BUSINESS OR ASSET SALES AGREEMENT
(Language more favorable to Seller)
A well-drafted Asset Sales Agreement will:
Information & Benefits:
The following information and benefits is what distinguishes us from other online providers.
- Deposit: Details of deposit
- Cash at Close
- Promissory Note, if any. - balance due (Various methods for paying off balance including, but not limited to: monthly, quarterly, and annual payments, variable or fixed interest rates, balloon payments, etc.)
Need to establish deadline for parties to conclude transaction: Time is of the essence!
Need assurances from each of the parties that they are authorized to act on behalf of the business without the need for outside approval and that no agreement(s) prevent them from proceeding with the transaction.
Closing Agent & Escrow Agent
It is imperative that the parties have a licensed professional oversee the legal and financial adequacy of the documents at closing to prevent problems down the road. Also important to segregate deposits and cash at close with independent escrow agent. (Like an attorney's trust account - preferably ours.)
Observation (Due Diligence Period)
Favors Buyer, so Seller should only give Buyer an opportunity to observe and inspect the business after the contract is signed by the. Seller should include the restrictive covenants detailed below (#23) in any Asset Sale Contract.
Favors Buyer, so Seller should get same assurances as stated above. In addition, Seller may also request compensation from Buyer for training. Finally, Seller should retain all sums paid by Buyer as liquidated damages if Buyer does not close.
Business Records & Financial Information
Only give Buyer an opportunity to review those documents specifically requested.
Franchise - Seller must determine under what conditions and circumstances he may sell or assign the franchise. Buyer should assume all required transfer fees. Get copy of franchise agreement. Seller will want a legal opinion letter attesting to the validity of the transfer.
Seller may want to retain ownership rights and merely license the marks with or without royalties for a specific period of time.
Seller transfers business name (DBA) to Buyer. If applicable, it agrees to change it's corporate name, which allows Buyer to change it's corporate name to match name of newly acquired business.
Licenses & Permits
Buyer is responsible for acquiring any and all applicable Licenses & Permits. All fees associated with the proper transfer of any license or permit shall be paid by Buyer. Seller shall not be responsible for Buyer's failure or inability to receive such license or permit. If Buyer cannot close for lack of license or permit, Seller shall retain all sums paid by Buyer as liquidated damages.
Assignment of Lease
If applicable, Seller will assign lease to Buyer. If not, Buyer is responsible for locating business space. Failure by Buyer in acquiring a lease shall not void or otherwise permit Buyer to rescind contract. Security deposit held under any lease must also be accounted for in this agreement.
Bill of Sale
Seller shall provide Buyer with a Bill of Sale reflecting valid transfer of title to all assets.
Buyer will want assurances that all taxes have been timely paid. Generally, sales taxes are treated as a lien on assets/inventory. Therefore, any taxes due, but yet unpaid will have to be dealt with. Include as prepayment by Seller.
Seller will want to be indemnified by Buyer against any expenses/losses incurred by Seller as a result of Buyer's management of the Business assets.
In case of default by Buyer, Seller may have the right to rescind contract and retain all sums paid by Buyer as liquidated damages, and address default in non-binding mediation and thereafter, if necessary, arbitration.
The payments for these accounts is usually retained by the Seller.
The responsibility for these accounts usually stays with the Seller.
Business Deposits (Prepayments)
Those amounts on deposit for the benefit of the Business. (e.g., utility services, leases, insurance, etc.) are owned by Seller.
Condition of Equipment/Assets
Seller represents and warrants only that the items held for sale & assets are in good working condition and does not offer any other express or implied warranties related to the condition of the assets.
Any inventory of items held for sale & assets should be conducted by both parties.
Phone, Fax, & Mail
Seller should transfer all phone lines and re-route all mail to buyer
Buyer's Restrictive Covenants
Before the Buyer has been given access to any business information, Seller should always ensure that Buyer has signed a contract which contains provisions that restrict the Buyer's ability to compete against Seller; to solicit staff away from Seller; or to disclose any of Seller's confidential information to others. In addition, it is always wise to include a non-circumvention clause, which will prohibit the Buyer from taking any action that would or would attempt to get around these restrictions. An example of trying to circumvent the contract would be assisting or enabling a third party to compete, solicit or disclose. As always, ensure any such restrictive covenant is within statutory parameters.
Risk of Loss
Risk of loss to any assets generally remains with Seller prior to close and flows to Buyer after close.
Mediation and Arbitration
Mediation and Arbitration should always specify a location in Client's jurisdiction (preferably, in the same county where they run their business). Mediation is a non-binding way to settle the dispute quickly and amicably. If unable to settle in mediation, arbitration is first option available. Arbitration is the preferred alternative to litigation because of speed, cost, and ability to maintain low profile (no info is publicly available).
Jurisdiction & Venue
Always make venue and jurisdiction as convenient to client (Seller) as possible.
No Modification or Waiver
No modifications except those specifically agreed upon by the parties in writing. Any waiver of a term or provision will not act as a waiver of any other provision.
Notices should always list the current and best addresses where each party may contact the other for whatever reason.
Spiegel & Utrera, P.A. : Affordable Agreements. Custom-Fit Contracts.
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New York City
1 Maiden Lane
642 Broad St., Suite 1B
8939 S Sepulveda Blvd.
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