Purchase Agreement For The Facilities:
If you are acquiring the building from the seller it is most likely that this would be handled like any other real estate transaction and be processed utilizing separate documentation utilizing the standard real-estate buy/sell forms.
Non-compete Agreement:
You will not want the seller to be able to start a duplicate business to the one that you have just acquired in your markets as soon as he sells you this business. Most non-compete agreements are for a minimum of five years and define a geographical area. The exact length of term of the non-compete clause and the geographical area that it covers differs greatly depending on the business. Most States have laws that define the maximum period of time that a non-compete clause can cover. Your lawyer will ensure that you do not use a time period that cannot be defended in the courts.
It is very common that the non-compete agreement is a separate agreement from the Purchase Agreement although there is no legal reason that the non-compete clauses cannot be contained within the master Purchase Agreement.
License Agreement:
If you are utilizing a professional license that the seller holds there will most likely be a separate agreement covering the terms and conditions under which you are allowed to utilizing it.If you are utilizing a professional license that the seller holds there will most likely be a separate agreement covering the terms and conditions under which you are allowed to utilizing it.
Agreement to Provide Insurance:
This usually goes hand in hand with an agreement to utilize a seller’s professional license and will be your commitment to provide the seller with adequate liability insurance naming the seller as a “name insured”. The commitment to supply insurance may be included within the license agreement rather than an independent document or agreement.
Warranty Liability Agreement:
The warranty liability agreement covers bill back rates and all the other terms and conditions that you have agreed with the seller pertaining to warranty claims. Some warranty liability agreements may have minimums on claims. As an example the buyer is responsible for all warranty claims where the total cost, which must be defined (is the labor rate with overhead burden or without) of each incident does not exceed $100.00. Or it could say that the buyer is responsible for the first $50.00 on all warranty claims. The agreement could also be time oriented whereby the buyer is responsible for past warranty claims to a maximum of $1,500.00. If warranty claims that are a result of sales made by the Seller exceed that amount then the Seller will reimburse the buyer (again there should be a detailed definition as to how costs are calculated and what costs the Seller will actually reimburse). Another item that should be covered is how the Seller actually reimburses the buyer. Does the buyer send an invoice to the Seller every month, every quarter or deduct it from loan payments or from the principal amount owed to the Seller.
Transfer of Patent Agreement:
If the seller has patents in his name you will require an agreement to utilize those patents.
Transfer of Domain Name Agreement:
If the company has a domain name and it is registered to the seller personally and not to the business, you would require an agreement transferring the ownership or the right to use it to you.
Note (Loan Agreement):
If you are borrowing money from the seller in order to acquire his business there may be a separate loan agreement detailing the terms and conditions of the loan.
Security Agreement:
The information contained within this agreement may be included in the note. The reason it may be written as a separate document is to allow it to be referenced to other agreements such as the license agreement.
This agreement defines the security that you, as the buyer are pledging as security for borrowing money from the seller. It may include some or all of the assets of the business as well as some personal assets. This agreement will usually specify what position the seller has with respect to his security interest. I always recommend that the seller’s security interest be defined as being in last place. This agreement should allow you to utilize the security for lines of credit or revolving bank loans.