain is taxed depends on the nature of the assets and how long they have been held. For example, gains on the sale of capital assets held for more than one year are generally taxed at the preferential long-term capital gains rates.
However, if the assets sold are inventory or other property held primarily for sale to customers in the ordinary course of business, the gain would generally be taxed as ordinary income at higher rates. Additionally, special rules may apply to the sale of certain types of assets, such as depreciable property or certain intangible property.
From the perspective of the foreign buyer, the tax implications can be complex and depend on various factors, including the type of foreign entity, the nature of the assets purchased, and the tax treaty (if any) between the United States and the foreign buyer’s home country.
For example, if the assets purchased include U.S. real property interests, the foreign buyer could be subject to the Foreign Investment in Real Property Tax Act (FIRPTA). Under FIRPTA, the foreign buyer would be required to withhold a certain percentage of the purchase price and remit it to the IRS.
Moreover, the foreign buyer may also be subject to tax in its home country on the purchase of the assets. The rules can vary widely depending on the jurisdiction, and it’s important to understand the potential for double taxation and how tax treaties may provide relief.
Lastly, the structure of the transaction can significantly affect the tax consequences. For instance, in an asset sale, the buyer generally gets a “step-up” in basis in the purchased assets, which can provide future tax benefits. However, in a stock sale, the buyer generally takes a carryover basis in the stock, which may not provide the same future tax benefits.
Given the complexity and potential impact of these tax issues, both parties should seek advice from tax professionals. Effective tax planning can help manage tax liabilities, identify potential tax advantages, and avoid costly mistakes. It is critical to engage tax advisors early in the transaction process to understand the potential tax implications and to structure the transaction in a tax-efficient manner.
FAQ
What is an Asset Sale Agreement?
An asset sale agreement is a legal document used when an entity wishes to sell its assets to another entity. In the context of international business, this could be a U.S. company selling its assets to a foreign company. The agreement outlines the terms and conditions of the sale, including the purchase price, the assets included in the sale, and any warranties or representations. In an international business context, this agreement serves as the cornerstone of the transaction, providing legal protection to both the U.S. company (the seller) and the foreign company (the buyer).
What is the difference between an asset sale and a stock sale in the context of a U.S. company selling to a foreign entity?
An asset sale and a stock sale are two different ways to structure a business transaction, and each has different implications for the seller and the buyer.
Asset Sale
In an asset sale, the U.S. company sells specific assets to the foreign entity. These assets could include physical assets like equipment or real estate, as well as intangible assets like intellectual property or customer lists. The U.S. company retains ownership of its stock, and it also retains any liabilities that are not specifically transferred to the buyer.
From the buyer’s perspective, an asset sale allows for greater flexibility because the buyer can choose which assets to purchase and which liabilities to assume. However, an asset sale can be more complex to execute because each asset and liability must be individually transferred.
From the seller’s perspective, an asset sale can be beneficial because it allows the seller to retain control of the company and to limit the liabilities transferred to the buyer. However, an asset sale may have less favorable tax implications compared to a stock sale.
Stock Sale
In a stock sale, the U.S. company sells its stock to the foreign entity. The foreign entity becomes the owner of the company, including all of its assets and liabilities.
From the buyer’s perspective, a stock sale is simpler to execute because the buyer acquires the entire company in one transaction. However, a stock sale involves more risk for the buyer because the buyer assumes all of the company’s liabilities, including any unknown or undisclosed liabilities.
From the seller’s perspective, a stock sale can be beneficial because it typically has more favorable tax implications compared to an asset sale. However, a stock sale involves a loss of control over the company, which may not be desirable for the seller.
In both asset sales and stock sales, the parties must comply with U.S. law and the laws of the foreign entity’s home country, and they may need approval from various regulatory bodies. Therefore, it’s crucial to obtain legal advice when deciding how to structure the transaction.
What are some legal considerations when a U.S. company sells assets to a foreign entity?
