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Agreement For Purchase And Sale
AGREEMENT FOR PURCHASE AND SALE by Gary Jacobson All Assets (Includes Trade Name Transfer) Comments This form involves a straightforward sale of all assets of a smaller incorporated agency with a single stockholder. Sale is to a larger incorporated agency with several offices; Buyer will consolidate the office of the acquired agency into that of the Buyer. A creative security arrangement is included, involving a security-escrowed broker-of-record letter as set forth in Exhibit 'G.' AGREEMENT FOR PURCHASE AND SALE OF ABLE INSURANCE AGENCY Table of Contents Section/Paragraph 1. Parties 2. Recitals 2.1 Status of Seller 2.2 Status of Buyer 2.3 Status of Able 2.4 Status of Dalton 2.5 Purpose 2.6 Move 3. Purchase and Sale 3.1 Insurance Accounts 3.1.1 Valuation 3.1.2 Risk of Loss 3.2 All Goodwill of the Seller 3.3 Name Change 3.4 Personal Property 3.5 Commissions Receivable 3.5.1 Schools Exception 3.5.2 Repayment 3.6 Contingency Commissions 3.7 Assumption of Liabilities 4. Payment/Terms/Security 4.1 Purchase Price 4.2 Allocation 4.3 Terms 4.4 Security -- Assets 4.5 Assignment, Replacement Property 4.6 Default 4.7 Security-Escrowed Letter 4.8 Cross-Default 5. Closing 5.1 Place and Time 5.2 Delivery of Documents and Consideration 5.3 Adjustments 6. Seller's Representations and Covenants 6.1 Representations and Warranties 6.2 Covenants 6.2.1 No Interruption in Business 6.2.2 Liabilities 6.2.3 Delivery of Receipts 6.2.4 Cessation 6.2.5 Ownership Indemnity 6.2.6 E&O Coverage and Indemnification 6.2.7 Carriers/Transition 7. Buyer's Representations and Covenants 7.1 Status of Buyer 7.2 Covenants 7.2.1 Non-Disclosure 7.2.2 E & O Coverage 8. Non-Compete 9. Contingencies 9.1 Representations, Warranties and Covenants True 9.2 Exhibits 10. Dispute Resolution 10.1 All Disputes 10.1.1 Alternative 10.1.2 Equitable Relief 10.2 Notice of Arbitration 10.3 Authority 10.4 Costs 11. Miscellaneous 11.1 Notices 11.2 Waivers and Extension 11.3 Expenses 11.4 Amendment 11.5 Entire Agreement 11.6 Applicable Law/Venue 11.7 Headings 11.8 Counterparts 11.9 Successors, Assigns, and Subsidiaries 11.10 Duration of Warranties 11.11 Necessary Documents 11.12 Exhibits 11.13 Separate Counsel 11.14 Attorney Fees 11.15 Assignment INDEX OF EXHIBITS Exhibit Description Paragraph 'A' Schedule of Accounts 3.1 'B' Schedule of Personal Property 3.4 'C' Schedule of Liabilities Assumed 3.7 'D' Promissory Note 4.3.2 'E' Financing Statement 4.4 'F' Security Agreement 4.4 'G' Security Escrowed Letter 4.7 'H' Bill of Sale for Equipment 5.2 'I' Bill of Sale for Accounts 5.2 'J' Able's Non-Compete 8 1. Parties 1.1 This AGREEMENT FOR PURCHASE AND SALE (the 'Agreement') is executed as of the date set forth on the signature page hereto, by and between: ABLE INSURANCE AGENCY, INC. ('Seller'); DALTON AGENCIES, INC. ('Buyer'); ALAN ABLE ('Able'); and DON DALTON ('Dalton'). 2. Recitals 2.1 Status of Seller. Seller is a Washington corporation engaged in the insurance local agency business (such business shall be referred to herein as the 'Agency'), with its principal place of business at 810 S. Grand Way N.E., Suite 1000, Podunk, Washington. 2.2 Status of Buyer. Buyer is a Washington corporation engaged in the insurance local agency business, with its principal place of business at 4321 Commercial Avenue, Suite 320, Any City, Washington, and a branch office located at 2222 Ocean Blvd., Walla Walla, Washington. 2.3 Status of Able. Able is the sole shareholder of Seller. 2.4 Status of Dalton. Dalton is the majority shareholder of Buyer. 2.5 Purpose. By this Agreement the parties desire to provide for the purchase and sale of assets of Seller in the manner described herein, and for Dalton personally to remain obligated to Seller and Able as specified herein. 2.6 Move. As of Closing, all of the assets acquired shall be relocated to Buyer's office at the Any City address set forth above. NOW, THEREFORE, the parties agree as follows: 3. Purchase and Sale Seller shall sell and transfer to Buyer at Closing as further described herein, all right, title and interest in and to the following assets ofSeller (collectively, the 'Assets'): 3.1 Insurance Accounts. All insurance records and accounts (other than accounting records), expirations and expiration data, daily reports of Seller, renewals of the business and policies in force and all supporting documents, papers, and files relating to all accounts of Seller now or hereafter carried upon the income and expense statement of Seller, specifically including without limitation those accounts set forth on Exhibit 'A' attached hereto. All Assets referred to in this paragraph 3.1 are collectively referred to herein as the 'Accounts.' 