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Agreement for Sale of a Business
(Comprehensive -- Long Form)
1. Introduction. Agreement made [date] between [name], whose principal place of business is at [address] (Seller), and [name], whose address is [address] (Buyer).
2. Sale and Purchase of Business. Seller is now conducting the business of [nature of business] under the trade name "[name]" at [address]. Seller shall sell to Buyer and Buyer shall purchase from Seller this business, free of all liabilities and encumbrances, upon the terms and conditions set out in this Agreement. The sale will include:
a. Goodwill. The goodwill of the business as a going firm;
b. Lease. The lease to the premises at which the business is conducted;
c. Inventory. All stock in trade and merchandise in Seller's inventory on the date the sale is closed;
d. Fixtures, Etc. All furniture, fixtures, furnishings, and other equipment used by Seller in the conduct of the business more fully described in the Schedule attached to this Agreement [omitted] and made a part of it.
3. Purchase Price. The purchase price shall be ---------- dollars ($----------), which is allocated as follows:
Furnishings, and Equipment ----------
Restrictive Covenant ----------
Total $ ---------
4. Purchase Price of Inventory. Upon the close of business on the day immediately prior to the day on which this sale closes, Seller and Buyer (or their representatives) shall make a physical count of Seller's inventory and shall prepare a schedule setting out each item in stock together with the price paid for it by Seller. Buyer shall pay to Seller, in addition to the sum provided in Paragraph 3, the total price paid by Seller for the inventory counted in accordance with this Paragraph. However, Buyer shall not be obligated to pay more than ---------- dollars ($----------) for the inventory.
5. Accounts Receivable. Buyer will purchase all of Seller's accounts receivable as of the date on which this sale is closed that have been incurred in the regular course of business and are not more than [number] days old. The purchase price shall be the total of the face amount of the accounts receivable. Buyer may withhold ---------- percent (----------%) of the purchase price as a reserve to cover bad debts and trade discounts. Any part of the reserve not used for this purpose shall be paid to Seller no later than [date].
5. Accounts Receivable. This sale does not include any of Seller's accounts or notes receivable, all of which will remain Seller's property. If, following the close of this sale, Buyer shall collect any of Seller's accounts or notes receivable, Buyer shall promptly remit the proceeds to Seller.
6. Payment of the Purchase Price. The purchase price shall be paid as follows: ---------- dollars ($----------) on the signing of this Agreement and the balance on the closing of the sale by certified check drawn on a local bank.
6. Payment of the Purchase Price. The purchase price shall be paid as follows: ---------- dollars ($----------) on the signing of this Agreement to be held in escrow by Seller's solicitor; the price paid for inventory and accounts receivable shall be paid on the closing of the sale by bank check drawn on a local bank; the balance shall be paid in [number] equal monthly installments starting [date], which shall be evidenced by a series of promissory notes signed by Buyer to be delivered by Buyer to Seller at the closing.
The notes shall bear interest at the rate of ---------- percent (----------%) per annum, be payable at [bank], and shall provide that upon default in the payment of any one note in the series the remaining unpaid notes shall become due and payable at Seller's option. As security for the payment of the notes, Buyer shall deliver to Seller at the closing all documents reasonably required by Seller to perfect a security interest in Seller in and to the furniture, fixtures, furnishings, and equipment transferred to Buyer at the closing and the lease to the business premises assigned to Buyer at the closing.
7. Seller's Accounts Payable and Other Debts. Buyer will not assume any of Seller's accounts payable or other debts. These shall remain Seller's obligations, and Seller will indemnify Buyer against any loss that Buyer may suffer by reason of Seller's failure to pay any of them.
8. Adjustments to Purchase Price. At the closing, the purchase price shall be adjusted for the following items: rent, payroll and payroll taxes, insurance premiums, deposits with utilities, security deposits, and loss or damage caused by fire, wind, or other casualty not sufficiently severe to terminate or interrupt the business. The net adjustments shall be added to or subtracted from the purchase price, as may be required.
9. Assumption of Contracts by Buyer. Upon the closing of this sale, Buyer will assume all contracts entered into by Seller in the course of business that remain executory and that are described in the Schedule attached to this Agreement [omitted] and made part of it. Buyer will also assume all contracts entered into by Seller after the date of this Agreement, provided that they were entered into in the ordinary course of business and are reasonable. Seller shall perform any contract that requires performance before this sale closes. Seller will indemnify Buyer against any loss incurred by Buyer by reason of Seller's breach of any such contract. Buyer will indemnify Seller against any loss incurred by Seller by reason of Buyer's breach of any such contract following the close of this sale.
10. Time and Place of Closing. The closing shall take place at the office of [name], Seller's attorney, at [address], on [date], at [hour] AM [PM] [time zone].
11. Adjournment of Closing. The closing may be adjourned to another time but only upon Buyer's and Seller's written consent.
