A memorandum of contract, or memorandum of sales contract, is a legally binding agreement that is part of a real estate sales contract. It protects the buyer of a property, who has had a buyer accept their offer, from being suddenly outbid and losing out on their purchase. This document will cloud a title and prevent the seller from selling to another buyer.
Having a memorandum of contract in place can also allow a buyer some leverage to be "bought out" if the seller finds they want to sell to another buyer. The purpose of a memorandum of contract is to minimize the risk that a seller will back out of a real estate transaction after accepting an offer from the buyer.
Below is a list of common sections included in Memorandums Of Contract. These sections are linked to the below sample agreement for you to explore.
MEMORANDUM OF UNDERSTANDING
This MEMORANDUM OF UNDERSTANDING (the “ MOU ”) is entered into as of June __, 2005, by and between SPACEHAB, Incorporated, a Washington corporation (the “ Company ”), and the person listed on the signature page hereto under the caption “Advisor” (the “ Advisor ”), with reference to the following facts:
A. The Company has previously issued $63,250,000 aggregate principal amount of its 8% Convertible Subordinated Notes due 2007 (the “ Notes ”);
B. The Advisor is a registered investment advisor who has been given discretionary authority by the beneficial owners (the “ Beneficial Owners ”) of the aggregate principal amount of the Notes set forth on the signature page hereto (the “ Advisor Notes ”) to sell, tender, exchange, transfer or otherwise dispose of the Advisor Notes;
C. The Company desires to refinance the Notes and has discussed on a confidential basis with the Advisor, or the Advisor’s representative, the potential terms of such a transaction;
D. The parties desire to set forth the terms that they have discussed in this MOU and the framework for the finalization of a binding transaction.
NOW, THEREFORE, in consideration of the foregoing premises and the covenants hereinafter contained, the parties hereto agree as follows:
1. Intent of the Company . The Company intends to commence a tender offer (the “ Tender Offer ”) for up to all of the Notes pursuant to which the Company will exchange each Note for a new note issued by the Company under a new indenture having terms substantially similar to the terms set forth on Schedule I attached hereto (the “ New Notes ”). In connection with the Tender Offer, the Company intends to solicit consents (the “ Consent Solicitation ”) from holders of the Notes to an amendment to the indenture under which the Notes were issued (the “ Indenture ”), such amendments having terms substantially similar to the terms set forth on Schedule II attached hereto (the “ Proposed Amendments ”).
2. Intent of the Advisor . Based upon the terms of the New Notes and Proposed Amendments having terms substantially similar to the terms that are attached hereto as Schedules I and II, the Advisor intends to, on behalf of the Beneficial Owners, (a) tender the Advisor Notes in the Tender Offer and (b) consent to the Proposed Amendments in the Consent Solicitation.
3. Notice . Each of the Company and the Advisor agrees to give notice to the other party in accordance with Section 5.5 upon such party’s decision to abandon, or to change its intentions with respect to, the transactions contemplated hereby. In addition, the Advisor agrees to give notice to the Company in accordance with Section 5.5 upon being instructed by any Beneficial Holder not to tender, or to withdraw the tender of, any Advisor Notes or upon any such Beneficial Owner terminating the authority of the Advisor to tender the Advisor Notes in the Tender Offer or consent to the Proposed Amendments in the Consent Solicitation.
4. Representations and Warranties of Advisor . The Advisor represents and warrants to the Company that the Advisor has the power of disposition, including the authority to tender the Advisor Notes in the Tender Offer and to consent to the Proposed Amendments in the Consent Solicitation, with respect to all Advisor Notes, subject only to the rights of the Beneficial Owners to give specific instructions to the Advisor concerning the disposition of the Advisory Notes or to terminate such power of disposition. The Advisor is not the beneficial owner of any Notes.
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