An asset sale of all or substantially all corporate assets is one that typically has the
effect of rendering the corporation unable to accomplish its corporate purpose. Such a
sale is distinguishable from other asset sales that occur in the normal course of
business and state law regarding the sale of all or substantially all of the corporate
assets must be complied with. This document includes common requirements for a sale
of all or substantially all corporate assets, including calculation of consideration and
various warranties regarding action by the board of directors and shareholder approval.
However, state laws differ and you should consult a legal professional to assure that
your state law is complied with. The terms of the sales Agreement can be modified to fit
the needs and legal requirements of the drafting parties.
Asset Purchase Agreement
Asset Purchase Agreement made this the (date), between XYZ, Inc., a
corporation organized and existing under the laws of (name of state), with its principal
office located at (street address, city, state, zip code), hereinafter called the Seller, and
ABC, Inc., a corporation organized and existing under the laws of (name of state), with
its principal office located at (street address, city, state, zip code), hereinafter called the
Subject to approval by Seller's stockholders of the terms and conditions of this
Agreement and the nature and amount of the consideration to be received by Seller
under this Agreement, the parties agree as follows:
I. Promise to Buy and Sell
Seller agrees to sell and Buyer agrees to purchase all the assets and property of
Seller, including its good will in the items, listed in Exhibit A, attached to and made a
part of this Agreement, for the consideration, under the terms and conditions, and
subject to the warranties and representations set forth in this Agreement.
II. Closing; Documents Deliverable
The closing of the sale shall take place on (date), at (time of day) at (street address,
city, state, zip code). At the closing, Seller shall deliver to Buyer such deeds, bills of
sale, assignments, and other instruments of transfer as may be necessary to vest in
Buyer good and marketable title to the property and assets sold under this Agreement.
At closing, Buyer shall pay Seller all of the purchase price as specified in this
Agreement. All documents and papers to which the parties are entitled under this
Agreement, unless otherwise specified in this Agreement, shall also be delivered at the
closing. The transaction contemplated by this Agreement shall be closed without the
necessity of compliance with any possible applicable bulk sales or bulk transfer laws. If
any claims are asserted by the creditors of the Seller by reason of any possible
applicable bulk sales or bulk transfer laws, these claims shall be the responsibility of the
Buyer in the case of claims constituting liabilities assumed by the Buyer under this
Agreement and the responsibility of the Seller as to any claims representing
undisclosed liabilities of the seller or liabilities which the Buyer has not assumed under
the terms of this Agreement.
III. Consideration and Allocation
The purchase price shall be $______________. The parties intend that the
purchase price shall be allocated as follows, and each party agrees that each will report
the allocation in this manner for all tax purposes:
A. Good will: $____________.
B. Equipment listed in Exhibit B attached hereto: $___________.
C. Inventory listed in Exhibit C attached hereto: $___________.
D. Restrictive covenant: $_____________.
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E. Real Property described in Exhibit D attached hereto: $_____________.
F. Accounts and Notes Receivable described in Exhibit E attached hereto:
IV. Warranties and Covenants of Seller
Seller agrees, represents, and warrants as follows:
A. Seller is duly incorporated and authorized to do business under the laws
of (name of state).
B. The execution of this Agreement has been duly authorized by Seller's
Board of Directors.
C. Seller shall use its best efforts to obtain, on or before (date), the approval
of its shareholders of the terms and conditions of this Agreement and of
the nature and amount of the consideration to be received by Seller under
D. The balance sheets and profit and loss statements of Seller, attached to
this Agreement as Exhibit F and made part of this Agreement, fully and
correctly reflect the financial condition, assets and liabilities, and operation
of Seller as of the dates stated in such documents.
E. The list of accounts and notes receivable, attached as Exhibit E and
made a part of this Agreement, is complete as of the date of this
Agreement. If any accounts or notes receivable so listed or acquired by
Seller before the closing date are not fully paid when due, Seller agrees to
pay them in full on written notice by Buyer of any default, provided that
Seller's liability shall be limited to the amount exceeding the reserve for
bad debts shown in Seller's balance sheet.
F. Seller has good and marketable title to all assets and property sold under
this Agreement, except as otherwise stated in the exhibits attached to this
Agreement and except for property disposed of or encumbered in the
ordinary course of business. All tangible property sold under this
Agreement is in good condition and repair and conforms to all applicable
zoning, building, safety, and other regulations.
G. Attached as Exhibit G, and made a part of this Agreement, is a list of
insurance policies in effect with respect to Seller's property and business
as of the date of this Agreement. Seller agrees to continue this insurance,
or insurance with similar coverage, until the closing date.
H. Seller agrees to use its best efforts to obtain the necessary consents for
the assignment or transfer of any contract, lease, license, or permit to be
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assigned or transferred under this Agreement and to perform its duties
under such contracts, leases, licenses, and permits without default until
the closing date.
I. Seller agrees to obtain a clearance certificate from (indicate appropriate
governmental agency) for all unemployment insurance contributions and
to obtain clearances with respect to any other taxes and liens affecting the
assets or properties sold under this Agreement.
