MEMORANDUM OF AGREEMENT
Made and entered into by and between: SELLER INSERT NAME AND DETAILS (Hereinafter referred to as the Seller) AND PURCHASER INSERT NAME AND DETAILS (Hereinafter referred to as the Purchaser) 1. DEFINITIONS
In this agreement the following words shall have the meanings assigned to them hereunder: a. "The business" means (STATE REGISTERED NAME AND TRADE NAME, DETAILS AND ADDRESSES) And includes the following assets of "the business" on the sale date: The trade name thereof; The goodwill attached thereto; The trade licence/s under which it is presently run; The lease of the premises; The fixed and moveable assets used in "the business" as set out in the schedule annexed hereto marked "A"; Stock-in-trade and work in progress ascertained by joint stocktaking on the effective date; Annexure "B"; Any brand name or patents; b. “The sale date" means the last date of signature hereof. c. "The effective date"(date of possession) shall be d. "The premises" means e. Other leases/H.P's if any are those described under "Additional Clauses". f. "The agent" means g. Headings of clauses shall be deemed to have been included for purpose of convenience only and shall not affect the interpretation of the agreement. h. Unless inconsistent with the context, words relating to any gender shall include any other gender, the singular shall include the plural, words relating to natural persons shall include persons having corporate status by statute or common law, and vice versa. i. In the event of the Seller or the Purchaser being more than one person, the obligations of such persons under this agreement shall be joint and several. The sale of the business and the sale of the stock shall constitute one indivisible sale by the Seller and one indivisible purchase by the
Purchaser. 2. SALE OF BUSINESS AS A GOING CONCERN
With effect from the effective date the Seller sells to the Purchaser, who purchases "the business" as a going concern, which is intended to be an income earning activity on the effective date. (STATE IF TAX/ES ARE PAYABLE IN ADDITION TO PURCHASE PRICE BY VIRTUE OF GOING CONCERN TRANSACTION AND TAX LAWS OF COUNTRY) 3. PURCHASE PRICE
The purchase price for "the business" excluding stock is: AMOUNT payable free of exchange in PLACE as follows: a. X deposit payable WHEN. b. AMOUNT OF BALANCE being the balance of the purchase price of "the business" into the agent's/broker's/attorney's trust account on or before the effective date to be held by the agent on behalf of the purchaser until the registration of transfer of ownership; on which date the seller will become entitled to the balance of the purchase price. c. AMOUNT being the estimated cost value of the stock, which will be adjusted in an Adjustment Account after physical stocktaking in terms of clause 4, shall be paid in cash to the Seller on the effective date. AMOUNT = TOTAL PURCHASE PRICE OF "THE BUSINESS" AND STOCK
d.
e. All monies shall be held in an interest bearing trust account and such interest prior to the effective date shall accrue to the Purchaser. Any interest earned after the effective date shall accrue to the Seller. 4. STOCK-IN-TRADE
a. The Seller warrants that the estimated cost value of stock on hand as at the sale date is AMOUNT and will on the effective date be as near as possible in accordance with this amount. This value will be the normal stock value that the Seller deems necessary to run the business as if he had no intention of selling. b. For the purpose of determining the value of the stock-in-trade, a physical stock-taking shall be carried out on the effective date by the Seller and the Purchaser. c. On completion of the stock taking the purchase price shall be adjusted by: Adding thereto the cost value of additional stock on hand over and above the estimated cost value; OR Deducting the shortfall from the estimated cost value. d. The stocktaking shall be conducted in accordance with sound and accepted business and accounting principles and each page of the stock sheets shall be signed by the parties on completion.
e. The stock shall be taken and valued at cost or net realisable value. f. No stock previously written down or written off shall be revalued or written up. g. In the event of any dispute arising between the parties as to the value of the stock, the value shall be determined by a chartered accountant appointed for the purpose by the (INSERT COUNTRY'S/STATE'S/PROVINCE'S/REGION'S CONTROLLING BODY FOR ACCOUNTANTS.) 5. SECURITY
Notwithstanding any of the terms and conditions of this agreement the parties agree that the assets referred to and the stock shall remain the absolute property of the Seller until such time as the full purchase price in terms of this agreement has been paid. 6. DELIVERY OF "THE BUSINESS"
Possession of "the business" shall be given to the Purchaser on the effective date when the risk and benefits of "the business" shall pass to the Purchaser. 7. LEASE OF PREMISES
The Purchaser and Seller undertake to co-operate with each other in the highest degree upon final signature of this agreement to obtain landlords consent, prior to the effective date, in order to procure: a. The Purchaser obtaining a new lease for a period of 3 years with an option for a further 3 years on terms and conditions no more onerous than the Seller's present lease. 8. TRADE LICENCES
The Purchaser shall apply to the relevant authorities, without delay, for the issue of licences, permits or authorities necessary to conduct the business to the same extent as the Seller presently conducts it. 9. INSOLVENCY /BANKRUPTCY/LIQUIDATION LEGISLATIVE REQUIREMENTS
(ADAPT FOR COUNTRY'S LAWS) In South Africa the following provision will apply: Notwithstanding anything to the contrary herein contained, the Purchaser, shall be entitled, but not obliged, to advertise this sale in terms of Section 34 of the Insolvency Act No. 24 of 1936 (as amended) and in such case the date of sale shall be 30 (thirty) days after the date of the last such advertisement. 10. COSTS
a. The costs of arranging and preparing a new lease or sub-lease or cession of lease on the premises together with any legal guarantees and taxes shall be paid by the Purchaser. b. The costs (if any) of applying for the necessary trade licences etc. shall be paid by the Purchaser.