When a U.S. company is selling assets to a foreign entity, there are several key legal considerations that must be addressed to ensure a smooth transaction.
Compliance with U.S. and International Law
First and foremost, the sale of assets must comply with both U.S. law and the laws of the foreign entity’s home country. This includes U.S. export control laws and regulations, which regulate the transfer of certain types of goods and information from the U.S. to foreign entities. Failure to comply with these laws can result in severe penalties.
Regulatory Approvals
Depending on the nature of the assets being sold and the countries involved, the sale may require approval from various regulatory bodies. For instance, if the sale involves items subject to U.S. export controls, approval may be required from the U.S. Department of Commerce. If the transaction could impact U.S. national security, approval may be needed from the Committee on Foreign Investment in the United States (CFIUS). Additionally, approval may be needed from regulatory bodies in the foreign entity’s home country.
Tax Implications
The sale of assets can have significant tax implications for both the seller and the buyer. For the seller, the sale could result in capital gains taxes. For the buyer, there may be import duties or value-added taxes. Both parties should consult with tax professionals to understand and plan for these tax implications.
What are some negotiation considerations in an Asset Sale Agreement with a foreign entity?
Negotiating an asset sale agreement with a foreign entity can be a complex process, involving several key considerations.
Valuation of Assets
One of the key considerations in any asset sale is the valuation of the assets. Determining the value of the assets can be a complex process, especially for intangible assets like intellectual property or customer lists. The parties may need to negotiate the valuation method and consider obtaining appraisals from independent third parties.
Cultural Differences
Cultural differences can play a significant role in negotiations. Different countries have different business practices and negotiation styles, and understanding these cultural nuances can be critical to the success of the negotiation. For example, some cultures value relationship building and socializing more than others, while others may have different attitudes towards hierarchy and decision-making.
Currency and Exchange Rate Risks
In an international transaction, the agreement should specify the currency in which the purchase price will be paid. If this is not the seller’s home currency, the seller may face exchange rate risk. This risk can be managed through various mechanisms, such as forward contracts or currency swaps.
How can a U.S. company protect itself when selling assets to a foreign entity?
When a U.S. company is selling assets to a foreign entity, there are several steps it can take to protect its interests.
Thorough Due Diligence
Due diligence is a critical step in any business transaction. The U.S. company should conduct thorough due diligence on the foreign buyer, investigating its financial stability, its reputation, and its compliance with laws and regulations. This can help identify any potential red flags and ensure that the buyer is capable of fulfilling its obligations under the agreement.
Robust Agreement
The agreement itself is a key tool for protection. The agreement should be comprehensive and clear, addressing all key aspects of the transaction. It should also include protections for the seller, such as representations and warranties from the buyer, indemnification clauses, and remedies for breach of contract.
Legal Advice
Legal advice is essential in any international business transaction. The U.S. company should obtain advice from a lawyer experienced in international business transactions. This can help ensure that the agreement is legally sound and that the seller’s interests are protected.
What are the common challenges faced during the drafting of an Asset Sale Agreement with a foreign entity?
Drafting an asset sale agreement with a foreign entity can present several unique challenges.
Language and Translation Issues
When dealing with a foreign entity, language can be a significant barrier. If the parties speak different languages, the agreement will need to be translated. This can lead to potential misunderstandings or discrepancies between the versions in different languages. It’s important to have the agreement reviewed by legal professionals fluent in both languages to ensure that the translations accurately reflect the parties’ intentions.
Understanding and Complying with Foreign Laws
Another challenge is understanding and complying with the laws of the foreign entity’s home country. These laws can be complex and unfamiliar, and they can have a significant impact on the transaction. They can include laws related to foreign investment, taxation, and the transfer of assets. The U.S. company should seek legal advice from professionals familiar with the laws of the foreign entity’s home country.
Time Zones and Communication
Communication can also be a challenge due to differences in time zones. This can slow down the negotiation and drafting process and can lead to delays in responding to issues or questions. It’s important to establish clear lines of communication and set expectations for response times.
