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Liquidation Agreement

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Liquidation Agreement Powered By Docstoc
					Liquidation Agreement
This is an agreement between a liquidation consultant and a company that wants to
liquidate its existing assets. A company can choose to liquidate its assets to avoid
bankruptcy proceedings, to close the business, or when merging with another business.
Customize the types of assets that will be liquidated, the assets that will not be
liquidated, the liquidation procedure, the consultant’s fee and much more. This
agreement is ideal for small businesses that want to liquidate assets or for consultants
that want to offer clients a thorough and detailed service agreement.
                                   LIQUIDATION AGREEMENT

THIS LIQUIDATION AGREEMENT (hereinafter referred to as the “Agreement”) is hereby
made and entered as of ____________________ [Instructions: Insert the date of this
agreement] by and between ____________________ [Instructions: Insert the Company’s
name] (hereinafter referred to as the “Company”), with an address of
________________________________ [Instructions: Insert the Company’s address] and
____________________ [Instructions: Insert the Liquidation Consultant’s name]
(hereinafter referred to as the “Liquidation Consultant”), with an address of
________________________________. [Instructions: Insert the Liquidation Consultant’s
address]

                                                     RECITALS

The Company has engaged the services of Liquidation Consultant to coordinate, oversee, and
conduct the liquidation of the Company’s assets consisting of intellectual property, tools,
equipment and miscellaneous other personal property (collectively referred to as the “Assets”)
for the benefit of the Company. The Assets shall not include: (i) cash or cash equivalents, such
as letters of credit, certificates of deposit, or any form of security deposit; (ii) choses in action;
and (iii) assets specifically set forth in Schedule 1 annexed hereto (hereinafter referred to as the
“Excluded Assets”). The Company is in the process of discontinuing its business operations and
requires immediate, expert assistance in connection with the liquidation of the Assets.

NOW, THEREFORE, in consideration of the promises, terms and conditions set forth herein,
and other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and Liquidation Consultant (each, a “Party” and collectively, the
“Parties”) agree as follows:

1. PURPOSE OF AGREEMENT

The Company hereby hires Liquidation Consultant, for the purpose of liquidating the Assets, as
the Company’s exclusive agent to coordinate, oversee, and conduct the liquidation of the Assets,
upon the terms and conditions set forth herein.

2. MANNER OF SALE

The Company hereby authorizes Liquidation Consultant to sell the Assets at public auctions
and/or private sales. Liquidation Consultant shall have the authority to conduct the liquidation in
the manner, and utilizing the methods, that Liquidation Consultant deems, in its professional
judgment, to be appropriate. It is understood and agreed that Liquidation Consultant may, at its
discretion, engage auctioneers as subcontractors to conduct various auctions of the Assets or
portions of the Assets, as Liquidation Consultant may deem appropriate; provided that such
auctioneers shall not receive, other than Buyer’s Premiums set forth in Section 5 below, any fees
from the Company. The Company shall reimburse auctioneers for all actual, necessary and
reasonable out-of-pocket expenses. The term “auctioneers” also includes liquidators and other
entities in the business of disposing of assets for cash.


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3. LIQUIDATION CONSULTANT COMPENSATION

The Assets shall be sold by the piece and/or by the lot. The Company shall pay to Liquidation
Consultant a fee in the amount of ______ % [Instructions: Insert the percentage of the sale
proceeds the Liquidation Consultant will receive for its services] of the gross liquidation sale
proceeds (“Liquidation Consultant Compensation”). The Company shall pay Liquidation
Consultant Compensation to Liquidation Consultant no later than ____________________.
[Instructions: Insert the date when Liquidation Consultant will get paid]

4. EXPENSE REIMBURSEMENT

In addition to being paid the Liquidation Consultant Compensation as set forth above,
Liquidation Consultant shall receive from the Company on a periodic basis an advance against
actual out-of-pocket expenses (e.g., not to include payment of salary, wages, or commissions to
Liquidation Consultant employees or Liquidation Consultant overhead expenses) in the amounts
to be estimated by Liquidation Consultant and agreed to by the Company.                  On a
____________________ [Instructions: Insert the expense reimbursement frequency. e.g.,
weekly, biweekly, or monthly] basis, Liquidation Consultant shall provide the Company with a
written, itemized expense statement which shall be reconciled against advances received. To the
extent that advances received exceed actual expenses, the excess expense advance amount shall
be applied against the amounts due for future expense advances due from the Company to
Liquidation Consultant. Liquidation Consultant shall also be reimbursed by the Company for
legal fees reasonably incurred by Liquidation Consultant in connection with this engagement.

