Purchase Agreement

 

AGREEMENT made this ____________ day of ______________, 199 , between [specify seller] (hereinafter referred to as "Seller"), a [specify state] corporation having its offices at [specify address], [specify buyer] (hereinafter referred to as "Buyer"), a [specify state] corporation having its offices at [specify address], and [specify guarantor], (hereinafter referred to as "Guarantor"), a [specify state] corporation having its offices at [specify address].

FIRST: Seller is hereby selling and Buyer is hereby purchasing the following assets ("Assets") of Seller at the price, terms and conditions hereinafter set forth:

1.        All accounts receivable owned by Seller as of [specify date] as listed on "Schedule A," annexed hereto and made a part hereof.

2.        All right, title and interest in and to the name [specify name], which name Seller warrants and represents to be the only trade name and trademark used by Seller in the course of its business.

3.        All inventory listed on "Schedule B" annexed hereto and made a part hereof. Seller represents that said inventory provides certain of the parts, supplies and other items necessary to fill the orders listed on "Schedule C" hereof.

4.        All of Seller's orders from customers as listed on "Schedule C," annexed hereto and made a part hereof. Said orders are represented by Seller to have a net sales value of no less than Five Hundred Eighty Five Thousand Dollars ($585,000) as of this date. The term "net sales value" is hereby defined as the sales price, less any trade or cash discounts and allowances, returns or reworks which may have been granted to the customer prior to date hereof.

5.        Certain machinery, equipment, molds, tools and dyes listed on "Schedule D". Certain items of the equipment are owned by Seller and certain items are owned by a joint venture consisting of [specify partners] (the joint venture hereinafter referred to as "F&W"). The equipment owned by F&W is included in this sale, and [names of partners], by consenting to this Agreement, agree to transfer the F&W equipment concurrently with the transfer of the remaining Assets.

6.        All of seller's right, title and interest in and to its list of customers (although some may not be currently active), together with all other historical records, documents, blueprints, part specifications and quantities sold. The list of customers is represented by Seller to be essentially all significant customers sold by Seller within the past five (5) years and is set forth on "Schedule E", annexed hereto and made a part hereof.

SECOND:

1.        Annexed hereto, made a part hereof and marked "Schedule F" is a full and complete list of liabilities and creditors of Seller. As of this date said liabilities and creditors are separated into the following: secured creditors, lessors of machinery and equipment, etc., tax liabilities and unsecured creditors. Except for the orders which are being assigned to Buyer, Buyer shall not assume or pay any of Seller's liabilities. The proceeds of closing shall be applied towards payment of all secured creditors and unsecured creditors, with the exception of those set forth on Schedule G, annexed hereto and made a part hereof, and said proceeds shall be delivered to [specify address], the attorneys for Seller, to be used specifically for payment of all of such liabilities. Annexed hereto and made a part hereof as Schedule H is an Escrow Agreement to be signed by such attorneys, to that effect. All liens on machinery and equipment sold hereby will be satisfied from the proceeds of closing. The remainder of all liabilities and obligations of Seller shall be paid from the first proceeds Seller receives from the commissions due to Seller pursuant to Article "THIRD B" hereof.

2.        Seller and [specify partner] by consenting hereto, shall indemnify, defend and hold Buyer harmless from any and all liability for any of Seller's obligations or liabilities, existing, accrued or contingent and any and all expenses including reasonable attorneys' fees therewith, which indemnity shall survive closing of this Agreement. In the event a claim is made against Buyer for any of Seller's obligations or liabilities, Buyer shall notify Seller, in writing, of such claim. In the event Seller fails to obtain a release to Buyer from the claimant within thirty (30) days after notice is given to Seller thereof, then in addition to any and all rights and remedies, Buyer shall be entitled to offset the amount of such claim against the following monies due:

i) any monies due to Seller representing commissions due hereunder pursuant to Article "THIRD" hereof; or ii) any monies due to [specify partner] under a Sales Agent Agreement being signed simultaneously herewith.

The amount of offset shall be an amount equal to any claims made against Buyer for any liabilities or obligations of Seller and the amount offset shall be held until such time as such claims are either paid or resolved to the reasonable satisfaction of Buyer, at which time the withheld amount shall be paid to the Seller according to entitlement.

THIRD:

1.        The purchase price for all assets purchased hereunder is the sum of Six Hundred Fifty Thousand Dollars ($650,000), which sum shall be delivered to Seller's attorney upon approval of this transaction by the Trustee in Bankruptcy of [partner], as provided in separate Letter Agreement being signed simultaneously herewith.

