The due diligence period in a contract is a designated timeframe during which the buyer is allowed to thoroughly inspect and evaluate the property or assets involved in the transaction. This period aims to ensure the buyer can identify any potential issues and make informed decisions before finalizing the agreement.
The Buyer will have until the date which is 45 days after execution of the Agreement (the “Due Diligence Period”), to conduct its due diligence on the Property at its own cost and expense. If the Buyer does not terminate the Agreement by the expiration of the Due Diligence Period, then the Due Diligence Period will expire and the Deposit will be nonrefundable and credited to the purchase price at closing. If Buyer elects to terminate the Agreement prior to the expiration of the Due Diligence Period, the Deposit is returned to the Buyer. After the expiration of the Due Diligence Period, if the Buyer does not terminate the Agreement and thereafter fails to close the transaction, the Deposit will be non-refundable and will be released to the Company as liquidated damages. The Due Diligence Period is subject to a 15 day extension (the “Extension Period”) by the Buyer if the Buyer has not received written reports from its environmental consultants as to the condition of the Property during the Due Diligence Period. However, during the Extension Period, the Buyer’s right to terminate the Agreement is limited to the reasons relating to the results of such written reports.
Pursuant to the terms set forth in the Agreement, the Buyer will conduct due diligence on the Property from September 6, 2019 through September 25, 2019 (the “Due Diligence Period”), at Buyer’s sole cost and expense. Buyer has the right to terminate its obligations under the Agreement (without further liability except as described in the Agreement) on or before the end of the Due Diligence Period. During the Due Diligence Period, the Buyer and the Company will negotiate the Lease in good faith. If, on or before the end of the Due Diligence Period, the Company and Buyer have not approved a final form of Lease, then, upon expiration of the Due Diligence Period, the Agreement and both the Company’s and Buyer’s obligations thereunder will, without further action by the parties, automatically terminate without further liability. Buyer has deposited $500,000 as a deposit (the “Initial Deposit”) with an escrow agent. If Buyer does not elect to terminate the Agreement during the Due Diligence Period, Buyer shall deposit an additional $500,000 (together with the Initial Deposit, the “Deposit”) with the escrow agent two (2) business days after the last day of the Due Diligence Period. The Deposit is non-refundable, except in the event of termination by Buyer during the Due Diligence Period.
The material terms of the MIPA include: (i) an initial deposit from the Buyer of $64,755 due within three business days after the Effective Date and an additional deposit from the Buyer of $64,755 (collectively, the “MIPA Deposit”) due within five business days after the expiration of the Due Diligence Period; (ii) a closing date that is the first business day following the date that is 15 days after the later to occur of (a) the expiration of the Due Diligence Period; (b) if the Buyer has not elected to terminate the MIPA in accordance with the terms of the MIPA, the date that is 15 business days following receipt of the Sellers’ Response Notice (as defined in the MIPA) to the Buyer’s Title Objection Notice (as defined in the MIPA) or the date that the Sellers’ Response Notice is due pursuant to the MIPA; or (c) such other date mutually agreed upon by the Buyer and the MIPA Sellers; (iii) an ability for the Buyer to terminate the MIPA at any time prior to the expiration of the Due Diligence Period and, upon such termination, the return of the full MIPA Deposit to the Buyer; and (iv) an ability of the Buyer or the MIPA Sellers, as applicable, to terminate the MIPA upon the uncured default of the MIPA Sellers or the Buyer, as applicable. The MIPA also contains indemnification provisions, including those in favor of the Buyer pursuant to which the MIPA Sellers, subject to limitations set forth in the MIPA (including a cap on liability in the amount of 4% of the MIPA Purchase Price, subject to certain specified carve-outs), will indemnify the Buyer and its affiliates from losses arising from, among other things, breaches of representations and warranties of the MIPA Sellers contained in the MIPA and breaches of the MIPA Sellers’ covenants pursuant to the MIPA. On or before the last day of the Due Diligence Period, the Buyer may provide an Approval Notice to the MIPA Sellers that the Buyer has approved the Norristown Property or a Disapproval Notice indicating the Buyer’s election to terminate the MIPA.
