Heads Of Terms (Asset Sales)
These Heads of Terms (Asset Sales) can be used when a buyer and seller have agreed the principal terms of an assets (or business) sale agreement and wish to put them in writing to avoid future misunderstandings and identify any pitfalls at an early stage of negotiations. This will avoid wasting time and costs. Most heads of terms will not be legally binding but it is quite common for some terms, such as confidentiality, to be an exception. These Heads of Terms (Asset Sales) are a fairly standard set of terms for an asset (or business) sale. Heads of Terms can also be referred to as Heads of Agreement.
Optional phrases / clauses are enclosed in square brackets. These should be read carefully and selected so as to be compatible with one another. The most important example is whether the there is one Seller or multiple Sellers and also whether the company being sold has subsidiaries. Unused options should be removed from the document.
These terms include a list of the assets included in the sale as well as those which are excluded (and an option to add more excluded assets is available). If the creditors are to be assumed by the Buyer, then clause 3.2 should be retained and the words “balance of the” should also be retained at clause 4.
An outline of the price and payment terms is set out at clause 4. VAT is dealt with at clause 5. The law regarding retention of VAT Records is complex and specialist advice should be taken when deciding what should be done with them (clause 5.3).
Brief details of how the contracts will be transferred are at clause 6. The TUPE regulations and how they will apply to the transaction are at clause 7. Details of the TUPE consultations can be included at clause 7.4. Provisions relating to real property can be included at clause 8. The other clauses deal with warranties and their qualifications, the assignment of third party assets, non-solicitation and non-competition restrictions that will apply after completion. An anticipated completion date is also mentioned. The clauses relating to confidentiality, responsibility for costs and the due diligence procedure are specifically stated to be legally binding. If an existing confidentiality agreement is in place, then the optional clause 13.2 will make the Heads of Terms subordinate to it.
These terms are in open format. Either enter the requisite details in the highlighted fields or adjust the wording to suit your purposes.
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