2.        In addition thereto, Buyer shall pay to Seller commissions equal to five (5%) percent of the net monies received and retained from sales made of [specify] products by Buyer to Seller's customers listed on "Schedule C" hereof. Payment of said commissions shall be made for all sales made over a period of seven (7) years from date hereof or until the total commissions paid to Seller total the sum of One Million Fifty Thousand Dollars ($1,050,000), whichever event occurs first. However, if during the foregoing seven (7) year period the net monies received and retained from sales made to the aforesaid customers exceed the sum of Twenty One Million ($21,000,000) Dollars, then Buyer shall pay to Seller an additional commission of five (5%) percent of said amount which exceeds Twenty One Million Dollars ($21,000,000). Payment of the aforesaid commissions shall be paid within thirty (30) days after each quarter-annual period, based upon net monies received from sales to such customers during said quarter-annual period. The term "net monies received and retained", shall be defined as the net proceeds realized from the sales to the customers listed on Schedule C after deduction of any returns and allowances. Seller shall provide Buyer with quarterly reports stating how the amount of commissions was arrived at and listing all such sales, and Seller shall have the right, at its expense, to audit such reports, at times and places convenient to Buyer.

FOURTH: The purchase price of Six Hundred Fifty Thousand Dollars ($650,000) is allocated as follows:

Assets	Allocation
A. Accounts Receivable	280,000
B. Inventory	100,000
C. Seller's Machinery and Equipment, etc	140,000
D. Machinery and Equipment	130,000

FIFTH: Annexed hereto and made a part hereof is a list of all leases, union agreements, employment agreements and any other contracts, commitments or obligations of Seller of a continuing nature. Said list is designated as "Schedule I". Buyer shall in no way assume or be responsible for any of said commitments and obligations and the indemnity provision of Article "SECOND" hereof shall apply thereto.

SIXTH:

1.        That upon transfer of title to all Assets sold hereunder, such Assets shall be delivered free and clear of any and all liens, encumbrances and obligations.

2.        That this transaction was duly authorized by the Board of Directors of Seller, and Seller is hereby submitting a certified copy of the Resolution of the Board of Directors of Seller authorizing this transaction.

3.        That it has entered into no other contract or commitment to sell, assign, mortgage or otherwise encumber the Assets being sold hereunder or any portion thereof.

4.        That the accounts receivable to be sold hereunder are represented to be bona fide in all respects. In the event the net monies received from said accounts receivable is less than the total face value thereof, Seller shall indemnify Buyer for the amount of such deficiency. Buyer shall be entitled to a credit for the amount of such deficiency which may, at Seller' s option, be offset against the commissions due to Seller after closing. Buyer shall use its best efforts to collect all accounts receivable and will apply receipts to the oldest accounts unless otherwise directed by the customer.

5.        That the annual net sales volume for the last fiscal or calendar year of Seller is in excess of [specify amount] Dollars.

6.        That, the orders being transferred and assigned to Buyer are bona fide in all respects. If said orders are canceled for any reason whatsoever, except if said cancellation is due to the fault of the Buyer, then Buyer shall be entitled to be reimbursed by Seller for the cost of all inventory which was specifically produced by Seller prior to date hereof to fill said canceled order.

7.        That there are no judgments, liens, actions or proceedings pending against it in any court, nor is there any litigation, proceeding, governmental or United Postal Service investigation presently pending to be paid from the purchase price.

8.        Except as provided in a separate agreement pertaining to the requirement of the consent of the Trustee of [specify partner name], neither the execution and delivery of this Agreement nor the consummation of the contemplated transactions herein will conflict with or result in a breach of any of the terms, conditions or provisions of any law or any regulations, order, writ, injunction or decree of any court or governmental instrumentality, or of any agreement or other instrument to which it is a party or by which it is bound.

9.        This Agreement is a legal, valid and binding obligation of the Seller.

10.   That all of the machinery, equipment, tools and dyes being sold to Buyer are owned by either Seller or F&W and shall be delivered free and clear of any and all liens and encumbrances and in working condition.

11.   That Seller shall cause the owner of the premises in which Seller is located to permit all of the machinery and equipment, tools and dyes to remain in the premises presently occupied by Seller, without charge, for a period of ninety (90) days after same is transferred to Buyer, to permit Buyer and/or its Assignee to conduct an auction sale on said premises of said equipment. During said period of time, said equipment may be used by Buyer who shall provide appropriate liability and other insurance to protect Seller during the course of access to said premises and the sale thereof. Said sale shall not use the name of Seller.

SEVENTH: Buyer and Guarantor hereby represent as follows:

1.        Neither the execution and delivery of this Agreement nor the consummation of the contemplated transactions herein will conflict with or result in a breach of any of the terms, conditions or provisions of any law or any regulation, order, writ, injunction or decree of any court or governmental instrumentality or of any agreement or instrument to which it is a party or by which it is bound.

2.        This Agreement is a legal, valid and binding obligation of the Buyer and Guarantor and Buyer and Guarantor are hereby delivering their Corporate Resolutions authorizing this transaction.

3.        Buyer and Guarantor are [specify state] corporations having been duly incorporated under the laws of the State of [specify state] and have the authority to execute this Agreement and all documents pursuant thereto.

4.        Buyer shall not assign its obligations hereunder nor will it take any action such as liquidation, dissolution or merger to avoid its obligations hereunder.

5.        Buyer is a wholly owned subsidiary of Guarantor, which, by executing this Agreement, guarantees all the obligations of Buyer hereunder and agrees not to allow Buyer to take any action such as liquidation, dissolution or merger to avoid its obligations hereunder.

EIGHTH: All of the warranties and representations of both Seller, Buyer and Guarantor shall survive closing of this contract.

