Advanced Issues in Purchase and Sale Agreements
Attachment to Outline
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) dated as of ______, 20__ (the “Effective Date”), is made by and between ______, a[n] ______(“Seller”), and ______, a[n] ______(“Purchaser”).
Recitals
A. Seller is the owner of the land legally described on Exhibit A attached hereto commonly known as ______, ______, ___ (such land, together with all buildings and all improvements, fixtures [and personal property] thereat, and all privileges, rights, easements, hereditaments, and appurtenances thereunto belonging, and all right, title and interest of Seller in and to all streets, alleys, passages and other rights-of-way included therein or adjacent thereto, are collectively referred to herein as the “Property”).
B.Seller desires to sell and convey to Purchaser, and Purchaser desires to purchase and acquire from Seller, all of Seller’s right, title and interest in and to the Property, upon and subject to the terms, provisions and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Purchaser do hereby agree as follows:
1.Recitals. The Recitals set forth above are hereby incorporated into this Agreement as though fully set forth herein.
2.Purchase and Sale. Subject to the conditions and on the terms contained in this Agreement, Purchaser agrees to purchase and acquire the Property from Seller, and Seller agrees to sell and transfer the Property to Purchaser.
3.Purchase Price; Earnest Money.
(a)Purchaser shall pay to Seller a purchase price ("Purchase Price") for the Property in an amount equal to [______] and No/100 Dollars ([$______.00]). The Purchase Price shall be payable in immediately available funds by Purchaser at Closing (as hereinafter defined) (except for the Earnest Money, which shall be paid as and when set forth in Section 3(b) below), subject to the adjustments and prorations as provided for herein.
(b)Purchaser shall deposit the sum of [______] and No/100 Dollars ([$______.00]) (together with any interest earned thereon, the “Earnest Money”) with ______(“Escrowee”) within five (5) business days after the Effective Date. The Earnest Money shall be held in escrow by Escrowee pursuant to Escrowee’s then current standard strict joint order escrow instructions. Purchaser may elect to direct Escrowee to invest the Earnest Money pursuant to Escrowee’s standard investment procedures. Any investment fee or other cost charged by Escrowee in connection therewith shall be borne solely by Purchaser. If this Agreement is not sooner terminated by either party pursuant to its rights under this Agreement then the Earnest Money shall be applied against the Purchase Price at Closing.
4.Seller's Representations and Warranties.
(a)Seller hereby represents and warrants to Purchaser as follows:
(i)Seller is a corporation, duly organized and in good standingin accordance with the laws of the State of ______. Seller has authority to execute this Agreement and will, as of Closing, have authority to convey to Purchaser all of its right, title and interest in and to the Property in accordance with this Agreement. The person signing this Agreement on behalf of Seller is a duly qualified representative of Seller and has all requisite power and authority to execute this Agreement on behalf of Seller as the valid, binding and enforceable obligation of Seller.
(ii)Seller has no Knowledge (as hereinafter defined) of any currently pending or threatened taking or condemnation of the Property or any portion thereof.
(iii)Except as disclosed by the Commitment (as hereinafter defined), there are no unrecorded leases, service contracts or occupancy agreements currently affecting any portion of the Property which will be binding on Purchaser following the Closing, except for the contracts listed on Exhibit B attached hereto and made a part hereof (the “Contracts”).
(iv)Neither the entering into of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in a violation or breach by Seller of any material judgment, order, writ, injunction or decree issued against or imposed upon it.
(v)Seller has no Knowledge of any actual or threatened action, litigation, or proceeding by any organization, person, individual or governmental agency against the Property, or against Seller regarding the Property.
(vi)Seller has no Knowledge of any violations of law, municipal or county ordinances, or other legal requirements (including laws relating to the environmental condition of the Property) with respect to the Property or with respect to the current use or occupancy thereof.
(vii)To Seller’s Knowledge, Seller is not in default of any of its obligations or liabilities pertaining to the Property.
(viii)Seller is not a "foreign person", "foreign corporation", "foreign trust" or "foreign estate", as those terms are defined in The Internal Revenue Code of 1986, as amended (“Code”) Section 1445.
The foregoing representations and warranties of Seller shall be deemed to have been remade as of the Closing Date (as hereinafter defined), and shall survive the Closing for a period of one hundred eighty (180) days.