5. AUCTIONEER’S “BUYER’S PREMIUM” AND EXPENSES

In order to compensate auctioneer firms, if any, engaged by Liquidation Consultant, as
subcontractors, to assist with the liquidation of the Assets, such auctioneer firms may charge and
retain a “Buyer’s Premium” in connection with the liquidation not to exceed _________ %
[Instructions: Insert maximum percentage auctioneer will receive for cash transactions] (for
cash transactions) and _________ % [Instructions: Insert maximum percentage auctioneer
will receive for credit card transactions] (for credit card transactions) of the gross liquidation
sales proceeds (the Buyer’s Premium is paid by the purchaser and not by the Company).
Liquidation Consultant shall not itself be paid or retain any portion of the “Buyer’s Premium” or
otherwise receive compensation from auctioneer firms in connection with the liquidation
contemplated hereby. Actual out-of-pocket expenses incurred by auctioneers, if any, retained by
Liquidation Consultant in connection with liquidation of any of the Assets shall be reimbursed
by the Company directly to the auctioneer in the amount of actual expenses incurred by such
auctioneer. Liquidation Consultant will use its reasonable efforts to negotiate with the
auctioneers in order to limit such expense reimbursement to the extent possible.

6. COLLECTION AND DISBURSEMENT OF LIQUIDATION PROCEEDS

Liquidation Consultant shall collect all gross proceeds of the liquidation of the Assets not sold by
independent auctioneers and deposit them into a depository account maintained by Liquidation



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Consultant. From the depository account, the Company shall be issued a check for all the net
proceeds (defined as gross proceeds, less Liquidation Consultant’s Compensation, and any
unpaid expense reimbursement and/or any other expenses incurred in connection with the
liquidation process, including Liquidation Consultant’s reasonable attorneys fees), as soon as
practicable, but in no event longer than _________________ [Instructions: Insert the amount
of time after the Liquidation Consultant receives funds they will pay the Company. e.g., 10
business days, 2 weeks, 1 month, etc.] following receipt of funds into the depository account.

7. SELLER

For all purposes, it is understood and agreed that the Company is the seller of the Assets and that
Liquidation Consultant shall act, in accordance with this Agreement, as the Company’s agent.

8. SALES TAX

The Company shall be responsible for payment of all applicable sales tax and any other tax
obligations and for the filing of all sales tax and any other returns relating to the liquidation of
the Assets. Liquidation Consultant shall provide the Company with appropriate accounting
information necessary in order for the Company to pay such sales tax and file the returns.
Liquidation Consultant shall have no responsibility for payment of sales or any other taxes
relating to the liquidation of the Assets.

9. LOCATION OF ASSETS

The Assets are located at _______________________________________. [Instructions: Insert
the address where the assets are located] Said location is referred to herein as the “Premises”.

10. USE OF THE PREMISES

The Company:

    (a) authorizes Liquidation Consultant and its employees, agents, representatives, and
        subcontractors (the “Liquidation Consultant Entities”) to enter and use, rent and cost free,
        the Premises for the purposes of storing the Assets thereupon, preparing for and
        conducting liquidation sales thereupon, and otherwise exhibiting the Assets;

    (b) shall not charge Liquidation Consultant any fees or costs associated with the Liquidation
        Consultant Entities’ use of the Premises in accordance with the terms of this section; and
        shall provide adequate utilities to the Premises, at the Company’s sole expense, to allow
        the Liquidation Consultant Entities to demonstrate and exhibit the Assets to any
        prospective purchaser of the Assets, and to conduct the liquidation sales of the Assets.

11. TERM OF AGREEMENT

The rights and obligations of the Parties under this Agreement shall terminate upon the earlier to
occur of the completion of the liquidation of the Assets by Liquidation Consultant and the



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removal of the Assets following the liquidation sales, or such other earlier or later date as the
Parties may, in writing, mutually agree (the “Termination Date”). Notwithstanding the
foregoing, Liquidation Consultant will use its best faith efforts to vacate the Premises and
conclude the liquidation of the Assets by _________________. [Instructions: Insert the date
the liquidation will culminate]

12. CASUALTY INSURANCE

Until such time as title to and possession of the Assets is delivered to purchasers, the Company
shall obtain and thereafter maintain all appropriate insurance coverage, including without
limitation, a policy or policies of all-risk or fire and extended coverage casualty insurance, and
vandalism and malicious mischief, for the Assets in an amount not less than the full insurable
value of the Assets. In the event that prior to sale of all of the Assets, all or any portion of the
Assets shall be lost or damaged by fire or other casualty, or by theft or vandalism, Liquidation
Consultant shall have no responsibility whatsoever for any such loss.