(b) Buyer shall have until 5:00 p.m. Hawaiian time on the last day of the Due Diligence Period to confirm, in Buyer’s sole and absolute discretion and Buyer’s sole expense, whether Buyer may feasibly acquire and use the Property for Buyer’s intended purpose. During the Due Diligence Period, Buyer shall have reviewed (or shall have had the opportunity to review) among other things: (i) the proposed improvements on the Property; (ii) the geological, soils and seismic conditions of the Property; (iii) all conditions and requirements imposed by governmental bodies having jurisdiction over the Property; and (iv) the viability of the Property for development or redevelopment. (c) If before the end of the Due Diligence Period, Buyer, in its sole and absolute discretion, determines to purchase the Property, Buyer shall notify Seller and Escrow Holder in writing (the “Acceptance Notice”). If Seller and Escrow Holder have not received an Acceptance Notice from Buyer before the end of the Due Diligence Period, Escrow shall terminate and the Initial Deposit shall be returned to Buyer as provided in paragraph 7.3, irrespective of any instruction or other communication, oral or written, from Seller. If Seller and Escrow receive an Acceptance Notice before the end of the Due Diligence Period, this feasibility condition shall be conclusively deemed satisfied in all respects including Buyer’s approval of each of the items set out in paragraph 3.2(b), and the Deposit(s) shall become non-refundable except in the event of a Default by Seller.
4. DUE DILIGENCE PERIOD. 4.1 Seller’s Deliveries. Within ten (10) days after the date of execution hereof, Seller shall deliver or cause to be delivered to Buyer the following: (a) copy of a current standard coverage preliminary title report issued by the Title Company showing the condition of title to the Property, accompanied by copies of all documents referred to in the report (collectively, the “PTR”); (b) a rent roll describing all Leases for the Property, together with a copy of all of the Leases; (c) all third-party service contracts relating to the Property; (d) real property tax statements for the past three (3) tax years for the Property; (e) the most recent ALTA survey of the Property that is in Seller’s possession or control (if any) (the “Survey”) (and if Buyer has need for a more recent survey, it shall be Buyer’s obligation to obtain such new survey at Buyer’s sole cost and expense); (f) any environmental assessments of the Property or other environmental reports of the Property that were prepared by or for Seller (or are otherwise in Seller’s possession or control); (g) a Natural Hazards Disclosure Report (which Seller shall cause Escrow Holder to prepare and deliver to Buyer); and (h) other non-privileged documents and materials that materially relate to the Property that are in Seller’s possession or the possession of Seller’s property manager, if any. Seller makes no representation or warranty as to the truth, accuracy, or completeness of any such delivered materials, and Buyer agrees notwithstanding the delivery of such materials, Buyer shall rely solely on its own investigations of the Property in determining, prior to the end of the Due Diligence Period, whether to purchase the Property. 4.2 Title Review. Not later than five (5) days before the end of the Due Diligence Period, Buyer shall deliver to Seller a written notice stating that Buyer either (a) approves the condition of title as shown on the PTR, or (b) disapproves any specific exceptions to title showing on the PTR. If Buyer fails to provide such written notice on or before such date, Buyer shall be deemed to have approved the condition of title as shown on the PTR. If Buyer delivers a timely written notice in which Buyer disapproves any specific exceptions to title, Seller shall either cause such exceptions to be removed on or before the Closing Date or shall notify Buyer in writing on or before the end of the Due Diligence Period that Seller will not cause such exceptions to be removed. If Seller notifies Buyer in writing