(b)All references to the “Knowledge” of Seller in this Agreement shall refer only to the current actual knowledge of the Seller Designated Person (as hereinafter defined), without inquiry, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Seller or any affiliate of Seller or to any other officer, agent, manager, representative or employee of Seller or any affiliate thereof, or to impose upon the Seller Designated Person any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains. As used herein, the term "Seller Designated Person" shall refer to the following person: ______, ______of Seller. In no event shall the Seller Designated Person have any personal liability under this Agreement.
(c)NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, PURCHASER HEREBY ACKNOWLEDGES AND AGREES THAT EACH AND ALL OF THE REPRESENTATIONS OR WARRANTIES OF SELLER HEREIN SHALL BE SUBJECT TO EXCEPTION FOR ANY MATTER OR INFORMATION CONTAINED IN ANY DOCUMENTS AND INSTRUMENTS DELIVERED TO PURCHASER BY SELLER PRIOR TO THE EFFECTIVE DATE. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, NO CLAIM FOR A BREACH OF A REPRESENTATION OR WARRANTY SHALL BE ACTIONABLE, PAYABLE OR GIVE RISE TO ANY RIGHT, CLAIM OR DEFENSE ON THE PART OF PURCHASER: (X) AT ANY TIME IF THE BREACH IN QUESTION RESULTS FROM OR IS BASED ON A CONDITION, STATE OF FACTS OR OTHER MATTER WITH RESPECT TO WHICH PURCHASER HAS KNOWLEDGE ON OR PRIOR TO THE EFFECTIVE DATE, OR (Y) AFTER CLOSING IF THE BREACH IN QUESTION RESULTS FROM OR IS BASED ON A CONDITION, STATE OF FACTS OR OTHER MATTER WITH RESPECT TO WHICH PURCHASER ACQUIRES KNOWLEDGE AFTER THE EFFECTIVE DATE BUT PRIOR TO CLOSING.
(d)Notwithstanding anything to the contrary in this Agreement, Seller shall have the right to amend and supplement any of the representations and warranties of Seller set forth in Section 4(a) above (other than those set forth in Sections 4(a)(i), 4(a)(iv) and 4(a)(viii) above) from time to time without Purchaser’s consent to the extent that (i) such representation or warranty needs to be amended or supplemented to maintain the truth or accuracy of such representation or warranty, (ii) Seller did not have Knowledge as of the Effective Date of the matter being disclosed in such amendment or supplement, and (iii) the event or circumstances that results in the amendment or supplement to such representation or warranty did not occur on or prior to the Effective Date (or, in the case of any representation or warranty which is qualified to the Seller’s Knowledge, Seller did not have Knowledge of such event or circumstance on or prior to the Effective Date). If Seller makes any such amendment or supplement (a “Post-Execution Disclosure”), then, within ten (10) business days after Purchaser’s receipt of Seller’s written notice thereof, Purchaser shall elect (as its sole right and remedy) by providing written notice to Seller to either (A) terminate this Agreement as a result of such Post-Execution Disclosure if, and only if, the corresponding representation or warranty or other information (when taken individually or in the aggregate with all other Post-Execution Disclosures) would be untrue or incorrect in any material respect in the absence of such Post-Execution Disclosure and would result, after Closing, in a material adverse effect on the use of the Property for Purchaser’s intended use thereof, or (B) proceed to Closing (without any reduction, credit or offset to the Purchase Price) notwithstanding such Post-Execution Disclosure, in which event the corresponding representation, warranty or other information shall be deemed qualified by such Post-Execution Disclosure for purposes of this Agreement. If Purchaser does not provide Seller with Purchaser’s written election within such time period, Purchaser shall be deemed to have elected to proceed to Closing pursuant to clause (B) of the preceding sentence.
5.Purchaser’s Representations and Warranties.
(a)Purchaser hereby represents and warrants to Seller as follows:
(i)Purchaser is a ______duly organized under the laws of the State of ______, and in good standingin accordance with the laws of the State of ______. Purchaser has authority to execute this Agreement and will, as of Closing, have authority to acquire the Property from Seller in accordance with this Agreement. The person signing this Agreement on behalf of Purchaser is a duly qualified representative of Purchaser and has all requisite power and authority to execute this Agreement on behalf of Purchaser as the valid, binding and enforceable obligation of Purchaser.
