Asset Purchase Agreement
This Asset Purchase Agreement (the "Agreement") is made as of [Agreement date] between [Buyer (entity that will own the business)] ("Buyer"), [Seller (entity that owns the business)] ("Seller"), and Seller’s principal owner(s), [Seller’s principal owner(s), who join for the non-compete and indemnity] (each an "Owner"), who join this Agreement for purposes of Sections 8, 9 and 11. Seller operates the business known as [Business name] at [Business address] (the "Business"). Seller wishes to sell, and Buyer wishes to buy, substantially all of the assets of the Business on the terms below. Buyer, Seller and each Owner are each a "Party" and together the "Parties".
1. Purchased Assets
At the Closing, Seller shall sell, assign, transfer and deliver to Buyer, and Buyer shall purchase, all of Seller’s right, title and interest in and to all assets, properties and rights used in or relating to the Business, wherever located, other than the Excluded Assets (the "Purchased Assets"), including: (a) all equipment, furniture, fixtures, vehicles, tools, supplies and other tangible personal property; (b) all inventory, including raw materials, work in progress and finished goods; (c) all contracts, leases, purchase orders and customer commitments listed on the schedule of assigned contracts delivered by Seller (the "Assigned Contracts"); (d) all intellectual property, including the Business name, trade names, trademarks, logos, domain names, websites, social media accounts, software, recipes, formulas, processes and know-how; (e) all customer, supplier and prospect lists, records, files, marketing materials, and books and records other than corporate minute books and tax returns; (f) all permits and licences to the extent transferable; (g) all prepaid expenses, deposits and rights under warranties relating to the Purchased Assets; (h) all telephone numbers, email addresses and listings; (i) all goodwill of the Business; and (j) specifically, the following: [Purchased assets (in addition to the standard categories)].
2. Excluded Assets; Assumed and Excluded Liabilities
The following assets are excluded from the sale and retained by Seller (the "Excluded Assets"): [Excluded assets (what the seller keeps)]. Unless listed above as Purchased Assets, Seller also retains its cash, accounts receivable arising before the Closing, corporate records, tax refunds, insurance policies, and rights under this Agreement.
Buyer assumes and agrees to pay and perform only the following liabilities (the "Assumed Liabilities"): [Assumed liabilities (or “None”)]. Buyer does not assume, and Seller shall remain solely responsible for, every other liability or obligation of Seller or the Business of any kind, whether known or unknown, fixed or contingent, including all taxes for periods before the Closing, all indebtedness, all accounts payable and accrued expenses, all wages, commissions, bonuses, accrued vacation and benefits owed to employees through the Closing, all liabilities under Assigned Contracts arising from any breach or event before the Closing, and all claims relating to products sold or services performed before the Closing (the "Excluded Liabilities").
3. Purchase Price and Allocation
The purchase price for the Purchased Assets is [Purchase price] (the "Purchase Price"), payable as follows: (a) a deposit of [Deposit paid on signing (or $0)] paid to Seller or to an escrow agent agreed by the Parties within three (3) business days after this Agreement is signed, to be credited against the Purchase Price at the Closing and refundable to Buyer only if this Agreement is terminated under Section 10 for a reason other than Buyer’s default; (b) [Cash paid at closing] in immediately available funds at the Closing; and (c) a promissory note from Buyer to Seller in the principal amount of [Seller note amount (or $0)] on the following terms: [Seller note terms (or “None”)]. If the seller note amount is zero, subsection (c) does not apply. Buyer shall also pay for inventory on hand at the Closing to the extent the Parties have agreed a separate inventory adjustment in writing.
The Parties agree to allocate the Purchase Price among the Purchased Assets as follows, in accordance with Section 1060 of the Internal Revenue Code: [Purchase price allocation]. Each Party shall report the transaction for all tax purposes, including on IRS Form 8594, consistently with that allocation and shall not take any inconsistent position unless required by a final determination. Sales, use and transfer taxes arising from the sale shall be paid one half by each Party. Rent, utilities, personal property taxes and similar periodic charges shall be prorated as of the Closing.
