Free Purchase and Sale Agreement Term Sheet

I. Introduction

This Term Sheet outlines the key terms for the proposed purchase between [Your Name] (the "Seller") and [Buyer's Name] (the "Buyer") and is a basis for further negotiations. It is not legally binding except as specifically stated, with completion contingent on due diligence, a definitive Agreement, and other conditions.

The primary objective of this Term Sheet is to outline the key terms, define the structure of the transaction, and set the timeline for completion. This simplification will aid all parties involved in understanding their roles and responsibilities, thereby facilitating a smoother negotiation and transaction process.

II. Purchase Price and Payment Terms

The terms related to the purchase price and the mechanics of the transaction are as follows:

1. Purchase Price: The total purchase price, which is the amount mutually agreed upon for the transaction, amounts to $1,000,000.

2. Deposit Due Date: Following the execution of this Term Sheet, and no later than thirty days after the date on which it is executed.

3. Deposit Amount: The Buyer agrees to deposit the sum of one hundred thousand dollars ($100,000) into an escrow account as stipulated in the agreement.

4. Closing Date: 90 days from the execution date is the specified date when the transaction will be finalized and ownership will transfer.

III. Assets Included in the Sale

The assets to be included in the sale ("Purchased Assets") encompass a range of tangible and intangible properties listed as follows:

1. Tangible Assets: These include all physical properties, inventory, and other physical items as detailed:

   • Real Estate: Land, buildings, offices, warehouses.

   • Equipment: Machinery, vehicles, computers, furniture.

   • Inventory: Raw materials, finished goods, work-in-progress items.

   • Physical Assets: Tools, fixtures, signage, and any other physical items related to the business

2. Intangible Assets: These include all rights, trademarks, customer lists, and intellectual property as detailed:

   • Intellectual Property: Trademarks, patents, copyrights, trade secrets, proprietary software.

   • Customer Lists: Database of current and potential customers, client contacts, and customer contracts.

   • Rights: Licensing agreements, distribution rights, franchise agreements.

   • Goodwill: Brand reputation, customer relationships, and other intangible value associated with the business.

Explicit exclusions from this transaction must be documented in the definitive Agreement. All transfers of assets will be completed free from encumbrances, liabilities, and other impediments unless otherwise negotiated.

IV. Representations and Warranties

Both parties agree to make standard representations and warranties typical to transactions of this nature. These include, but are not limited to, authority to enter into the Agreement, the accuracy of financial statements, compliance with laws, and absence of undisclosed liabilities. Detailed representations and warranties will be set out in the definitive Agreement.

The Seller and the Buyer may request additional representations and warranties specific to the nature of the Purchased Assets and the scope of the transaction during the due diligence process.

V. Conditions Precedent to Closing

Completion of the transaction is contingent upon fulfillment of the following conditions:

1. Due Diligence Completed by [Due Diligence Completion Date]: Due diligence entails a detailed examination of the seller's business, including finances, assets, liabilities, and legal duties by the buyer to fully understand the business and identify potential risks. This process must be finished by a set date to maintain the transaction schedule.

2. Securing Required Government and Regulatory Approvals: Certain transactions may need endorsements like licenses, permits, or other clearances from relevant authorities, depending on the involved industries. These are essential for legal and regulatory compliance.

3. No material adverse change in [Your Name]'s financial position or business before closing: This condition protects the buyer by ensuring that no significant negative changes in the seller’s financial status or business operations, like financial losses or legal disputes, occur that could affect the transaction or the assets' value before closing.

In the event of failure to meet these conditions, both parties may reconsider the terms of the Agreement or terminate this agreement with no further obligations.

VI. Confidentiality

Both parties agree to maintain confidentiality concerning the terms of this transaction and any disclosed information during the due diligence process. This confidentiality obligation shall survive the termination of this Term Sheet and the completion of the transaction, subject to the terms outlined in the definitive Agreement.

Exclusivity will be granted to the Buyer for a period of [Exclusivity Period] from the date of this Term Sheet, during which the Seller shall not engage in negotiations or discussions with any other potential buyers.

VII. Miscellaneous

1. Governing Law: This agreement is governed by the laws of [Jurisdiction], without regard to conflict of laws principles.

2. Amendments: Any modifications or alterations to this Term Sheet must be documented in written form and must be duly signed by both parties involved.

3. Severability: Should any portion of this Term Sheet be deemed invalid or unenforceable, the remaining provisions shall continue to be valid and enforceable to the maximum extent permissible under the law.

VIII. Signatures

The parties hereto have executed this Term Sheet as of the date first above written.

[Your Name]
[Date]

[Buyer's Name]
[Date]

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