on or before the end of the Due Diligence Period that it will not cause such exceptions to be removed, Buyer may either terminate this Agreement prior to the end of the Due Diligence Period as provided in Section 4.4 below, or waive its disapproval to such exceptions and proceed to Closing, in which case Seller shall have no obligation to cause such exceptions to be removed from title. Seller’s failure to provide such notice shall be deemed Seller’s election not to cause such exceptions to be removed. Notwithstanding the foregoing, Seller agrees to extinguish on the Closing Date all monetary liens or encumbrances affecting title to the Property (excluding the lien for real property taxes and assessments that are not yet delinquent, and any liens caused by Buyer). If Buyer does not terminate this Agreement before the end of the Due Diligence Period, Buyer shall irrevocably be deemed to have elected to waive its disapproval to such title exceptions, to have approved the condition of title to the Property, and to have elected to proceed to Closing. 4.3 Buyer’s Inspections. During the Due Diligence Period, Buyer shall have the right to conduct and make such feasibility studies as Buyer deems necessary, including but not limited to engineering studies, building inspections, books and records inspections, environmental studies, zoning studies, mechanical studies, economic studies, utility studies, and Lease review, subject to the terms and conditions of this Section. During the Due Diligence Period, on at least two (2) days’ prior written notice to Seller, Buyer, its agents, and representatives (subject to the rights of Tenants) shall be entitled to enter upon the Property, accompanied by representatives or agents of Seller, to perform inspections and tests of the Property. Buyer may not perform any intrusive testing without giving Seller a plan describing the intrusive testing at least five (5) days before the intrusive testing and obtaining Seller’s and any affected Tenant’s written consent to perform such intrusive testing. Buyer shall repair any damage caused by such studies, inspections, tests, and investigations. Buyer hereby agrees to indemnify, defend, and hold harmless Seller and Tenants from and against any and all damages, liabilities, losses, costs, expenses, causes of action, and liens, including but not limited to reasonable attorneys’ fees, resulting from, arising out of, or in connection with such studies, inspections, tests, and investigations. Prior to performing any intrusive testing or any physical studies, inspections, tests, and investigations, Buyer will give Seller a certificate of insurance naming Seller and its agents and representatives and any affected Tenant as additional insureds, issued by an insurance company authorized to do business in the State of California insuring against all claims, demands, or actions for injury or death to persons or damage to property in an amount of not less than $2,000,000.00 per occurrence. The duty to repair and the indemnification contained in this Paragraph 4.3 shall survive termination of this Agreement and shall survive the Closing Date. 4.4 Termination Right. If, prior to the expiration of the Due Diligence Period, Buyer has determined in Buyer’s judgment that the Property is not suitable for Buyer’s intended use, Buyer may terminate this Agreement by written notice delivered to Seller before the expiration of the Due Diligence Period, whereupon this Agreement shall become null and void and of no further force or effect, the parties hereto shall have no further obligations to one another (except as expressly stated otherwise in this Agreement), and the Deposit shall be returned to Buyer. Buyer’s failure to notify Seller before the expiration of the Due Diligence Period shall constitute a waiver of the right to terminate this Agreement pursuant to this Article 4, in which case the Deposit shall be non-refundable. If Buyer terminates this Agreement, Buyer will give Seller copies of all tests and studies received by Buyer and return the Seller Deliveries to Seller.