c. The cost of advertising in terms of applicable legislation shall be paid by the Purchaser. 11. LIABILITY AND INDEMNITY
a. It is recorded that the liabilities of "the business" up to the effective date shall remain the obligation of the Seller who hereby indemnifies the Purchaser and "the business" in full and holds them harmless against any and all claims arising out of such liabilities. b. The Seller warrants and undertakes in favour of the Purchaser that any claims arising out of the liabilities of "the business" prior to the effective date will be discharged by him promptly and by not later than 7 (seven) days after the date of release of the purchase price or portion thereof to the Seller. 12. SELLER'S OBLIGATIONS
Until the effective date the Seller shall conduct "the business" in a businesslike manner and continue to keep "the business" adequately stocked and staffed in order to preserve its contracts, goodwill, name and assets. 13. SELLER'S WARRANTIES
a. "The business": the Seller has not and will not at the effective date, have granted any option or pre-emptive right to any other party for the sale of "the business". b. Litigation: "the business" is not and will not as at the effective date be a party to any arbitration or litigation proceedings either as plaintiff or defendant and the Seller is not aware of any law suits pending or threatened or any fact which may give rise thereto. c. Assets: that all the assets of "the business" are the unencumbered property of the Seller and are not subject to any cession, lien, lease or H.P. agreements excepting those specifically recorded herein under "Special Conditions". Further that the assets listed in annexure “A” are and will be in good condition and in proper working order. d. Insurance: that the assets of "the business" are fully insured against loss or damage by fire and theft and adequately insured against public liability. No insurance will be cancelled prior to the effective date without the written consent of the Purchaser. e. Trade licences: on the effective date, the Sellers necessary licences will be of full force and effect and no grounds will exist for the cancellation of the licences. f. On the effective date "the business" will have met all its obligations to its employees in respect of leave pay, sick pay, salaries and bonuses. g. General disclosure: the Seller has to the best of his knowledge and belief, made full disclosure to the Purchaser of all information relating to "the business" which is reasonably likely to be material to the Purchaser and he is not aware of any facts or circumstances which might prevent "the business" from carrying on as hitherto. The Seller hereby indemnifies the Purchaser and "the business" against any loss or damage which it may sustain from a breach of any of the warranties herein contained. Warranties, indemnities and undertakings shall be and are construed to be continuing warranties and undertakings and shall survive the delivery of "the business".
14.
PURCHASER'S OBLIGATIONS
The Purchaser: a. Acknowledges that he has acquainted himself with "the business" and assets hereby sold. He accepts them as to quantity and conditions as they now stand. b. Shall, until such time as the purchase price and all interest has been paid in full or secured to the satisfaction of the Seller, keep "the business" adequately stocked and staffed and maintain "the business" in good order and condition and shall not allow the same to deteriorate from neglect or other avoidable cause, nor shall the Purchaser cease to trade. c. Shall not sell "the business" nor remove, pledge or part with possession of any of the assets, except stock-in-trade in the ordinary course of business, until the full purchase price has been paid or the Sellers consent in writing has been first obtained, which consent shall not be unreasonably withheld. d. Shall at all times properly fulfil all the conditions of the lease and licences. e. Shall be obliged, from the effective date and until all obligations to the Seller have been discharged, to insure all the assets of "the business" adequately and against such contingencies as may be reasonably required by the Seller and to furnish proof when called upon by the Seller that all obligations in terms of this clause have been complied with. f. Already is registered or shall register with the COUNTRY'S Revenue Service as a taxpayer and shall on or before the effective date furnish a copy of his/her/its certificate or receipt of application to the tax authority to the Seller. In the event that taxes in addition to the purchase price is payable to the tax authority by reason of the Purchaser's failure to comply with this clause, then the Purchaser shall immediately on demand make payment of the said amount to the Seller. 15. PURCHASER'S WARRANTIES
The Purchaser warrants that he has disclosed all personal information regarding himself, which is reasonably likely to be material to the purchase of "the business". In the event of the sale being cancelled by reason of such non-disclosure or default on the part of the Purchaser in not performing or carrying out any of the requirements necessary to give effect to this agreement, then the Purchaser shall be liable to the Seller, in addition to any claims for damages which might arise, for all amounts which the Seller has paid or is obliged to pay in respect of the sale. 16. BREACH