4. Representations and Warranties of Seller
Seller and each Owner, jointly and severally, represent and warrant to Buyer that, as of the date of this Agreement and as of the Closing: (a) Seller is duly organized, validly existing and in good standing, has full power and authority to enter into and perform this Agreement, and this Agreement has been duly authorized and is binding on Seller; (b) Seller has good and marketable title to the Purchased Assets, free and clear of all liens, claims and encumbrances, and at the Closing will convey them free and clear; (c) the financial statements of the Business delivered to Buyer are true and complete in all material respects and fairly present the results of the Business for the periods shown, and there has been no material adverse change since the date of the most recent statement; (d) all tax returns of the Business have been filed and all taxes paid, and no tax audit or deficiency is pending or threatened; (e) the Assigned Contracts are in full force, Seller is not in default under any of them, and each may be assigned to Buyer with the consents identified on the schedule; (f) the tangible Purchased Assets are in good operating condition, ordinary wear excepted, and are all of the assets needed to operate the Business as currently conducted; (g) Seller owns or has the right to use all intellectual property used in the Business and its use does not infringe any third party’s rights; (h) Seller has complied in all material respects with applicable laws, holds all permits needed to operate the Business, and has received no notice of violation; (i) there is no litigation, claim, investigation or proceeding pending or, to Seller’s knowledge, threatened against Seller or the Business; (j) the schedule of employees delivered to Buyer is complete and accurate, Seller has paid all wages and contributions due, and no employee is subject to a collective bargaining agreement; (k) Seller has disclosed to Buyer every liability, environmental condition and other matter that a reasonable buyer would consider material; and (l) no broker is entitled to a fee from Buyer in connection with this transaction. These representations survive the Closing as provided in Section 9.
5. Representations and Warranties of Buyer
Buyer represents and warrants to Seller that Buyer is duly organized, validly existing and in good standing, has full power and authority to enter into and perform this Agreement, that this Agreement has been duly authorized and is binding on Buyer, that Buyer has or will have at the Closing sufficient funds to pay the cash portion of the Purchase Price, and that no broker is entitled to a fee from Seller in connection with this transaction because of any act of Buyer.
6. Covenants Before Closing; Conditions
From the date of this Agreement until the Closing, Seller shall operate the Business only in the ordinary course consistent with past practice; maintain the Purchased Assets and its relationships with customers, suppliers, landlords and employees; not sell or encumber any Purchased Asset other than inventory in the ordinary course; not enter into, amend or terminate any material contract, increase any compensation, or make any commitment outside the ordinary course without Buyer’s written consent; keep Buyer informed of any material development; and use commercially reasonable efforts to obtain every consent needed to assign the Assigned Contracts and the premises lease to Buyer. Seller shall give Buyer and its advisers reasonable access to the Business, its records and its personnel.
Buyer’s obligation to close is subject to: Seller’s representations being true in all material respects at the Closing; Seller having performed its covenants; receipt of the landlord’s consent to assignment of the premises lease, or a new lease, on terms acceptable to Buyer; receipt of the other consents identified on the schedule of Assigned Contracts; delivery of a tax clearance certificate or equivalent where available in the state; and no material adverse change in the Business. Seller’s obligation to close is subject to Buyer’s representations being true in all material respects, Buyer having performed its covenants, and payment of the Purchase Price.
7. Closing
The closing of the purchase and sale (the "Closing") shall take place on [Closing date], or on such other date as the Parties agree in writing, by electronic exchange of documents and funds. At the Closing, Seller shall deliver: a bill of sale for the tangible Purchased Assets; assignments of the Assigned Contracts, the premises lease, and the intellectual property, in recordable form where appropriate; title certificates for any vehicles, endorsed to Buyer; releases of all liens on the Purchased Assets; a certificate confirming Seller’s representations and covenants; evidence of Seller’s authority; all keys, codes, passwords, account credentials and records; and possession of the Purchased Assets. At the Closing, Buyer shall deliver the cash portion of the Purchase Price, the promissory note and any security agreement described in Section 3, an assumption of the Assumed Liabilities, and evidence of Buyer’s authority. For [Seller transition assistance after closing (days)] days after the Closing, Seller and the Owners shall provide reasonable transition assistance, including introductions to customers and suppliers, training of Buyer’s personnel, and answering questions, without additional charge for up to twenty (20) hours per week, and Seller shall promptly forward to Buyer all mail, payments and inquiries relating to the Business.
8. Non-Competition and Non-Solicitation
In consideration of the Purchase Price and as an inducement to Buyer to purchase the goodwill of the Business, Seller and each Owner agree that for [Non-compete term (years)] years after the Closing, none of them shall, directly or indirectly, as an owner, partner, employee, consultant, lender or otherwise: (a) engage in, or assist any other person in engaging in, any business that competes with the Business as conducted at the Closing within [Non-compete radius (miles)] miles of the Business address; (b) solicit or accept business from any person who was a customer of the Business during the two (2) years before the Closing for products or services competitive with the Business; (c) solicit for employment or hire any person employed by the Business at the Closing or by Buyer thereafter; or (d) disparage Buyer or the Business or interfere with its relationships with customers, suppliers or landlords. Seller and each Owner acknowledge that this covenant is given in connection with the sale of the goodwill of the Business, is reasonable in duration and area, is necessary to protect the value of what Buyer is purchasing, and is enforceable by injunction without proof of actual damage. If a court finds any part of this covenant unenforceable, it shall be modified to the minimum extent necessary and enforced as modified. Seller and each Owner shall also keep confidential all non-public information about the Business and shall not use it after the Closing.
