asset acquisitions - Jackson Walker LLP

Articles 3 and 4 are the representations and warranties of the Seller and the Buyer,respectively. The representations and warranties are statements of fact that exist or will exist at thetime of the Closing. The Seller’s representations and warranties, which contain detailed statementsabout its business, are much more comprehensive than the Buyer’s and include extensive provisionsregarding matters such as environmental problems, employee benefits, and intellectual property thatcould result in significant liabilities for the Buyer after the Closing if not covered by adequaterepresentations and warranties (and the corresponding indemnification obligations) by the Seller andits principal shareholders. The Buyer’s representations and warranties deal mainly with the Buyer’sability to enter into the acquisition agreement and to consummate the acquisition.Articles 5 and 6 contain covenants in which the parties commit to perform (affirmativecovenants) or not to perform (negative covenants) certain acts in the period between signing theacquisition agreement and closing the acquisition. The main burden of the covenants falls on theSeller, which must take organizational steps toward consummating the acquisition and operate itsbusiness in the manner provided after signing the agreement and before the closing.Articles 7 and 8 contain conditions precedent to the obligations of the Buyer and the Seller,respectively, to consummate the acquisition. These sections specify what each party is entitled toexpect from the other at the Closing. If a condition is not satisfied by one party, the other party maybe able to elect not to complete the acquisition.Article 9 outlines the circumstances in which each party may terminate the acquisitionagreement and the effects of such termination.Article 10 contains certain additional covenants of the parties.Article 11 contains indemnification provisions giving each party specific remedies for theother’s breach of certain obligations under the acquisition agreement. These provisions covermatters such as calculation of damages, recovery of expenses and costs (including legal fees) inaddition to damages (a right that may not exist absent an indemnification provision), and proceduresfor claiming damages.Article 12 contains comprehensive confidentiality and access to information provisions,which are applicable both prior to and after the closing and supersede the confidentiality agreementpreviously entered into between the parties.Article 13 contains general provisions such as notice, severability, and choice of law.B. Letter of IntentIn some transactions, the parties do not sign a binding agreement until the closing. If a letterof intent has been executed that includes a no-shop provision and gives the buyer adequateopportunity to conduct due diligence, the buyer may resist becoming contractually bound until it isready to close. Conversely, the seller has an interest in not permitting extensive due diligence untilthe buyer is contractually bound. This is especially so in circumstances in which the buyer is acompetitor or in which the seller is concerned that the due diligence process will necessitate or riskdisclosure to employees, customers or competitors that the business is for sale.3148166v1- 21 -