13. SECURITY

The Company, at its sole expense, shall provide and maintain appropriate security at the
Premises pending completion of the liquidation of the Assets pursuant to this agreement. In the
event that prior to sale of all the Assets, all or any portion of the Assets are lost or damaged as a
result of theft or vandalism, Liquidation Consultant will have no responsibility for any such loss.

14. SELLER’S AUTHORIZATIONS REGARDING BILLS OF SALE

The Company hereby authorizes the Liquidation Consultant Entities to execute, on the
Company’s behalf, all bills of sale, receipts and other documents necessary to transfer title to the
Assets to purchasers upon payment.

15. SATISFACTION OF LIENS

Notwithstanding the Company’s representations that are more fully described below, in the event
that any claim is made by any alleged creditor, partner or any other party, for the payment of
sums due in connection with any security interests, liens or other charge or right associated with
any of the Assets (collectively, “Claim”), the Company shall: either, at the Company’s sole
discretion, (a) expeditiously pay the amount of the Claim so as to discharge all liens associated
with the Assets and to obtain a full and complete release thereof; or (b) prior to the sale or
auction, direct Liquidation Consultant to remove any such Asset from the sale or auction.

16. REPRESENTATIONS OF THE SELLER

The Company represents, warrants and covenants to Liquidation Consultant that: (a) in the event
of and upon the Company’s filing of a chapter 11 bankruptcy petition or the filing of an
involuntary bankruptcy petition against the Company, the Company shall immediately seek
approval of this Agreement by the United States Bankruptcy Court presiding over the
Company’s chapter 11 bankruptcy case; (b) in the event of and upon the Company’s filing of a



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chapter 11 bankruptcy petition or the filing or an involuntary bankruptcy petition against the
Company, the Company shall immediately seek from the United States Bankruptcy Court an
order that the Assets may be sold free and clear of all liens, encumbrances, security interests,
adverse claims, mortgages, pledges, liabilities, conditional sale agreements, restrictions, and
charges of any kind (collectively, “Liens”); (c) the Company has the authority and has performed
all acts necessary to sell, transfer and deliver good and merchantable title to the Assets to
purchasers, free and clear of all Liens, and agrees to defend purchasers’ title therein against each
and every person whomsoever may bring a Claim or otherwise seek to enforce and lien; (d)
except for Liquidation Consultant’s Compensation and the Buyer’s Premium set forth herein, no
brokerage fees are due and owing in connection with the sale of the Assets; (e) the person
executing this Agreement on behalf of the Company is duly authorized to do so; (f) the terms of
this Agreement are binding upon and enforceable against the Company; (g) to the best of the
Company’s knowledge, information or belief, the Assets have never been and are not being used
to make, store, handle, treat, dispose, generate, or transport Hazardous Substances (as that term is
defined below) in violation of any applicable laws; (h) Liquidation Consultant has no obligation
to remove any Hazardous Substances that may be located at the Premises or otherwise associated
with the Assets and (i) the Company shall make its employees and attorney’s available to
Liquidation Consultant in connection with identifying and locating the Assets, securing access to
the Assets, confirming title to the Assets and assuring that the Assets can be moved without
interference from creditors or landlords. The term “Hazardous Substances” means, collectively,
any chemical, solid, liquid, gas, or other substance having the characteristics identified in, listed
under, or designated pursuant to any law, statute, or regulation of a government or political
subdivision or agency thereof, as presenting an imminent and substantial danger to the public
health or welfare or to the environment, or as otherwise requiring special handling, collection,
storage, treatment, disposal, or transportation.

17. REPRESENTATIONS OF LIQUIDATION CONSULTANT

Liquidation Consultant represents and warrants to the Company that: (a) the person executing
this Agreement on behalf of Liquidation Consultant is duly authorized to do so; and (b) the terms
of this Agreement are binding upon and enforceable against Liquidation Consultant.

18. INDEMNIFICATION BY THE COMPANY

The Company hereby indemnifies, defends and agrees to hold harmless Liquidation Consultant
and Liquidation Consultant’s officers, agents, employees, representatives, and subcontractors
from and against any and all claims, demands, liabilities, judgments, damages, settlements, costs
and expenses (including but not limited to court costs and reasonable attorneys’ fees), except
those due to Liquidation Consultant’s willful misconduct, that may be sustained or incurred by
the Liquidation Consultant Entities arising from or connection or in connection with the
liquidation of the Assets or advertising of the same, including without limitation, the following:
(i) claims of creditors, partners, affiliates and insiders of the Company; (ii) sales tax and/or any
other tax claims; (iii) any acts or omissions of the Company that result in (a) personal or property
injury incurred at the Premises, (b) a violation of any governmental statute, ordinance or code
related to the Assets or the Premises, or (c) a violation of any security interest, license
agreement, patent or other encumbrance restricting the sale or the use of the Assets; (iv) any



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environmental action being brought – (a) because the Assets allegedly were involved in, or are
somehow related to, the storage, handling, treatment, disposition, generation, or transportation of
Hazardous Substances, or (b) against Liquidation Consultant in connection with any remedial
actions associated with the Assets or the premises; (v) any material misrepresentation of the
warranties set forth herein; or (vi) any product liability claim.

