Cette
page en français 
This page in French
Author:
Jonathon
Wise Polier
Member of the Bars of New York
State and Paris (France)
4 rue de Marignan, 75008 Paris
Telephone: (33) 1 47 23 41 51
/ Fax: (33) 1 47 23 37 93
E-Mail: j-polier@paris-law.com
/ http://www.paris-law.com
(List
of articles in English and French relating to various legal
issues)
The America Purchase and Sale Agreement is a highly structured and lengthy legal document. Every clause is necessary. Immediately below is the outline of the table of contents of a recent $ 8 million asset acquisition. The length would have been the same if the purchase price has been only $ 1 million
The
following Table of Contents is drawn from a typical asset
acquisition. If the acquisition involved stock of the target,
there would be certain variations.:
Table of Contents
| Article I | SALE OF ASSETS AND PURCHASE PRICE |
| Article II | REPRESENTATIONS AND WARRANTIES OF SELLER |
| Article III | REPRESENTATIONS AND WARRANTIES OF BUYER |
| Article IV | CONDUCT OF BUSINESS AND TRANSACTIONS PRIOR TO CLOSING |
| Article V | CONDITIONS TO OBLIGATIONS OF BUYER |
| Article VI | CONDITIONS TO OBLIGATIONS OF SELLERS |
| Article VII | TRANSACTION SUBSEQUENT TO CLOSING |
| Article VIII | CONFIDENTIALITY |
| Article IX | COVENANTS NOT TO COMPETE |
| Article X | INDEMNIFICATION |
| Article XI | LIQUIDATED DAMAGES AND OTHER REMEDIES |
| Article XII | MISCELLANEOUS |
| Exhibits A - CC | [including ancillary agreement] |
The detailed Purchase and Sale Agreement is designed to achieve a number of goals, including the following:
Require the target to clearly disclose all facts which would or could decrease the value of the business to be acquired. This is done by obtaining detailed written "Representations and Warranties" from the target.
If full disclosure is not made, the Purchase and Sale Agreement provides the mechanism by which the buyer will be indemnified, including an escrow of part of the purchase price, a bank guarantee and/or personal guarantee of target's controlling shareholder.
Set the agreed allocation of the purchase price for U.S. tax purposes (a significant issue to be negotiated),
Provide an option for the buyer not to close after signature of Purchase and Sale Agreement is a condition of closing if not met.
Timely due execution and
delivery of ancillary agreement which are important (e.g.,
employment/ non-compete agreements with key employees, waiver
of bank liens on certain assets, etc.
In brief, when the buyer pays the purchase price, it needs to receive what it thought it was purchasing. If the target has tried to deliver assets with a lesser value, there should be a clear right and usable mechanism to permit the buyer to make itself whole through arbitration or litigation in a context favorable to the buyer and/or invoking the ancillary escrow agreement or bank guarantee agreement put in place pursuant to Purchase and Sale Agreement.
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DISCLAIMER The information provided here and on the other pages linked hereto is intended for educational purposes only, and is not legal advice. Particular situations require particular analyses that can only be provided by legal professionals who specialize in the relevant fields and who know all the details of a situation. Also, a presentation such as this does not establish the attorney-client relationship that is necessary in any rendering of legal advice. Finally, one should be aware that the law is a chameleon-like beast that changes its colors frequently, and what holds good today may be reversed by tomorrow. The comments herein should then be read in that light. |