TECH AGREEMENT 15111: ASSET PURCHASE AGREEMENT FOR WEBSITE SERVICES FIRM FOR CASH, SUBORDINATED NOTE, AND EARN OUT PAYMENTS $99.95
|Purchase Agreement Type||Purchase and Sale Agreement for the assets of a internet consulting company|
|Additional Assets Included||All corporate assets except those on an excluded assets schedule|
|Seller Liabilities||Specified enumerated liabilities are assumed by the buyer|
Seller Representations And Warranties
|Extensive list of representations and warranties by both the seller and the buyer|
|Escrow Account||Sale of assets to be effected through an escrow account in a law office|
|Other Features||Elaborate earn-out arrangement specified in the agreement; Buyer to negotiate a new lease for office space for the unit offices post closing with terms acceptable to Buyer; Extensive noncompetition covenants in favor of the Buyer; Nonsolicitation clauses relating to customers and employees|
|Number of Single Spaced Pages||40|
This Asset Purchase Agreement (the "Agreement") is made as of _______________, 20__, by and among ________________, a ____________ corporation, with a principal place of business at __________________ ("Buyer") and _________________ ("Seller"), a ____________ corporation, with a principal place of business at ______________________.
WHEREAS, the Boards of Directors of each of Buyer and Seller, and the holders of all outstanding shares of Seller, have approved the sale of Assets (as defined herein) of the web services, web content management and design business of Seller (the "Business");
WHEREAS, Seller desires to sell, and Buyer desires to purchase, certain assets and assume certain liabilities of Seller for the consideration and on the terms set forth in this Agreement (the "Transaction"); and
WHEREAS, each of the parties to the Agreement desires to make certain representations, warranties, and agreements in connection with the Transaction between the parties and to prescribe various conditions thereto.
NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
PURCHASE AND SALE OF ASSETS
1.1. Sale and Purchase of Assets. At the Closing (as defined in Section 1.8 hereof) and subject to and upon the terms and conditions of this Agreement, Seller shall sell, convey, transfer, assign and deliver or cause to be sold, conveyed, transferred, assigned and delivered to Buyer, and Buyer will purchase from Seller, free and clear of all liens, charges, claims, pledges, security interests and encumbrances ("Liens"), the Assets (as hereinafter defined). The term "Assets" shall mean all of Seller’s right, title and interest in and to, as of the Closing, all of the assets and properties, whether tangible or intangible, wherever situated, and whether or not specifically referred to in any instrument or conveyance delivered pursuant hereto, that are identified on Schedule 1.1 hereto. The Assets include all of the assets and properties of the Business other than the Excluded Assets (as defined in Section 1.2 hereof).
1.2. Excluded Assets. Notwithstanding anything contained in Section 1.1 to the contrary, Seller shall retain all of Seller’s right, title and interest in and to, as of the Closing, all of the assets and properties, whether tangible or intangible, wherever situated and whether or not specifically referred to herein or in any instrument or conveyance delivered pursuant hereto, that are identified on Schedule 1.2 hereto (the "Excluded Assets").
1.3. Purchase Price. In exchange for the Assets, and subject to the terms and conditions contained in this Agreement, Buyer agrees to: (a) pay Seller at the Closing _________________ dollars ($________) via wire transfer to an account selected by Seller (the "Cash Consideration"); (b) execute and deliver to Seller at the Closing a subordinated promissory note in the aggregate principal amount of $________, which note shall accrue interest at the annual rate of ____ percent (__%) and shall be subordinate only to Buyer’s primary lender (the "Note"), the form of which Note is attached hereto as Exhibit 1.3; (c) assume as of the Closing Deferred Revenue (as defined below) of Seller; and (d) pay the Earn-Out Consideration (as defined below) in an amount up to $__________ (collectively the "Purchase Price").
1.4. Adjustments for Deferred Revenue; Accounts Receivable; and Accounts Payable. "Deferred Revenue" shall mean amounts recorded on the balance sheet as a liability by Seller prior to the Closing for services not yet performed by Seller as of the Closing as determined in accordance with generally accepted accounting principles consistently applied ("GAAP"). Promptly after the Closing, Buyer shall complete an audit of the financial statements of Seller for the fiscal year ended December 31, 20___ and a review of the interim financial statements of Seller for the interim period between January 1, 20___ and the Closing (the "Audit"). If, as a result of the Audit, the Deferred Revenue as of close of business on the last business day preceding the Closing is determined by Buyer’s independent accounting firm to be greater than $_______ (the "Target Amount"), the Earn-Out Consideration shall be reduced by the amount the Deferred Revenue exceeds the Target Amount. If as a result of the Audit, the Deferred Revenue as of the Closing is determined by Buyer’s independent accounting firm to be less than the Target Amount, the Earn-Out Consideration shall be increased by the amount the Deferred Revenue is less than the Target Amount. Additionally, if, as a result of the Audit, the Accounts Receivable acquired by Buyer, as of close of business on the last business day preceding the Closing, is determined by Buyer’s independent accounting firm to be less than the amount listed in Schedule 2.18, then the Earn-Out Consideration shall be reduced by the amount the Accounts Receivable acquired by Buyer determined from the Audit is less than the amount listed in Schedule 2.18. Finally, if, as a result of the Audit, the Accounts Payable (including Accrued Expenses) assumed by Buyer, as of close of business on the last business day preceding the Closing, is determined by Buyer’s independent accounting firm to be greater than the amount listed in Schedule 1.7A, then the Earn-Out Consideration shall be reduced by the amount the Accounts Payable (including Accrued Expenses) assumed by Buyer determined from the Audit is greater than the amount listed in Schedule 1.7A.
1.5. Earn-Out Consideration.
(a) The Seller shall be entitled to earn additional consideration (the "Earn-Out") during the Complete Earn-Out Period (as defined below), in an amount up to $________ in the aggregate, subject to adjustment as set forth in Section 1.4 above, payable in cash in accordance with the terms of this Section 1.5 (the "Earn-Out Consideration").
(b) The followings terms shall have the following meanings for purposes of this Agreement:
(i) "Complete Earn-Out Period" shall mean the Initial Earn-Out Period and the Secondary Earn-Out Period (as defined below), if any, for a total of up to sixteen (16) full calendar quarters.
(ii) "Earn-Out Amount" shall mean the amount to be paid to Seller following an Earn-Out Period or Additional Earn-Out Period, as the case may be, as calculated in accordance with Section 1.5(c).
(iii) "Initial Earn-Out Period" shall mean the period beginning with the calendar quarter ending December 31, 20___ continuing for a total of twelve (12) calendar quarters (each calendar quarter, an "Earn-Out Period").
(iv) "Net Revenue" shall mean the amount of revenue actually recorded by Buyer from customers of the _________ Business Unit (as defined below) for programs and services rendered by the _________ Business Unit net of such items as sales taxes, discounts, allowances, rebates, refunds and chargebacks, as determined in accordance with GAAP.
(v) "__________ Business Unit" shall mean the division of Buyer located in the _______________, _________ metropolitan area following the Closing (formerly the business operations of Seller located in __________, _________).
(vi) "Secondary Earn-Out Period" shall mean the period beginning on the first day of the first full calendar quarter following the Initial Earn-Out Period and continuing for the four (4) calendar quarters immediately following the Initial Earn-Out Period (each such calendar quarter, an "Additional Earn-Out Period").
End of Excerpt
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