12. Documents to Be Delivered to Buyer at the Closing. At the closing, Seller shall deliver to Buyer, properly executed, the following documents: a Bill of Sale with warranties and affidavit of title, the assignment of the lease to the business premises together with the landlord's written consent to the assignment, assignments of the contracts described in Paragraph 9 together with written consents to the assignments from the other contracting parties, assignment of Seller's trade name as provided in Paragraph 14, and all other instruments that are reasonably required by Buyer to transfer to Buyer all of the assets of the business described in this Agreement free of all encumbrances.
13. When Title Passes. Upon the delivery of the documents to Buyer described in Paragraph 12, and payment of the purchase price by Buyer to Seller in accordance with Paragraphs 4, 5, and 6, this sale shall close, and Buyer shall have title to and possession of the business.
14. Assignment of Seller's Trade Name. Seller will continue to do business under the trade name "[name]" prior to the closing and will do nothing to impair the trade name's value. At the closing, Seller will assign all rights to the trade name to Buyer. Buyer will thereafter have the sole right to use the trade name provided Buyer takes the necessary actions to make the transfer a matter of public record.
15. Seller's Representations. Seller represents and warrants the following:
a. Good Title. Seller has good and marketable title to all the assets to be sold pursuant to this Agreement, and they are free of any encumbrance.
b. Business Contracts. Seller has not entered into any contracts affecting the business other than those described in the Schedule attached to this Agreement and made a part of it.
c. Payment of Taxes. When the sale closes, Seller will have paid all payroll taxes, withholding taxes, and sales taxes then due to all federal, state, and local taxing authorities.
d. No Judgments, Caveats, Liens, Etc. No judgments, liens, actions, or proceedings are presently outstanding or pending against the business or Seller personally, and none will be outstanding or pending when the sale closes.
16. Buyer's Representations. Buyer represents and warrants that Buyer has inspected Seller's premises, inventory, furnishings, fixtures, and equipment and knows their physical condition. Buyer further represents and warrants that Buyer has examined Seller's books of account and other business records and is satisfied that they properly reflect Seller's past and present earnings and financial condition. Buyer represents and warrants that Buyer has not relied upon any representations by Seller or others as to the past or present earnings or the prospects of future earnings of the business.
17. Representations to Survive Closing. The representations and warranties contained in Paragraphs 15 and 16 shall survive the closing.
18. Compliance With Federal Law. In compliance with Federal law of [state], Seller shall prepare and deliver to Buyer, no later than [number] days before the closing, a list of Seller's creditors. The list shall be signed and sworn to or affirmed by Seller or Seller's agent. The list shall contain the names and business addresses of all of Seller's creditors, the amounts owed to them, if known, and the names and business addresses of all parties known by Seller to assert claims against Seller even if the claims are disputed. In addition, Seller will give Buyer a list of the business names and business addresses used by Seller during the three years ending with the date of this Agreement.
19. Seller's Restrictive Covenant. For a period of [number] years from the date of closing, Seller will not, directly or indirectly, either as principal, partner, agent, manager, employee, stockholder, director, officer, or in any other capacity, engage or be interested in the conduct of a business similar to the one sold pursuant to this Agreement within a radius of [number] miles from the city in which the business being sold is located. This restrictive covenant will be included in the bill of sale to be delivered at the closing.
20. Restrictive Covenant Assignable by Buyer. The rebets restrictive covenant contained in Paragraph 19 shall inure to the benefit of Buyer's assigns, successors, and transferees. If Buyer sells or otherwise transfers the business, Seller will remain bound by the terms of the restrictive covenant that may be enforced by Buyer's assigns, successors, and transferees.
21. Risk of Loss or Destruction. Seller assumes all risk of loss or damage caused by fire, wind, or other casualty up to the closing. If the business is terminated or interrupted before the closing by loss or damage caused by fire, wind, or other casualty, Buyer may terminate this Agreement and demand the return of any sums Buyer may have paid to Seller or Seller's agent on account of the purchase price. Upon return of those sums, this Agreement shall terminate and be of no effect, and neither Buyer nor Seller shall have any further rights against each other. If the loss or damage is not sufficiently severe to terminate or interrupt the business, the purchase price shall be adjusted to reflect the loss or damage in accordance with Paragraph 8.
22. Mail Addressed to Seller. Following the closing, Buyer may open all mail addressed to Seller at the business premises. Buyer shall properly forward to Seller any mail that does not require Buyer's action.
23. Agreement Binding. This Agreement is binding upon and shall inure to the benefit of the parties' heirs, executors, administrators, successors, and assigns.
24. Applicable Law. This Agreement shall be construed in accordance with the laws of [state], the state in which the business is located.
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [County]
On [Date] before me, [Name of Notary], notary, personally appeared [Name of Person(s) Involved], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____