Term Sheet for Asset Purchase Template

Term Sheet for Asset Purchase Template

Term Sheet for Asset Purchase
Date: [Date of Term Sheet]

1. Parties

Buyer
Legal Name: [Buyer Legal Name]
Jurisdiction and Entity Type: [Buyer Jurisdiction and Entity Type]
Address: [Buyer Address]

Seller
Legal Name: [Seller Legal Name]
Jurisdiction and Entity Type: [Seller Jurisdiction and Entity Type]
Address: [Seller Address]

2. Business and Assets

Business Name: [Business Name]
Business Description: [Description of Business Operations]

Purchased Assets (together, the “Purchased Assets”):

• Tangible Assets: [Tangible Assets, e.g., equipment, inventory, furniture, fixtures]

• Intangible Assets: [Intangible Assets, e.g., trademarks, trade names, domain names, software, customer lists, goodwill]

• Contracts and Rights: [Contracts, licenses, permits, and other rights to be assigned]

• Other Assets: [Other Assets to Be Included]

Excluded Assets (not being purchased): [Excluded Assets]

3. Purchase Price and Consideration

Total Purchase Price: [Purchase Price Amount and Currency]

Payment Structure:

• Cash at Closing: [Cash Amount]

• Promissory Note: [Principal Amount and Basic Terms]

• Equity Consideration (if any): [Equity Description]

• Earn-Out or Contingent Consideration (if any): [Basic Earn-Out Structure or Formula]

Purchase Price Allocation (for tax and accounting purposes, subject to agreement in the definitive Asset Purchase Agreement):

• Tangible Assets: [Allocated Amount or Percentage]

• Intangible Assets and Goodwill: [Allocated Amount or Percentage]

• Other Categories: [Allocated Amount or Percentage]

4. Transaction Structure

Transaction Type: Asset purchase.

Buyer will purchase the Purchased Assets from Seller and will assume only the Assumed Liabilities described in Section 5. All other liabilities will remain with Seller as Excluded Liabilities.

Closing will occur on the Closing Date at the time and place specified in the definitive Asset Purchase Agreement.

5. Assumed Liabilities and Excluded Liabilities

Assumed Liabilities (Buyer to assume):

• Specified trade payables related to the Purchased Assets: [Description]

• Obligations under contracts and leases expressly assumed: [Description]

• Certain customer deposits or prepayments: [Description]

• Other Liabilities to Be Assumed: [Description]

Excluded Liabilities (remain with Seller):

• All liabilities not expressly assumed by Buyer.

• All indebtedness for borrowed money of Seller: [Description]

• Taxes of Seller for periods ending on or before the Closing Date: [Description]

• Employee and benefit obligations not expressly assumed: [Description]

• Litigation, claims, and disputes relating to periods before closing: [Description]

• Other Excluded Liabilities: [Description]

6. Closing and Timeline

Target Signing Date for Asset Purchase Agreement: [Target APA Signing Date]

Target Closing Date: [Target Closing Date]

Outside Date (if any): [Outside Date by which closing must occur or parties may terminate]

7. Due Diligence

Due Diligence Period: [Number] days starting on the date Seller first provides access to requested information and materials.

Scope of Due Diligence:

• Financial statements and accounting records: [Scope]

• Legal and corporate records: [Scope]

• Material contracts, leases, and licenses: [Scope]

• Employee, payroll, and benefits information: [Scope]

• Regulatory, compliance, and permits: [Scope]

• Intellectual property and IT systems: [Scope]

• Environmental and operational matters (if applicable): [Scope]

Seller will provide Buyer and its advisors with reasonable access to facilities, records, and key personnel, subject to confidentiality obligations and business operations.

8. Conditions to Buyer’s Obligation to Close

Buyer’s obligation to close will be subject to conditions that are expected to include:

• Negotiation and execution of a mutually satisfactory Asset Purchase Agreement and related documents.

• Completion of due diligence to Buyer’s satisfaction within the Due Diligence Period.

• Accuracy in all material respects of Seller’s representations and warranties at closing.

• Performance in all material respects of Seller’s covenants and obligations through closing.

• Receipt of all required third-party consents and notices: [Examples, such as landlord, key customers, lenders, licensors].

• Receipt of necessary governmental or regulatory approvals (if any).

• No material adverse change in the Business or Purchased Assets between the date of this term sheet and closing.

9. Conditions to Seller’s Obligation to Close

Seller’s obligation to close will be subject to conditions that are expected to include:

• Negotiation and execution of a mutually satisfactory Asset Purchase Agreement and related documents.

• Accuracy in all material respects of Buyer’s representations and warranties at closing.

• Performance in all material respects of Buyer’s covenants and obligations through closing.