19. INDEMNIFICATION BY LIQUIDATION CONSULTANT

Liquidation Consultant agrees to defend, indemnify and hold harmless the Company and the
Company’s agents, officers and representatives from any and all losses, liabilities, claims, costs
and expenses, including but not limited to, reasonable attorneys’ fees resulting from
(i) Liquidation Consultant’s material breach of or failure to comply with the agreement,
covenants, representations or warranties of Liquidation Consultant contained herein, (ii) any
harassment or other unlawful tortuous or otherwise actionable treatment of any customers,
employees or agents of the Company by Liquidation Consultant or any of its representatives;
(iii) any claims made by a third party auctioneer engaged by Liquidation Consultant for
commissions allegedly due and owing in connection with the sale of the Assets; (iv) any claims
by any party engaged by Liquidation Consultant as an employee or independent contractor
arising out of such employment or engagement; and (v) the gross negligence or willful
misconduct of Liquidation Consultant or its agents or affiliates.

20. BINDING OBLIGATION; ASSIGNMENT

This Agreement shall be binding upon the Parties and their respective successors and assigns.
Neither Party may assign its interest in this Agreement without the prior written consent of the
other Party.

21. FINAL AGREEMENT

This Agreement – and any and all (i) exhibits that are attached hereto and made a part hereof,
and (ii) any side agreements, letter agreements, and amendments (if any) that are executed by the
Company and Liquidation Consultant in furtherance of this Agreement – contains the final and
entire agreement and understanding of the Parties, and any terms and conditions not set forth in
this Agreement (or in such exhibits, side letters, letter agreements, and amendments) are not a
part of this Agreement and the understanding of the Parties. This Agreement may be amended or
altered only in writing signed by the Party to be bound by the change or alteration.

22. MISCELLANEOUS PROVISIONS

Time is strictly of the essence of this Agreement. As used herein, the singular shall include the
plural and the plural may refer to only the singular. The use of any gender shall be applicable to
all genders. The captions contained herein are for purposes of convenience only and are not a
part of this Agreement. If any term, covenant or condition of this Agreement or its application to
any person or circumstances shall be invalid or unenforceable, the remainder of this Agreement,
or the application of such term or provision to persons or circumstances other than those to
which it is held invalid or unenforceable shall not be affected, and each term shall be valid and



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enforceable to the fullest extent permitted by law. If any action at law or in equity is brought to
enforce the terms of this agreement, the prevailing party will be entitled to reasonable attorney’s
fees and expenses, including fees and expenses upon appeal. This Agreement may be executed
in counterparts and may be delivered via facsimile transmission.

23. NOTICES

Any notice required or permitted by or in connection with this Agreement, without implying the
obligation to provide any such notice, shall be in writing and shall be made by facsimile
(confirmed on the date the facsimile is sent by one of the other methods of giving notice
provided for in this Section) or by hand delivery, by Federal Express, or other similar overnight
delivery service, or by certified mail, unrestricted delivery, return receipt requested, postage
prepaid, addressed to the respective Parties at the appropriate address set forth below or to such
other address as may be hereafter specified by written notice by the respective Parties. If notice
is tendered pursuant to the provisions of this Section and is refused by the intended recipient
thereof, the notice, nevertheless, shall be considered to have been given at the addresses
specified in the first paragraph of this Agreement.

IN WITNESS WHEREOF, the Company and Liquidation Consultant execute this Agreement
as of the date first above



COMPANY




____________________________
By: ____________________________
I have authority to bind the company.




LIQUIDATION CONSULTANT




____________________________
By: ____________________________
I have authority to bind the company.




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                                                   SCHEDULE 1

                                              EXCLUDED ASSETS


[Instructions: Insert a list of the Company’s assets that will be excluded from liquidation]




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DOCUMENT INFO
Description: This is an agreement between a liquidation consultant and a company that wants to liquidate its existing assets. A company can choose to liquidate its assets to avoid bankruptcy proceedings, to close the business, or when merging with another business. Customize the types of assets that will be liquidated, the assets that will not be liquidated, the liquidation procedure, the consultant’s fee and much more. This agreement is ideal for small businesses that want to liquidate assets or for consultants that want to offer clients a thorough and detailed service agreement.