(d)Due Diligence Period; Review of Documents and Other Due Diligence. During the period commencing on the Effective Date and ending at 5:00 p.m. Pacific time on the date that is sixty (60) days after the Effective Date (the “Due Diligence Period”) (provided, however, that if such date falls on a non-Business Day, the Due Diligence Period shall be extended to the first Business Day thereafter), Buyer shall have the opportunity to review the documents delivered by Seller or the Title Company pursuant to Section 4, the Due Diligence Items, and any other materials Buyer may elect, at its sole cost and expense, to obtain and review with respect to the Property. Buyer shall also have the opportunity to review and investigate all other aspects of the Property, including but not limited to: (i)all matters addressed in the Seller Disclosures attached hereto as Exhibits “H-1” and “H-2,” which shall be approved or disapproved by Buyer within ten (10) days following the Effective Date; (ii)All matters pertaining to the physical, structural, electrical, mechanical, soil/geotechnical, seismic, drainage, and other physical conditions of the Property (other than environmental audit and governmental zoning, land use and regulations affecting the Property), including but not limited to any and all studies, investigations and reports relating to the physical condition of the Property, the Property square footage (Buyer shall conduct its own measurements of the Property, and Purchase Price shall not be adjusted or modified by reason of any determination of actual or rentable square footage), all of which shall be approved or disapproved by Buyer no later than fifteen (15) days following the Effective Date; (iii)the environmental condition of the property, which shall be approved or disapproved by Buyer within the Due Diligence Period; provided, however, that Buyer shall not perform, or cause to be performed, any “Phase II” invasive environmental testing or any other physical testing of the Property except in accordance with subsection (e), below; (iv)The Tenant Leases and Service Contracts, if any, to be approved or disapproved by Buyer within the Due Diligence Period; (v)all government ordinances, rules and regulations and evidence of Seller’s compliance therewith, including without limitation zoning and building laws and regulations, and all permits and entitlements relating to the Property, to be approved or disapproved by Buyer within the Due Diligence Period; and (vi)all other matters pertaining to or disclosed in the Due Diligence Items, to be approved or disapproved by Buyer within the Due Diligence Period except as set forth above.
3. Inspection Period. OSREC’s “Due Diligence Period” shall be the period commencing on the Effective Date and extending until 5:00 pm (Central Time) on [to be 60 days after the Effective Date]. At least ten (10) days prior to the expiration of the Due Diligence Period, Seller shall deliver to Buyer (i) a title commitment with respect to each Property, dated within sixty (60) days of the Effective Date from the Title Company, (each, a “Title Report” and, collectively, the “Title Reports”);
4.1 Due Diligence Period The Purchaser and its Representatives shall have up to 5 pm ET on the first Business Day that is thirty (30) calendar days following the Effective Date (the “Due Diligence Period”) to: (a) obtain any necessary internal approvals for the Purchaser to consummate the transaction contemplated herein, including approval from The Hershey Company’s Board of Directors (the “Internal Approval Condition”); (b) finalize the Final List of Chattels and Final List of Excluded Chattels; and (c) examine the Purchased Assets, conduct searches, verify compliance with Applicable Laws and zoning, conduct tests, review financial information and other documents or information relating to the Purchased Assets (including the Vendor Deliveries and the Decommissioning Report) and otherwise satisfy itself, in its sole and absolute discretion, with the Purchased Assets (together with the Internal Approval Condition, the “Due Diligence Condition”).
B. The Due Diligence Period set forth in Purchase Agreement is set to expire at 5:00 p.m. Pacific time, on January 24, 2020.
(a) Buyer shall have forty-five (45) days from the Effective Date to complete Buyer’s Due Diligence (the “Due Diligence Period”). During the Due Diligence Period, Seller shall permit the officers, employees, directors, agents, consultants, attorneys, accountants, lenders, appraisers, architects, investors and engineers designated by Buyer and representatives of Buyer (collectively, the “Buyer’s Consultants”) access to, and entry upon the Real Property and each Facility to perform its normal and commercially reasonable due diligence, including, without limitation, the following (collectively, the “Due Diligence Items”):
2.1 Due Diligence Period. Upon the execution of this Agreement, for a period of one hundred and eighty (180) days, the Parties will jointly undertake to determine the feasibility of the construction of a SkyCycle Plant at the Initial Potential OPAL RNG Production Project Locations (the “Initial Due Diligence Period”); provided that the parties may, by mutual written consent, elect to extend the due diligence period for an additional 180 days (the “Additional Due Diligence Period,” and together with the Initial Due Diligence Period, the “Due Diligence Period”). In the event that the Parties mutually determine that the construction of such plant at such location is commercially feasible and desirable, then the Parties will commence with their respective responsibilities as more fully set forth herein, including without limitation, as set forth in Sections 2.2 and 2.3 below, as applicable. In the event that either of the Parties determines that the construction of such plant at either of the Initial Potential OPAL RNG Production Locations is not feasible or desirable, the Parties agree to cooperate to identify Additional Potential OPAL RNG Production Locations in order to determine feasibility of an alternative OPAL RNG Production Project upon which CarbonFree could construct such SkyCycle Plant.
4. Due Diligence: Beginning on the Effective Date and continuing for a period of 150 days thereafter (the “Due Diligence Period”), each Party may make or cause to be made such investigation of another Party as it deems necessary or advisable. Each Party agrees to cooperate in good faith and permit the other Party and its respective agents and representatives, on reasonable notice, to furnish such data and other information with respect to the Transaction as they shall, from time to time, reasonably request. If a Party determines, in its sole and absolute discretion, for any reason whatsoever that the Transaction is unsatisfactory to them, they may, deliver written notice to the Parties of such Party’s unsatisfactory due diligence review, and the Term Sheet shall immediately be terminated with no further force or effect, and the Parties shall be discharged and released from their liabilities and obligations, except as set forth in Section 11 below. If written notice is not delivered within the Due Diligence Period, the Parties shall be deemed satisfied with their due diligence review and the termination rights within this provision shall be waived.
5. The parties agree and acknowledge that the Due Diligence Period has expired. Except for the terms of the Agreement specifically amended by the terms of this Amendment, all terms of the Agreement shall remain in full force and effect.
4.Due Diligence Period. Buyer shall have until 5:00 p.m. (EST) on the date which is sixty (60) days after the Effective Date (“Due Diligence Period”) in which to conduct its due diligence and all inquiries and investigations with respect to the Property as may be determined by Buyer in its sole discretion and at its sole cost and expense. If Buyer fails to provide written notice of its intent to terminate this Agreement prior to expiration of the Due Diligence Period, then notwithstanding anything to the contrary, the parties agree that this Agreement may thereafter only be cancelled by Buyer upon a default by Seller hereunder and Buyer shall be obligated to proceed to Closing (as defined herein), any and all contingencies to Closing shall be deemed to be waived by Buyer hereunder and the Deposits shall be non-refundable except in case of Seller’s default hereunder. During the Due Diligence Period, Buyer and its officers, employees, agents, advisors, accountants, attorneys and engineers shall have the right to enter upon the Property at reasonable times after written notice to Seller for purposes of inspection and examination of the Property (including environmental testing) and otherwise perform whatever tasks reasonably necessary or deemed appropriate by Buyer in its sole discretion. Buyer covenants and agrees that it will not materially disrupt or interfere with any tenants (including their use and/or enjoyment of the Property) or Seller’s operations of the Property during such inspections and investigations thereof.
5.3 Termination During Due Diligence Period. If Purchaser determines, in its sole discretion, before the expiration of the initial Due Diligence Period that the Property is unacceptable to Purchaser, Purchaser shall have the right to terminate this Agreement by giving to Seller written notice of termination before the expiration of the initial Due Diligence Period and the Earnest Money Deposit shall be immediately refunded to Purchaser. In addition, upon such a termination, Purchaser shall immediately return to Seller any information about the Property that has been provide to it by Seller. If Purchaser does not obtain the Approvals (as hereinafter defined) on or prior to the expiration of the Due Diligence Period, as extended, the provisions of Section 5.5 shall govern. If Purchaser does not give notice of termination, this Agreement shall continue in full force and effect. Notwithstanding anything to the contrary contained herein, Purchaser acknowledges and agrees that the Purchase Price shall not be reduced by any amount as a result of Purchaser’s due diligence investigations unless the parties agree otherwise.