• Receipt of the Purchase Price in the form agreed.

• Receipt of required consents and approvals that are conditions to Seller’s ability to transfer the Purchased Assets: [Description].

10. Key Covenants Prior to Closing

Between the date the Asset Purchase Agreement is signed and the Closing Date, the parties expect to agree that:

Seller Covenants:

• Operate the Business in the ordinary course consistent with past practice.

• Preserve relationships with customers, suppliers, and employees.

• Maintain existing insurance coverage for the Business.

• Not dispose of any material Purchased Assets except in the ordinary course of business.

• Not enter into, terminate, or materially amend material contracts without Buyer’s consent.

Buyer Covenants:

• Use reasonable efforts to obtain financing (if applicable): [Financing Description].

• Use reasonable efforts to obtain required regulatory and third-party consents.

11. Non-Compete and Non-Solicitation (Conceptual Terms)

The definitive Asset Purchase Agreement or a separate addendum is expected to include non-compete and non-solicitation restrictions on Seller and certain related parties.

Indicative Terms (subject to negotiation and local law):

• Restricted Business: [Description of Business Activities Restricted]

• Restricted Territory: [Geographic Area]

• Restricted Period: [Number of Years after Closing Date]

• Non-Solicitation of Customers: [Basic Concept]

• Non-Solicitation of Employees: [Basic Concept]

12. Confidentiality

Any existing confidentiality or non-disclosure agreement between Buyer and Seller will remain in full force and effect and will govern the handling of confidential information exchanged in connection with this transaction.

If no separate agreement exists, the parties may agree that non-public information exchanged under this term sheet will be kept confidential and used only to evaluate the potential transaction, subject to standard exceptions such as legal requirements.

13. Exclusivity (No-Shop) – Binding

Exclusivity Period: [Start Date of Exclusivity] to [End Date or Number of Days].

During the Exclusivity Period, Seller will not, directly or indirectly:

• Solicit, initiate, or encourage any proposal or inquiry from any third party for the purchase of the Business or the Purchased Assets (other than in the ordinary course of business for inventory or non-core assets).

• Enter into or continue discussions or negotiations with any third party regarding such a transaction.

• Provide non-public information about the Business or Purchased Assets to any third party for the purpose of evaluating a competing transaction, except as required by law.

14. Expenses – Binding

Each party will bear its own fees and expenses, including legal, accounting, and advisory costs, incurred in connection with negotiating this term sheet, conducting due diligence, and negotiating the Asset Purchase Agreement, unless otherwise agreed in writing.

15. Governing Law – Binding

Governing Law: [State/Province, Country]

This term sheet, to the extent its provisions are binding, will be governed by and construed in accordance with the laws of the jurisdiction stated above, without regard to conflict-of-law rules.

16. Non-Binding Effect; Binding Provisions

Non-Binding Provisions

The parties intend that the business terms described in Sections 1 through 8, 10, 11, and any other clearly designated non-binding sections of this term sheet are non-binding expressions of interest only. No party is obligated to proceed with the transaction until a definitive Asset Purchase Agreement is executed.

Binding Provisions

The parties intend that Sections 13 (Exclusivity), 14 (Expenses), 15 (Governing Law), and 16 (Non-Binding Effect; Binding Provisions), and any confidentiality provisions referenced in Section 12 are binding and enforceable.

17. Signatures

This Term Sheet for Asset Purchase is accepted and agreed as of the date first written above, to the extent of the binding provisions identified in Section 16 and as an outline of proposed non-binding business terms.

Buyer:
Signature: _______________________________
Printed Name: [Buyer Signatory Name]
Title: [Buyer Signatory Title]
Date: [Date Signed by Buyer]

Seller:
Signature: _______________________________
Printed Name: [Seller Signatory Name]
Title: [Seller Signatory Title]
Date: [Date Signed by Seller]

Witnesses (If Used)

Witness 1:
Signature: _______________________________
Printed Name: [Witness 1 Full Name]
Address: [Witness 1 Address]
Date: [Date Signed by Witness 1]

Witness 2 (if required):
Signature: _______________________________
Printed Name: [Witness 2 Full Name]
Address: [Witness 2 Address]
Date: [Date Signed by Witness 2]

Notary Acknowledgment (If Required)

State/Province of [State/Province]
County of [County]

On [Notarization Date], before me, [Notary Full Name], a Notary Public, personally appeared [Buyer Signatory Name] and [Seller Signatory Name], who proved their identities on the basis of satisfactory evidence and acknowledged that they executed this Term Sheet for Asset Purchase for the purposes stated in it.

Notary Public Signature: _______________________________
Notary Public Printed Name: [Notary Full Name]
My Commission Expires: [Commission Expiration Date]
Notary Seal: ☐