asset acquisitions - Jackson Walker LLP

C. Gap Between Signing and ClosingOccasionally it is the seller that is reluctant to sign before the closing. This may be the case,for example, if the seller has announced that the business is for sale, has several potential buyers anddoes not want to preclude talking to alternative buyers until the seller is certain that the transactionwill close.Sometimes a simultaneous signing and closing occurs because the transaction simply evolvesthat way. The parties may be negotiating an agreement that contemplates a period between signingand closing, but the due diligence may proceed more rapidly than the negotiations, and it maydevelop that a waiting period would be pointless or even harmful to the transaction. In suchcircumstances, counsel should consider whether it is appropriate to remove from the agreement thepre-closing covenants, conditions to the parties’ obligations to close, and other provisions renderedunnecessary by the decision to sign and close simultaneously. Care should be taken to ensure that nocontractual obligation applicable post-closing is affected by such changes.VIII. SELECTED ASSET PURCHASE AGREEMENT PROVISIONSTo illustrate and amplify the matters discussed above, there are set forth below the followingselected provisions of a hypothetical Asset Purchase Agreement (the page number references are topages herein) which are derived from a recent draft of the Model Asset Purchase Agreement. Theselected provisions below represent only certain parts of an Asset Purchase Agreement which arerelevant to issues discussed herein and do not represent a complete Asset Purchase Agreement, theprincipal provisions thereof or even all of the provisions which distinguish an asset purchase fromanother form of business combination.1. DEFINITIONS AND USAGE ................................................................................261.1 DEFINITIONS .............................................................................................................261.2 USAGE.......................................................................................................................392. SALE AND TRANSFER OF ASSETS; CLOSING .........................................402.1 ASSETS TO BE SOLD ..................................................................................................402.2 EXCLUDED ASSETS....................................................................................................442.3 CONSIDERATION .......................................................................................................462.4 LIABILITIES...............................................................................................................472.5 ALLOCATION ............................................................................................................522.6 CLOSING ...................................................................................................................532.7 CLOSING OBLIGATIONS ............................................................................................542.8 ADJUSTMENT AMOUNT AND PAYMENT.....................................................................592.9 ADJUSTMENT PROCEDURE........................................................................................612.10 CONSENTS.................................................................................................................653. REPRESENTATIONS AND WARRANTIES OF SELLER ANDSHAREHOLDERS............................................................................................................683.2 ENFORCEABILITY; AUTHORITY; NO CONFLICT .......................................................713.4 FINANCIAL STATEMENTS..........................................................................................773.6 SUFFICIENCY OF ASSETS...........................................................................................803.13 NO UNDISCLOSED LIABILITIES .................................................................................803148166v1- 22 -