Can an Asset Sale Agreement be governed by U.S. law even if the buyer is a foreign entity?
Yes, the parties can agree that the asset sale agreement will be governed by U.S. law. This is typically specified in a choice-of-law clause in the agreement. However, it’s important to note that the enforcement of the agreement and any disputes may be subject to the laws of the buyer’s home country. This can create challenges, especially if the foreign country’s laws are significantly different from U.S. law or if the foreign country does not readily recognize or enforce U.S. judgments. Therefore, it’s crucial to obtain legal advice on the choice-of-law clause and on any potential enforcement issues.
What happens if a dispute arises under an Asset Sale Agreement with a foreign entity?
If a dispute arises under the agreement, the resolution will largely depend on the dispute resolution clause in the agreement. This clause outlines the procedures that the parties will follow to resolve disputes. These procedures can include negotiation, mediation, arbitration, or litigation.
If the agreement provides for litigation, it should specify the jurisdiction where the litigation will take place. This is typically specified in a choice-of-forum or jurisdiction clause.
Regardless of the dispute resolution mechanism chosen, it’s important to consider the enforceability of any resulting decision or award in the buyer’s home country. This can be a complex issue that requires legal advice, especially if the buyer’s home country has different legal standards or does not readily recognize or enforce foreign judgments or arbitral awards.
What are some negotiation considerations in an Asset Sale Agreement with a foreign entity?
Valuation of Assets
Determining the value of the assets can be a complex process, particularly for intangible assets. The parties may need to negotiate the valuation method and consider obtaining third-party appraisals.
Cultural Differences
Negotiating with a foreign entity may involve navigating cultural differences. Understanding the negotiation style and business practices of the foreign entity’s home country can be critical.
Currency and Exchange Rate Risks
The agreement should specify the currency in which the purchase price will be paid. If this is not the seller’s home currency, the seller may face exchange rate risk.
How can a U.S. company protect itself when selling assets to a foreign entity?
Thorough Due Diligence
The seller should conduct thorough due diligence on the buyer, including its financial stability and its compliance with laws and regulations.
Robust Agreement
The agreement should be comprehensive and clear, and should include protections for the seller, such as representations and warranties, indemnification clauses, and remedies for breach of contract.
Legal Advice
The seller should obtainadvice from a lawyer experienced in international business transactions. This can help ensure that the agreement is legally sound and that the seller’s interests are protected.
What are the common challenges faced during the drafting of an Asset Sale Agreement with a foreign entity?
Language and Translation Issues
If the parties speak different languages, the agreement will need to be translated. This can lead to potential misunderstandings or discrepancies between the versions in different languages.
Understanding and Complying with Foreign Laws
The seller must understand and comply with the laws of the buyer’s home country, which can be complex and unfamiliar. This can include laws related to foreign investment, taxation, and asset transfers.
Time Zones and Communication
Differences in time zones can make communication more challenging. It’s important to establish clear lines of communication and set expectations for response times.
Can an Asset Sale Agreement be governed by U.S. law even if the buyer is a foreign entity?
Yes, the parties can agree that the asset sale agreement will be governed by U.S. law. However, the enforcement of the agreement and any disputes may be subject to the laws of the buyer’s home country. Therefore, it’s important to include a choice-of-law clause in the agreement that specifies which law will govern.
What happens if a dispute arises under an Asset Sale Agreement with a foreign entity?
The agreement should include a dispute resolution clause that outlines how disputes will be resolved. This could include negotiation, mediation, arbitration, or litigation. If the agreement provides for litigation, it should specify the jurisdiction where the litigation will take place. It’s also important to consider the enforceability of judgments in the buyer’s home country.
What legal risks does a U.S. company face when selling assets to a foreign entity?
When a U.S. company sells assets to a foreign entity, it faces several potential legal risks.