3.1.1 Valuation. The values ascribed by the parties to each individual Account on Exhibit 'A' have been negotiated and bargained for in good faith, and shall be binding upon them for all purposes. 3.1.2 Risk of Loss. Except as expressly provided to the contrary herein, Buyer assumes all hazards due to the Agency business operation, and agrees that no failure of consideration or charge-back attributable to cancellation shall occur due to Buyer's failure to retain an Account for any reason. 3.2 All Goodwill of the Seller. All goodwill of the Agency including the exclusive right to use the trade name 'ABLE INSURANCE' or any derivation thereof (to the fullest extent owned by Seller), the rights to Seller's Agency telephone numbers including FAX, and all rights relating to the marketing, underwriting, and adjusting of all insurance business transferred herewith. 3.3 Name Change. Following Closing, Seller shall promptly dissolve or change its corporate name, and execute a consent and/or other necessary documentation transferring the exclusive rights to the trade name 'ABLE INSURANCE' to Buyer. 3.4 Personal Property. All tangible personal property of the Seller, including without limitation all furniture and equipment set forth on Exhibit 'B' attached, located at Seller's office as of September 1, 20__, and used in its insurance local Agency business. 3.5 Commissions Receivable. The parties agree that this sale shall not include any commissions earned by Seller for sales of new policies or renewals completed prior to close of business on August 31, 20__, which commissions may not be received until after August 31, 20__. In the event Seller receives commissions or bonuses after August 31, 20__ for sales or renewals completed by Seller on or before that date, direct bill or otherwise, Seller shall be entitled to retain said commissions. Commissions for sales of new policies or renewals made after August 31, 20__, shall belong exclusively to Buyer. 3.5.1 Schools Exception. The only exception to this transfer of commissions shall be the commissions paid on both the Podunk and Any City School District business renewed during September 20__. These prepaid one-time school renewal commissions for the period September 1, 20__ through August 31, 1996 shall remain the property of Seller. 3.5.2 Repayment. Notwithstanding the above, in the event that as a result of a return, credit, cancellation, or any form of audit, an insurance carrier requests from Seller (or from Buyer as Seller's successor in interest) a refund for commissions paid prior to August 31, 20__, then Seller shall immediately pay said sum to that carrier, or to Buyer if said request is made to Buyer. If said request is made to Buyer and repayment thereof is not forthcoming from Seller, then Buyer would further be entitled to offset that sum against any payments next due to Seller hereunder. 3.6 Contingency Commissions. Any contingency or bonus commission earned by Seller attributable to sales completed on or before August 31, 20__ on the Accounts shall also belong to Buyer. 3.6.1 The only exception shall be the multi-peril contingency bonus from American International Insurance, which shall remain the property of and be paid to Seller. 3.7 Assumption of Liabilities. As part of the purchase of assets hereunder, Buyer shall assume and agree to pay according to their respective terms the outstanding obligations of Seller, including interest thereon, set forth on Exhibit 'C' attached hereto, not to exceed the amounts shown there; payments thereon shall be prorated for the month as of Closing. 4. PAYMENT/TERMS/SECURITY 4.1 Purchase Price. The purchase price for all of the Assets conveyed shall be One Hundred Thousand Dollars ($100,000) (the 'Purchase Price'). 4.2 Allocation. The Purchase Price shall be allocated as follows: Furniture and Equipment $8,636 Accounts $80,364 Goodwill $11,000 TOTAL: $100,000 4.2.1 Buyer and Seller both agree to report to the Internal Revenue Service the allocation as set forth above. 4.2.2 All sales and use tax due as a result of this transaction shall be promptly paid by Buyer at its expense. 