The Deposit Agreement For Business Purchase is a crucial document used in Nigerian business acquisitions to formalize the initial commitment between buyer and seller. It serves as a preliminary agreement before the main purchase agreement, typically used when a buyer wishes to secure their interest in a business purchase while conducting due diligence or arranging financing. The document must comply with Nigerian commercial law, including the Companies and Allied Matters Act (CAMA) 2020 and relevant financial regulations. It provides essential protections for both parties by clearly defining the deposit terms, conditions for refund or forfeiture, and the relationship to the final purchase agreement. This agreement is particularly important in the Nigerian business environment where formal documentation of financial commitments is crucial for regulatory compliance and dispute prevention.
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1. Parties: Identification of the Seller and Buyer, including full legal names, registration numbers (if companies), and addresses
2. Background: Context of the transaction, including brief description of the business being sold and the parties' intention to enter into a business purchase agreement
3. Definitions: Definitions of key terms used throughout the agreement, including 'Business', 'Deposit', 'Completion Date', and 'Purchase Agreement'
4. Deposit Payment: Details of the deposit amount, payment method, and timing
5. Escrow Arrangements: Terms for holding and managing the deposit, including appointment of escrow agent if applicable
6. Conditions: Conditions that must be met before proceeding with the main purchase agreement
7. Due Diligence: Terms regarding the buyer's right to conduct due diligence and timeframes
8. Deposit Status: Clarification of whether the deposit is refundable or non-refundable and under what circumstances
9. Application of Deposit: How the deposit will be applied to the purchase price upon completion
10. Termination: Circumstances under which the agreement can be terminated and consequences for the deposit
11. Governing Law: Specification of Nigerian law as governing law and jurisdiction
12. Execution: Signature blocks and execution formalities
1. Anti-Money Laundering Compliance: Additional provisions for compliance with Nigerian anti-money laundering regulations, required when deposit amount exceeds certain thresholds
2. Foreign Investment Provisions: Required when buyer is a foreign entity, addressing NIPC requirements
3. Tax Provisions: Specific tax-related provisions, needed when there are complex tax implications or withholding requirements
4. Dispute Resolution: Detailed dispute resolution procedures, recommended for high-value transactions
5. Force Majeure: Provisions for unforeseen circumstances, recommended in uncertain economic conditions
6. Confidentiality: Required when sensitive business information will be shared during due diligence
7. Broker/Agent Provisions: Required when transaction involves business brokers or agents
1. Schedule 1 - Deposit Payment Details: Detailed breakdown of deposit amount, payment schedule, and bank account details
2. Schedule 2 - Business Description: Brief description of the business being purchased, including key assets and operations
3. Schedule 3 - Due Diligence Requirements: List of documents and information to be provided for due diligence
4. Schedule 4 - Conditions Precedent: Detailed list of conditions that must be satisfied before proceeding to main purchase
5. Appendix A - Form of Notice: Standard forms for various notices required under the agreement
6. Appendix B - Escrow Terms: Detailed terms of escrow arrangement if applicable
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