Breach of Contract
One risk is that the foreign buyer may breach the agreement, such as by failing to pay the purchase price or by failing to comply with other terms of the agreement. This can result in financial losses for the seller. The risk of breach can be mitigated by conducting thorough due diligence on the buyer and by including robust protections in the agreement, such as security interests or escrow arrangements.
Enforcement Challenges
If the foreign buyer breaches the agreement, the U.S. seller may face challenges enforcing its rights. Enforcing a U.S. judgment or arbitral award in a foreign country can be difficult and time-consuming, especially if the foreign country has different legal standards or does not readily recognize or enforce foreign judgments or awards.
Regulatory Violations
The U.S. seller could also face risks related to regulatory violations. For instance, if the sale involves items subject to U.S. export controls, the seller could face penalties for an unauthorized export. Similarly, if the transaction could impact U.S. national security, the seller could face penalties for failing to obtain necessary approval from the Committee on Foreign Investment in the United States (CFIUS).
What steps should a U.S. company take after signing an Asset Sale Agreement with a foreign entity?
After signing an asset sale agreement with a foreign entity, there are several steps that the U.S. company should take to finalize the sale and protect its interests.
Fulfill Contractual Obligations
First, the U.S. company should ensure that it fulfills all of its obligations under the agreement. This could include delivering the assets to the buyer, assisting with the transfer of any licenses or permits, and providing the buyer with necessary information or documentation.
Obtain Payment
The U.S. company should also ensure that it obtains the agreed-upon payment from the foreign buyer. This could involve coordinating with banks or other financial institutions, and it may involve currency conversion if the purchase price is paid in a foreign currency.
Maintain Records
The U.S. company should maintain comprehensive records of the transaction. This could include the agreement itself, correspondence with the buyer, records of asset delivery, and records of payment. These records could be important for tax purposes, for regulatory compliance, and for resolving any future disputes with the buyer.
Comply with Regulatory Requirements
Finally, the U.S. company should ensure that it complies with all regulatory requirements related to the sale. This could involve obtaining necessary export licenses, reporting the sale to regulatory authorities, and paying any required taxes or duties.
How can cultural differences impact the drafting and negotiation of an Asset Sale Agreement with a foreign entity?
Cultural differences can have a significant impact on the drafting and negotiation of an asset sale agreement with a foreign entity. Here are some ways these differences can come into play:
Communication Styles
Different cultures have different communication styles. In some cultures, business communication is direct and straightforward, while in others, it’s more indirect and nuanced. Misunderstandings can arise if the parties are not aware of these differences.
Negotiation Styles
Negotiation styles can also vary between cultures. In some cultures, negotiation is viewed as a competitive process, while in others, it’s seen as a collaborative process aimed at finding a mutually beneficial solution. Understanding the other party’s negotiation style can help avoid conflicts and facilitate a smoother negotiation process.
Business Practices
Different cultures have different business practices. For instance, in some cultures, business decisions are made by consensus, while in others, decisions are made by a single authority figure. These differences can impact the negotiation and decision-making process.
Legal Concepts
Even legal concepts can vary between cultures. For instance, the concept of contract law may differ between jurisdictions, with some placing a higher emphasis on written agreements and others on verbal agreements or relationships. These differences can impact the drafting of the agreement and the enforcement of its terms.
All of these cultural differences underscore the importance of cultural sensitivity and understanding in international business transactions. It’s often beneficial to engage local advisors or counsel who understand the cultural context and can provide valuable insights.
What legal risks does a U.S. company face when selling assets to a foreign entity?
When a U.S. company sells assets to a foreign entity, it faces several potential legal risks.
Breach of Contract
One risk is that the foreign buyer may breach the agreement, such as by failing to pay the purchase price or by failing to comply with other terms of the agreement. This can result in financial losses for the seller. The risk of breach can be mitigated by conducting thorough due diligence on the buyer and by including robust protections in the agreement, such as security interests or escrow arrangements.