J. Seller agrees to disclose to Buyer not later than (number) days after the
closing date, all trade secrets, customer lists, and technical information
held or controlled by Seller and relating to the business sold under this
Agreement. Buyer shall have the right to use the name of Seller, and
Seller agrees not to use, or authorize others to use, its name or a similar
K. Until the closing date of this Agreement, Seller shall not, without the
written consent of Buyer, dispose of or encumber any of the assets or
property to be sold under this Agreement, with the exception of any
transactions occurring in the ordinary course of Seller's business. Seller
shall use its best efforts to preserve its business and good will. Seller
further agrees to permit Buyer and its representatives full access to its
property and records any time prior to the closing date during normal
business hours and to supply all information concerning its property and
affairs as Buyer may reasonably demand.
V. Mandatory Arbitration. Notwithstanding the foregoing, and anything herein to
the contrary, any dispute under this Agreement shall be required to be resolved by
binding arbitration of the parties hereto. If the parties cannot agree on an arbitrator,
each party shall select one arbitrator and both arbitrators shall then select a third. The
third arbitrator so selected shall arbitrate said dispute. The arbitration shall be governed
by the rules of the American Arbitration Association then in force and effect.
VI. Indemnification. Except as otherwise expressly provided in this Agreement,
Seller shall indemnify Buyer against any liability connected with the assets or business
sold under this Agreement accruing as a result of acts or omissions occurring before the
closing date, and Buyer shall indemnify Seller against any such liability accruing as a
result of acts or omissions occurring after the closing date. Each party to this Agreement
shall cooperate with the other party in defending claims for which the other party is or
may be liable under this provision by giving notice to the other party of the assertion or
existence of any such claim and by furnishing such documents and information as may
be useful in defense of such claims.
VII. Transfer of Title; Risk of Loss
Title to the assets and property sold under this Agreement shall pass to Buyer on
the closing date on delivery to it of the proper instruments of transfer. If at any time any
of the tangible property sold under this Agreement shall have been lost or damaged,
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except for damage or loss through use and wear in the ordinary course of business, by
any cause or event beyond the reasonable power and control of Seller, Buyer shall be
entitled to collect all insurance proceeds collectible by reason of such loss or damage
or, if the amount of the loss or damage exceeds ______% of the value of that property,
Buyer shall have the right to elect to complete the sale and collect all insurance
proceeds or to terminate this Agreement in lieu of any other right or remedy. If Buyer
becomes entitled to collect insurance under this provision, the purchase price of lost or
damaged assets covered by insurance shall not be reduced.
VII. Impossibility of Performance
If, except as otherwise provided in this Agreement, either party shall be
prevented from completing the sale for any cause beyond its reasonable power and
control, the other party may elect to accept partial performance or, in lieu of any other
remedy, elect to terminate this Agreement.
VIII. Sales and Use Taxes
Any sales or use tax payable by reason of the sale of any of the assets under this
Agreement shall be paid by Buyer, and such payment shall not be construed as part of
the purchase price. Seller agrees to furnish to Buyer resale certificates for any items
sold to Buyer for resale. Seller shall also obtain and deliver to Buyer a clearance receipt
of the (specify appropriate governmental agency) for sales and use taxes due from
IX. Inventory of Goods to be Sold
An inventory of all stock in trade, supplies, fixtures, furnishings, and equipment
shall be taken by Buyer on (date). The inventory of Seller's stock in trade shall set forth
the aggregate value for which the items are to be sold under this Agreement based on
Seller's actual cost for each item.
X. Disposition of Documents and Records
Seller shall retain title to all its documents and records, except those agreed to
be transferred under this Agreement. Any such documents or records that Buyer may
reasonably require after the closing date for use in connection with the assets or
business sold under this Agreement shall be delivered or made available to Buyer. Each
party shall forward to the other party all correspondence, documents, or payments
relating to the assets or business sold under this Agreement to which the other party is
entitled under the terms of this Agreement. Before destroying any records or papers
connected with the assets or business sold under this Agreement, each party shall first
offer them to the other party.
Buyer shall bear the cost of title insurance premiums and record costs. All other
costs incidental to the sale under this Agreement shall be borne by the parties in
accordance with prevailing custom.
XII. Interpretation of Agreement
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A. There are no Agreements, warranties, or representations, express or
implied, except those expressly set forth in this Agreement. All Agreements,
representations, and warranties contained in this Agreement shall apply as of the
closing date and shall survive the closing of this Agreement.
B. This Agreement shall not be assignable by Buyer without the written
consent of Seller. Subject to this provision, this Agreement shall be binding on
and benefit the successors and assigns of the parties.
C. This Agreement is to be governed by and construed under the laws of
(name of state).
XYZ, Inc. ABC, Inc.
(Signature of Officer) (Signature of Officer)
(Printed Name & Office in Corporation) (Printed Name & Office in Corporation)
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