(ii)Neither the entering into of this Agreement nor the consummation of the transactions contemplated hereby will constitute or result in a violation or breach by Purchaser of any material judgment, order, writ, injunction or decree issued against or imposed upon it.
(iii)Neither (x) the assets of Purchaser, nor (y) any of the funds to be used by Purchaser with respect to the transaction contemplated under this Agreement are pursuant to ERISA (as hereinafter defined) or the Code considered for any purpose of ERISA or Section 4975 of the Code to be assets of a Plan (as hereinafter defined). Purchaser is not executing this Agreement and will not be performing its obligations under the Agreement on behalf of or for the benefit of any Plan. For purposes of the foregoing, the following terms shall have the following meanings: (a) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended to the date hereof and from time to time hereafter, any successor statute and any applicable regulations or guidance promulgated thereunder, and (b) “Plan” shall mean a “plan” as that term is defined in Section 3(3) of ERISA or Section 4975 of the Code.
(b)All references to the “Knowledge” of Purchaser in this Agreement shall refer only to the current actual knowledge of the Purchaser Designated Person (as hereinafter defined), without inquiry, and shall not be construed, by imputation or otherwise, to refer to the knowledge of Purchaser or any affiliate of Purchaser or to any other officer, agent, manager, representative or employee of Purchaser or any affiliate thereof, or to impose upon the Purchaser Designated Person any duty to investigate the matter to which such actual knowledge, or the absence thereof, pertains. As used herein, the term "Purchaser Designated Person" shall refer to the following person: ______, ______of Purchaser. In no event shall the Purchaser Designated Person have any personal liability under this Agreement.
6.Due Diligence Period.
(a)Seller shall, within ten (10) business days after the date hereof, deliver to Purchaser all of the following documents and materials relating to the Property of which Seller has Knowledge (in each case, to the extent the same are in Seller’s possession or control):
(A) Copies of all engineering plans and specifications for the Property and copies of any reports or studies (including, without limitation, engineering, soil boring, environmental and physical inspection reports, made or prepared by employees, principals, consultants, governmental authorities or insurance carriers of Seller) with respect to the physical and environmental condition or operation of the Property;
(B) copies of the Contracts; and
(C) copies of all licenses, permits, authorizations and approvals of governmental authorities having jurisdiction over the Property applicable to the occupancy thereof or for any present use thereof, together with copies of all warranties and guaranties relating to the Property which remain in effect as of the Effective Date (the "Intangibles").
The materials referred to in clauses (A) through (C) above are referred to collectively herein as the “Seller Due Diligence Materials”.
(b)Subject to the terms of this Section 6, Purchaser, its officers, employees, agents, prospective lenders, attorneys, accountants, architects and engineers (“Purchaser Parties”) shall be permitted to enter upon the Property at reasonable times (as set forth in Section 6(c) below) during the period of time commencing on the Effective Date and expiring at 5:00 p.m. local time at the Property on the date that is ______(___) days after the Effective Date (the “Due Diligence Period”), for purposes of performing Due Diligence (as hereinafter defined) with respect to the Property. For purposes of this Agreement, “Due Diligence” shall mean the conduct, undertaking and execution of examinations, inspections, investigations, surveys, inventories, reviews, audits and similar investigations with respect to the Property as Purchaser reasonably deems necessary or desirable including, without limitation, a review of any and all records, reports and other documentation regarding the Property relating to the physical structures and improvements constituting the Property. The Due Diligence shall be performed subject to the terms, conditions and limitations set forth below and Purchaser’s conduct thereof shall be in compliance with its covenants and agreements contained herein.