Enforcement Challenges
If the foreign buyer breaches the agreement, the U.S. seller may face challenges enforcing its rights. Enforcing a U.S. judgment or arbitral award in a foreign country can be difficult and time-consuming, especially if the foreign country has different legal standards or does not readily recognize or enforce foreign judgments or awards.
Regulatory Violations
The U.S. seller could also face risks related to regulatory violations. For instance, if the sale involves items subject to U.S. export controls, the seller could face penalties for an unauthorized export. Similarly, if the transaction could impact U.S. national security, the seller could face penalties for failing to obtain necessary approval from the Committee on Foreign Investment in the United States (CFIUS).
What steps should a U.S. company take after signing an Asset Sale Agreement with a foreign entity?
After signing an asset sale agreement with a foreign entity, there are several steps that the U.S. company should take to finalize the sale and protect its interests.
Fulfill Contractual Obligations
First, the U.S. company should ensure that it fulfills all of its obligations under the agreement. This could include delivering the assets to the buyer, assisting with the transfer of any licenses or permits, and providing the buyer with necessary information or documentation.
Obtain Payment
The U.S. company should also ensure that it obtains the agreed-upon payment from the foreign buyer. This could involve coordinating with banks or other financial institutions, and it may involve currency conversion if the purchase price is paid in a foreign currency.
Maintain Records
The U.S. company should maintain comprehensive records of the transaction. This could include the agreement itself, correspondence with the buyer, records of asset delivery, and records of payment. These records could be important for tax purposes, for regulatory compliance, and for resolving any future disputes with the buyer.
Comply with Regulatory Requirements
Finally, the U.S. company should ensure that it complies with all regulatory requirements related to the sale. This could involve obtaining necessary export licenses, reporting the sale to regulatory authorities, and paying any required taxes or duties.
APA TEMPLATE
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the “Agreement”) is entered into this ______ day of _, 20, by and between _____________, a US Limited Liability Company (“Seller”) and _______________, a foreign entity (“Buyer”).
- Asset Description
This Agreement pertains to the sale of assets listed in Exhibit A attached hereto (the “Assets”). These Assets encompass a wide range of tangible and intangible properties, including but not limited to business equipment, inventory, trademarks, patents, customer lists, trade secrets, and goodwill. The precise nature, condition, quantity, and location of each asset are described in detail in Exhibit A.
- Purchase Price
The purchase price for the Assets, as mutually agreed upon by Seller and Buyer, shall be $__________. This figure represents the fair market value of the Assets based on an evaluation conducted by an independent, third-party valuation expert. The purchase price shall be paid in accordance with the terms set forth in Section 4 of this Agreement.
- Assumption of Liabilities
Except as expressly provided in this Agreement, Buyer shall not assume or become responsible for any liabilities or obligations of the Seller, whether known or unknown, contingent or otherwise. This includes, without limitation, any liability for taxes arising out of the operation of the business prior to the closing date, any liability for violations of law, and any liability for claims arising out of product defects.
- Terms of Payment
The purchase price shall be paid as follows: (Provide the detailed terms of how the payment will be made, including any deposit, installments, or other arrangements). For instance, the Buyer may pay a certain percentage of the purchase price at closing, with the balance to be paid in specified installments over a defined period. The payment terms should also specify the form of payment, such as by wire transfer or certified check.
- Representations and Warranties of the Seller
Seller represents and warrants to Buyer that the following statements are true and correct as of the date of this Agreement and will be true and correct as of the closing date:
a. Seller is the legal and beneficial owner of the Assets and has full power and authority to sell the Assets as contemplated by this Agreement. b. The Assets are free from any liens or encumbrances. c. The operation of the business and the Assets complies with all applicable laws. d. There are no pending or threatened legal proceedings relating to the Assets or the operation of the business.
- Representations and Warranties of the Buyer
Buyer represents and warrants to Seller that the following statements are true and correct as of the date of this Agreement and will be true and correct as of the closing date:
a. Buyer has full power and authority to enter into this Agreement and to perform its obligations under this Agreement. b. Buyer has the financial capability to pay the purchase price and fulfill its obligations under this Agreement.