9. Indemnification
Seller and each Owner, jointly and severally, shall indemnify and hold harmless Buyer and its owners, managers and employees from all losses, liabilities, damages, costs and expenses, including reasonable attorney fees (collectively, "Losses"), arising out of: (a) any breach of Seller’s representations, warranties or covenants in this Agreement; (b) any Excluded Liability; (c) the operation of the Business before the Closing; and (d) any claim by a broker engaged by Seller. Buyer shall indemnify and hold harmless Seller and the Owners from all Losses arising out of any breach of Buyer’s representations, warranties or covenants, any Assumed Liability, and the operation of the Business after the Closing.
The representations and warranties in Section 4 survive the Closing for [Survival of general representations (months)] months, except that the representations in Sections 4(a), 4(b), 4(d) and 4(l) survive until sixty (60) days after the applicable statute of limitations expires, and claims based on fraud survive indefinitely. Seller and the Owners are not liable for breaches of representations until Buyer’s aggregate Losses exceed one percent (1%) of the Purchase Price, after which they are liable for all Losses from the first dollar, and their aggregate liability for breaches of representations is capped at [Indemnity cap (% of purchase price)] percent of the Purchase Price; neither the deductible nor the cap applies to Excluded Liabilities, to the representations listed above as surviving longer, or to fraud. A Party seeking indemnification for a third-party claim shall give prompt written notice, and the indemnifying Party may assume the defense with counsel reasonably acceptable to the indemnified Party, provided it acknowledges its obligation to indemnify and does not settle without the indemnified Party’s consent unless the settlement involves only money the indemnifying Party pays. Buyer may set off any Losses finally determined to be owed by Seller or an Owner against payments due under the promissory note described in Section 3.
10. Termination
This Agreement may be terminated before the Closing: (a) by mutual written agreement; (b) by either Party if the Closing has not occurred by [Outside date (deal can be terminated if not closed by)], unless the failure to close results from that Party’s own breach; (c) by Buyer if any condition to Buyer’s obligation to close has become incapable of satisfaction, or if Seller materially breaches this Agreement and does not cure within ten (10) days after notice; or (d) by Seller if Buyer materially breaches this Agreement and does not cure within ten (10) days after notice. On termination under (a), (b) or (c), the deposit shall be returned to Buyer; on termination under (d), Seller may retain the deposit as liquidated damages as Seller’s sole remedy, the Parties agreeing that Seller’s actual damages would be difficult to determine and that the deposit is a reasonable estimate. Termination does not relieve a Party of liability for a willful breach before termination, and the confidentiality obligations of the Parties survive.
11. Employees; Bulk Sales; General
Buyer may, but is not obligated to, offer employment to any employee of the Business on terms Buyer determines. Seller shall terminate the employment of all employees of the Business effective at the Closing, shall pay all wages, accrued vacation, commissions and benefits owed through the Closing, and is responsible for any obligation under the WARN Act or any state equivalent arising from those terminations. Buyer is not a successor employer except as required by law. The Parties waive compliance with any applicable bulk sales law, and Seller shall indemnify Buyer for any Losses arising from that waiver.
This Agreement is governed by the laws of the State of [Governing law (state)], without regard to its conflict of laws rules, and the Parties submit to the exclusive jurisdiction of the state and federal courts in that state, except that Buyer may seek injunctive relief under Section 8 in any court. The prevailing Party in any action arising out of this Agreement is entitled to reasonable attorney fees and costs. This Agreement, with its schedules and the documents delivered at the Closing, is the entire agreement between the Parties about its subject and supersedes all prior agreements, including any letter of intent. It may be amended only in a writing signed by all Parties. Buyer may assign its rights to an affiliate or to a lender as security; otherwise no Party may assign this Agreement without the others’ consent. If any provision is held unenforceable, the remainder continues in effect. Notices shall be in writing and delivered to the email addresses in the execution record or to the addresses above. This Agreement may be signed electronically and in counterparts, each of which is an original and all of which together are one instrument, and the electronic execution record, timestamps and document fingerprints kept by the signing platform are conclusive evidence of its execution. Each person signing represents that they are authorized to bind the Party for whom they sign.
Signatures
Buyer · Seller