(c)Purchaser understands and agrees that any access to the Property shall occur at reasonable times agreed upon by Seller and Purchaser after reasonable prior notice to Seller (which shall, in any event, be at least twenty-four (24) hours in advance) and shall be conducted so as not to interfere with, and shall take into consideration, the use and operation of the Property by Seller and all other users or occupants of the Property. Seller shall have the right (but not the obligation) to accompany any Purchaser Parties during the performance of any Due Diligence at the Property. Purchaser shall not undertake any Due Diligence involving invasive testing at the Property without first obtaining Seller’s prior written consent thereto, which consent may be subject to any reasonable terms and conditions imposed by Seller, including, without limitation, requiring Purchaser to furnish to Seller for its approval, prior to commencement of any such testing by Purchaser or any other Purchaser Parties onto the Property, any plans and permits necessary for any such work. Purchaser shall contact ______of Seller at (___) ___-______, in connection with any request by Purchaser or any Purchaser Parties to enter the Property. Any Due Diligence shall be done at Purchaser’s sole cost and expense. Purchaser shall, at all times during the period that Due Diligence is being performed at the Property, maintain comprehensive and general liability insurance, in type, form and amount reasonably satisfactory to Seller, naming Seller as an additional insured. Purchaser shall also require all consultants, contractors and sub-contractors engaged by Purchaser or other Purchaser Parties to obtain and maintain insurance of the same types and amounts as are reasonably required by Seller. At Seller’s request, Purchaser will promptly furnish to Seller copies of any reports or other written materials received by Purchaser relating to any Due Diligence performed at the Property.
(d)Purchaser agrees to protect, indemnify, defend (with counsel reasonably acceptable to Seller) and hold Seller, its parents, subsidiaries and affiliates, and their respective officers, directors, shareholders, employees, agents, successors and assigns (collectively, the “Indemnified Parties”) harmless from and against any claim for liabilities, losses, costs, expenses (including reasonable attorneys’ fees), damages or injuries suffered or incurred by any of the Indemnified Parties arising out of, resulting from, relating to or connected with any Due Diligence performed at the Property by Purchaser or any other Purchaser Parties, except to the extent caused by the negligence or intentional misconduct of the Indemnified Parties.
(e)From and after the expiration of the Due Diligence Period, neither Purchaser, nor any other Purchaser Parties or their respective agents, consultants, contractors or employees shall have any right, license or authority whatsoever to enter or be present upon the Property under this Agreement. Purchaser shall cause all personal property brought upon the Property by Purchaser, any other Purchaser Parties or their respective agents, consultants or contractors pursuant to this Agreement to be removed on or prior to the expiration of the Due Diligence Period, and shall leave the Property in the same condition as the Property was in as of the Effective Date, normal wear and tear excepted.
(f) Purchaser shall have the right, before the expiration of the Due Diligence Period, to give written notice to Seller that the condition of the Property is not suitable (which determination shall be within Purchaser’s sole discretion) for Purchaser to purchase, and that Purchaser has therefore elected to terminate this Agreement. In the event that Purchaser delivers any such written notice terminating this Agreement to Seller prior to the expiration of the Due Diligence Period, the Earnest Money shall be returned to Purchaser, this Agreement shall terminate (except for the terms and provisions hereof which are expressly intended to survive any such termination), and the parties shall have no further obligation to proceed to Closing. In the event Purchaser fails, for any reason, to deliver the aforesaid written notice terminating this Agreement to Seller prior to the expiration of the Due Diligence Period, Purchaser shall be conclusively deemed to have waived its right to terminate this Agreement pursuant to the terms and provisions of this Section 6(f), this Agreement shall remain in full force and effect, and the parties shall proceed to Closing (in accordance with, and subject to, the terms and provisions hereof).
(g)Nothing in this Agreement contained shall empower Purchaser to do any act which can, shall or may encumber the Property or the title of Seller therein. Purchaser has no authority or power to cause or permit any lien, charge or encumbrance of any kind whatsoever, whether created by act of Purchaser, any other Purchaser Parties, their respective employees, agents, consultants or representatives, operation of law or otherwise, to attach to or be placed upon any of the Property or Seller’s title or interest therein, or any part thereof. Purchaser covenants and agrees not to suffer or permit any lien of mechanics or materialmen or others to be placed against the Property or any part thereof with respect to work or services claimed to have been performed for or materials claimed to have been furnished to Purchaser, any other Purchaser Parties, their respective employees, agents, consultants or representatives or the Property or any part thereof. In the event such lien or claim of lien is not released and removed within thirty (30) days after notice from Seller, Seller, at its sole option and in addition to any of its other rights and remedies, may take any and all action necessary to release and remove such lien or claim of lien (it being agreed by Purchaser that Seller shall have no duty to investigate the validity thereof), and Purchaser shall promptly upon notice thereof reimburse Seller for all sums, costs and expenses, including court costs and reasonable attorneys’ fees and expenses, incurred by Seller in connection with such lien or claim of lien.