In the event of either party committing any breach of the terms and conditions of this agreement and failing to remedy such breach within 7 (seven) days of receipt of written notice calling upon it to do so, then the party giving notice shall be entitled; a. If it is the Purchaser either to cancel this agreement and claim full restitution or to claim specific performance without prejudice to a right to claim damages; b. If it is the Seller to cancel the agreement retake possession of "the business" and retain all payments made as pre-estimated and liquidated damages alternatively to claim immediate
payment of the full balance owing at the time of such default together with all interest in terms of this agreement. 17. COLLECTION OF TRADE DEBTS
The Purchaser undertakes to accept collection of the trade debts owing to the Seller prior to the effective date, at the place of business and to pay over all sums collected to the Seller as and when received. 18. GENERAL UNDERTAKINGS
The parties jointly undertake to do all such things, perform all such acts, take all such steps and procure the doings of all such things, as may be necessary to give effect to the terms and conditions of this agreement. 19. AGENTS COMMISSION
The parties acknowledge by their signature to this agreement that: a. NAME acting as agents for the Seller have carried out their mandate and are the effective cause of this sale; and the Seller shall pay the agent's commission being AMOUNT excluding/including additional tax of AMOUNT which commission shall be deemed to have been earned upon the signature of both parties to this agreement subject to clause 24 and shall be payable on the effective date or at such earlier time as may be agreed to in writing by the Purchaser and the Seller; the agents are hereby entitled and authorised by both the Purchaser and the Seller to deduct and /or claim payment of the commission from any deposits or payments made by the Purchaser in terms of Clause 3. b. The obligations of the said agents have been fully discharged and they are not responsible in any way for the due carrying out of the terms of this agreement by either party. c. In conveying information regarding the business the agents do so in their capacity as agents of the Seller and are not responsible in any way for any inaccuracies, errors or defects originating from the Seller. 20. ONLY AGREEMENT
This agreement shall be the whole and only agreement between the Purchaser and the Seller and cancels any prior or verbal agreements. Any representations made by either party, shall not affect it unless recorded in writing herein. 21. NOTICES AND DOMICILIA
All notices by one party to the other shall be given in writing by prepaid registered post, telegram, fax or delivered by hand to: The Seller at: The Purchaser at: Which addresses the parties choose as their 'domicilia citandi et executandi' for all purposes. The parties shall be entitled to change the address aforesaid, provided that he shall give the other party 14 (fourteen) days notice in writing of his intention and that any such new address shall be situated
within the NAME OF COUNTRY/STATE. 23. RESTRAINT
The Seller shall not, for a period of X years/months from the effective date be interested or engaged, whether as a proprietor, partner, director, shareholder, employee, member of a syndicate or otherwise howsoever in any business which carries on in competition to "the business" hereby sold within a NUMBER Kilometres/Miles Radius. 24. INSPECTION OF RECORDS ETC.
While any monies are owing by the Purchaser to the Seller, the Seller shall at all reasonable times be entitled to inspect, either personally or through his representative, any books of account and records of "the business" and shall be entitled to consult with the auditors in regard to the financial position of "the business". 25. SPECIAL CONDITIONS
(ADD SUCH CONDITIONS THAT SUITS YOUR PARTICULAR TRANSACTION. RETAIN, DELETE OR VARY CLAUSES BELOW AS YOU WISH) Notwithstanding anything herein contained this offer is subject to the following: • acceptance by the purchaser until DATE; • the purchaser taking over existing staff members; • the seller training the purchaser in all aspects of the business for a continuous period of X days/ months after the effective date at no remuneration/ fee of AMOUNT per day/month; • the purchaser acquiring the lease for the business as set out in clause 7 above; • the assets listed in annexure “A” are in good condition and in proper working order; • completion of registration of transfer of ownership in the business into the name of the purchaser.
SIGNED BY THE PURCHASER AT ________________ this _____ day of _______________ in the presence of the undersigned witnesses. AS WITNESSES 1. _____________________ _______________________ PURCHASER _ 2. _____________________ _______________________ PURCHASER'S SPOUSE (if necessary by country's laws)
SIGNED BY THE SELLER AT __________________ this ____________ day of _____________________ in the presence of the undersigned witnesses. AS WITNESSES 1. _____________________ 2. _____________________ _______________________ SELLER Capacity:
The benefits accruing to the agents in terms of this agreement are hereby accepted. SIGNED: _________________________________