- Indemnity
Both parties agree to indemnify and hold harmless the other from and against any and all losses, damages, claims, costs, expenses, liabilities or causes of action, including, without limitation, reasonable attorney’s fees and court costs, incurred or suffered by such party as a result of or in connection with any breach or alleged breach of any of the representations, warranties, covenants or agreements made by the indemnifying party in this Agreement. The indemnifying party will assume control of the defense and settlement of any claim or litigation to which this indemnification applies.
- Confidentiality
“Confidential Information” refers to all non-public, proprietary, or confidential information disclosed by one party to the other under this Agreement, whether in writing, orally, by inspection of tangible objects, or otherwise, including, but not limited to, trade secrets, business plans, strategies, forecasts, projects, customer lists, pricing, marketing plans, unpublished financial statements, budgets, licenses, prices and costs, supplier lists, software, source codes, inventions, procedures, algorithms and technology.
Both parties agree that the Confidential Information received will only be used for the purposes of carrying out obligations under this Agreement. Each party agrees to restrict access to such Confidential Information to those employees, advisors, or contractors who need to know such information for the purposes of executing the obligations under this Agreement and who are under a duty of confidentiality no less restrictive than that imposed by this Agreement.
The obligations of confidentiality will not apply to any information that:
a. Is or becomes generally available to the public other than as a result of disclosure by the receiving party in breach of this Agreement. b. Was in the possession of the receiving party prior to its being furnished by the disclosing party, provided that the source of such information was not bound by a confidentiality agreement in respect to such information. c. Is received from a third party without breach of any obligation of confidentiality. d. Is independently developed by the receiving party without use of or reference to the Confidential Information of the disclosing party. e. Is required by law to be disclosed; provided, that the receiving party gives the disclosing party prior written notice of such requirement and reasonably assists in resisting such disclosure.
The obligations under this section shall continue for a period of five years from the termination or expiry of this Agreement, unless otherwise agreed in writing by both parties.
- Closing
The sale and purchase of the Assets shall be completed at a closing (the “Closing”) to be held on a mutually agreed upon date. At the Closing, Seller shall deliver to Buyer duly executed and acknowledged bills of sale, assignments, and other good and sufficient instruments of transfer, conveying the Assets to Buyer. Buyer shall deliver to Seller the purchase price as specified in this Agreement.
- Entire Agreement
This Agreement contains the entire agreement of the parties and supersedes all prior or contemporaneous agreements, understandings, negotiations, or discussions, whether oral or written, of the parties in respect of the subject matter hereof.
- Governing Law
This Agreement shall be governed by, and construed in accordance with, the laws of the State of _________, without regard to its conflict of laws rules.
- General
a. Assignment: Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by either of the parties without the prior written consent of the other party. Notwithstanding the foregoing, each party may assign this Agreement and its rights and obligations hereunder to an affiliate.
b. No Third-Party Beneficiaries: Except as expressly provided herein, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.
c. Severability: If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future law, then that provision will be fully severable. In such instance, this Agreement will be construed and enforced as if the illegal, invalid, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement will remain in full force and effect.
d. Waiver: No failure or delay by any party in exercising any right, power or privilege under this Agreement will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder.
e. Prevailing Language: The original version of this Agreement has been written in English. The parties hereto waive any statute, law, or regulation that might provide an alternative law or forum or to have this Agreement written in any language other than English.
BUYER:
_______________________________
SELLER:
________________________________
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Exhibit A – “Purchased Assets” – [List or description of the specific assets to be purchased under this agreement, which may include physical assets, intellectual property, customer lists, etc.]
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Notary Acknowledgement:
STATE OF _______________
COUNTY OF _______________
On this ___ day of _____, 20___, before me, a Notary Public in and for said county and state, personally appeared _______________, known to me to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged that he/she/they executed the same for the purposes therein contained.
Notary Public My Commission Expires: ________