5.5 Extension of Due Diligence Period. Purchaser will use commercially reasonable efforts to obtain all required zoning relief, site plan review and entitlements to allow it to operate a freight truck terminal and warehouse, with outside storage of trailers and routine truck maintenance on the Real Property, and shall keep Seller reasonably apprised of its progress in this regard (the “Approvals”). Seller shall reasonably cooperate with and assist Purchaser in its efforts to obtain the Approvals without cost or expense to Seller. Purchaser shall have the right to extend the Due Diligence Period for up to five (5) consecutive thirty (30) day periods (each an “Extension”) in order for Purchaser to obtain the Approvals under the following conditions: (i) Purchaser provides Seller written notice of its election to extend prior to the expiration of the Due Diligence Period, or any Extension thereof; (ii) as of the day after the initial Due Diligence Period, the Earnest Money Deposit becomes non-refundable but applicable to the Purchase Price; and (iii) Purchaser deposits an additional $12,500 with the Escrow Agent for each Extension (each an “Extension Fee”), prior to the expiration of the Due Diligence Period, or any Extension thereof, to be governed by the Escrow Agreement. Each Extension Fee shall be non-refundable but applicable to the Purchase Price. If Purchaser does not obtain the Approvals on or prior to the expiration of the Due Diligence Period, as extended, Purchaser shall have the right, at its sole option, to terminate this Agreement by written notice to Seller prior to the expiration of the Due Diligence Period, as extended, and this Agreement shall thereupon terminate, the Earnest Money and all Extension Fees shall be payable to Seller and neither Seller nor Purchaser shall have any further obligation or liability under this Agreement (except for obligations that are expressly intended to survive the termination of this Agreement). If this Agreement is not so terminated pursuant to the foregoing, this condition shall be deemed waived by Purchaser.
(a)Due Diligence Period. Commencing on the Contract Date and continuing until 5:00 p.m. (CT) until the date which is the later of (i) ninety (90) days after the Contract Date, or (ii) the date that is thirty (30) days after Purchaser receives e-mail notification from Seller that the Seller Demolition is complete (such longer period, the “Due Diligence Period”), Purchaser shall have the right to satisfy itself, in its sole discretion, as to conditions necessary for Purchaser’s proposed ownership, development or other use of the Premises, including, without limitation: the environmental, soil and engineering conditions of the Premises and any other physical, economic and/or suitability conditions necessary, required or desired for Purchaser’s proposed ownership, development or other use of the Premises (collectively, the “Inspections”). If Purchaser desires to terminate this Agreement for any reason or no reason during the Due Diligence Period, Purchaser may terminate this Agreement pursuant to this Section 5(a) by sending written notice to the Seller on or before the expiration of the Due Diligence Period, and upon such notice this Agreement shall immediately terminate and the Initial Deposit shall be returned by Escrow Agent to Purchaser, without further instruction from the parties, and neither party shall have any rights or obligations under this Agreement except those that expressly survive termination of the Agreement. If Purchaser does not timely provide its notice of termination, Purchaser shall be deemed to have timely elected to terminate this Agreement. If Purchaser elects to proceed by delivering notice of such election to Seller prior to the expiration of the Due Diligence Period, then (i) this Agreement will remain in full force and effect, and (ii) the Earnest Money shall be non-refundable to Purchaser except as otherwise provided in this Agreement.
The Due Diligence Period is a specific timeframe during which a buyer is allowed to thoroughly investigate and evaluate a property, business, or asset before finalizing a transaction. This process typically involves reviewing legal, financial, and operational details to ensure that there are no hidden issues or risks associated with the purchase.
The Due Diligence Period should be used when:
When writing about a Due Diligence Period, it should be clearly defined in the agreement or contract. Here is an example clause:
Due Diligence Period Clause:
“The Buyer shall have a period of [number of days] days, starting from the Effective Date, to conduct a thorough due diligence review of the Property. During this period, the Buyer is entitled to access all relevant documents, perform site inspections, and engage professional advisors to evaluate the Property’s condition, compliance, and any other pertinent aspects.”
“If, during the Due Diligence Period, the Buyer finds any issues that are not satisfactory, the Buyer may, at their sole discretion, terminate this Agreement by giving written notice to the Seller before the expiration of the Due Diligence Period.”
Contracts that typically contain a Due Diligence Period include:
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