4.3 Terms. The Purchase Price shall be paid as follows: 4.3.1 A down payment of $17,000.00 to Seller at Closing, comprised of $5,000.00 cash plus a credit in the amount of $12,000.00 as the agreed-upon value of the school commissions left with Seller pursuant to paragraph 3.4.1 above; and 4.3.2 A Promissory Note (the 'Note') to Seller in the form attached hereto as Exhibit 'D'; Buyer shall have the right of offset against the Note for default on any obligations of Seller or Able hereunder. 4.3.3 The Note shall be unconditionally personally guaranteed by Dalton (and his spouse) as majority shareholder of Buyer. 4.4 Security - Assets. As security for payment of the Note and other obligations of Buyer hereunder, Buyer does hereby grant to Seller and Able a first lien security interest in all of Buyer's assets as follows, herein called 'collateral': All assets of the insurance local agency business owned by Debtor, including without limitation its insurance accounts, policies in force, expirations, daily reports, renewals, all computer data attributable to those accounts, prospect lists, accounts receivable, goodwill, furniture, telephone numbers, fixtures, equipment, corporate and trade names including the corporate and trade names 'ABLE INSURANCE AGENCY' and 'DALTON AGENCIES', belonging to Buyer, now owned or hereafter acquired, and the proceeds thereof. This security interest is given to secure payment of all obligations of Buyer hereunder to both Seller and Able, presently existing and hereafter arising, and all expenses including reasonable attorney's fees incurred by Seller or Able as prevailing party in an arbitration or legal action with respect to this Agreement and/or the executed originals of all Exhibits thereto. At closing, Buyer shall execute an appropriate standard UCC-1 Financing Statement and Security Agreement in the form attached hereto as Exhibit 'E' and Exhibit 'F' to perfect Seller's security interest. 4.5 Assignment, Replacement Property. Buyer shall not assign, mortgage, pledge or otherwise encumber the collateral which is the subject matter of this Agreement, nor this Agreement nor any interest herein, without the prior written approval of the Seller, which Seller shall not unreasonably withhold provided such action by Buyer will not, in the opinion of Seller's counsel, materially jeopardize Seller's security. This paragraph is not, however, intended to preclude Buyer from conducting its business in the ordinary course, nor is it intended to preclude Buyer from selling and replacing equipment needed and used in the Agency during the period of this Agreement. 4.6 Default. Default and remedies shall be as set forth in the Note and Security Agreement attached hereto. 4.7 Security-Escrowed Letter. Buyer shall execute at Closing a set of undated Broker-of-Record Letters ('Letters') pursuant to Exhibit 'G' attached hereto, for each insurance carrier handling the Accounts at time of Closing. Upon default by Buyer, Seller may proceed in accordance with the provisions set forth in Exhibit 'G .' 4.8 Cross-Default. Since the obligations of Buyer to Seller and Able are all interdependent, the parties intend for them all to be cross-secured. Therefore, a default by Buyer under this Agreement or the executed original of any Exhibit hereto shall also, at Seller and Able's option, be deemed a default by Buyer under the others as well. 5. CLOSING 5.1 Place and Time. Regardless of the date upon which the various Exhibits are executed and consideration exchanged in accordance herewith (the 'Closing'), the agreed date of closing hereof for prorations and all other purposes (the 'Date of Closing') shall be deemed to be September 1, 20__. 5.2 Delivery of Documents and Consideration. At Closing, the parties shall deliver to one another all documentation and consideration specified herein, including without limitation the executed original Bill of Sale for Equipment, a copy of which is attached hereto as Exhibit 'H', and that Bill of Sale For Accounts, a copy of which is attached hereto as Exhibit 'I.' 5.2.1 Seller shall deliver all of the Accounts and corresponding documentation within 24 hours after Closing. 5.2.2 Seller and Buyer shall each deliver to the other at Closing a copy of a resolution of its Board of Directors authorizing this transaction. 5.3 Adjustments. The parties recognize that there may be some overlooked or unclear technicalities that need to be cleared up after Closing, and they shall attempt to resolve those by mutual agreement; failing to do so, any such issues shall be submitted to arbitration in accordance with Section 10 hereof.