NINTH: The parties acknowledge that the sole broker that brought about this sale is [specify broker] and Seller shall pay said broker all commissions due hereunder as per separate Agreement, and shall indemnify and hold Buyer harmless therefrom.

TENTH: Simultaneously herewith, the following documents are being signed and delivered:

1.        Seller is delivering to Buyer a Bill of Sale transferring to Buyer all of the Assets sold hereunder, free and clear of any and all liens, encumbrances, security interests, debts or taxes of any nature whatsoever. Said Bill of Sale shall contain an Affidavit of Title together with an Affidavit providing for the payment to Seller's creditors as set forth in this Agreement.

2.        Seller is signing a document notifying all of Seller's accounts receivable to pay said accounts receivable to Buyer. Said document does provide that in the event any payments thereof are made to Seller, then Seller shall immediately turn over said payments to Buyer.

3.        Seller shall sign a document in such form as may be designated by Buyer notifying its customers that their orders have been assigned and assumed by Buyer.

4.        Seller shall sign a document assigning all of its right, title and interest in and to the name [specify name] to the Buyer. Within twenty (20) days from date hereof, Seller shall execute and file in the appropriate [specify state] office, a change of name certificate changing the name of its corporation to a name completely dissimilar to [specify name].

5.        Seller is delivering to Buyer all of the records, documents, blueprints, specifications, etc. of its customers.

6.        Seller's attorney is delivering to Buyer an Opinion Letter in the form annexed hereto, made a part hereof and marked "Schedule J".

7.        A Sales Agent Agreement is being signed with [specify name] a copy of which is annexed hereto and marked "Schedule K".

8.        In addition to the foregoing, Seller is hereby signing and delivering all other documents necessary to effectuate the transfer of the ownership of the Assets being sold hereby and if any additional documents are necessary to complete said transfer, Seller agrees to sign same.

ELEVENTH: Seller and [specify partner] individually, hereby jointly and severally agree that except as provided in the Sales Agent Agreement with [specify name] they shall not engage in or in any manner become interested in, either directly or indirectly, as an owner, partner, shareholder or employee (jointly or otherwise), in any business, trade or occupation which sells to the customers (as hereinafter defined) of Seller, any products which were sold by Seller during the calendar years _______ and _______ to date. Said covenant shall continue in full force and effect for a period of six (6) years from date hereof and may be enforced by injunctive relief in any court of competent jurisdiction. In the event of a breach hereof, Buyer shall have the right (in addition to all other rights and remedies), to terminate and reduce any commissions or payments due to Seller and/or [specify partner], pursuant to Article "THIRD" hereunder, or pursuant to the Sales Agent Agreement being signed by [specify partner]. Such termination and/or reduction of commissions or payments shall not be considered a default by Seller. In the event there be a default (as hereinafter defined) by Seller in payment of said commissions under Article "THIRD B" hereunder, or in the payment of any monies due to [specify partner] under the Sales Agent Agreement, then the foregoing restrictive covenant shall terminate. The term "default" shall mean an adjudication by a court of competent jurisdiction or an arbitration tribunal that Seller is in default. The term "customers" as used herein shall mean all customers sold by Seller during the five (5) year period immediately preceding date hereof.

TWELFTH: Any claim or controversy arising among or between the parties hereto pertaining to this Agreement and any claim or controversy arising out of or respecting any matter contained in this Agreement or any difference as to the interpretation of any of the provisions of this Agreement shall be settled by arbitration in [specify location] by three (3) arbitrators under the then prevailing rules of the American Arbitration Association.

THIRTEENTH: This writing is intended by the parties as a final expression of their agreement and is intended also as a complete and exclusive statement of the terms of their agreement. No course of prior dealings between the parties and no usage of the trade shall be relevant to supplement or explain any term used in this Agreement. Whenever a term defined by the Uniform Commercial Code is used in this Agreement, the definition contained in the code is to control.

FOURTEENTH: This Agreement can be modified or rescinded only by a writing by both parties or their duly sworn authorized agents.

FIFTEENTH: No claim or right arising out of the breach of this Agreement can be discharged in whole or in part by a waiver or renunciation of such claim or right unless the waiver or renunciation is in writing signed by the aggrieved party.

SIXTEENTH: The invalidity or unenforceability of any particular provision of this Agreement shall not affect other provisions hereof and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.

SEVENTEENTH: This Agreement shall inure to the benefit of and be binding upon the parties named herein as the Seller and the Buyer and, except as heretofore provided, to their respective successors, assigns, heirs, executors, legal representatives and administrators.

EIGHTEENTH: This Agreement shall be executed simultaneously in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument, and this Agreement shall be construed under the laws of the State of [specify state].

NINETEENTH: All notices hereunder shall be sent by certified mail, return receipt requested, with copies to the parties' attorneys by regular mail as follows:

[specify seller's address]
[specify seller's attorneys' address]
[specify buyer's address]
[specify buyer's attorneys' address]

IN WITNESS WHEREOF the parties hereto have set their hands and seals the day and year first above written.

CONSENTED AND AGREED TO: