AGREEMENT FOR PURCHASE AND SALE
All Assets (Includes Trade Name Transfer)
This form involves a straightforward sale of all assets of a smaller incorporated agency with a single stockholder. Sale is to a larger incorporated agency with several offices; Buyer will consolidate the office of the acquired agency into that of the Buyer.
A creative security arrangement is included, involving a security-escrowed broker-of-record letter as set forth in Exhibit "G."
AGREEMENT FOR PURCHASE AND SALE
OF ABLE INSURANCE AGENCY
Table of Contents
2.1 Status of Seller
2.2 Status of Buyer
2.3 Status of Able
2.4 Status of Dalton
Purchase and Sale
3.1 Insurance Accounts
3.1.2 Risk of Loss
3.2 All Goodwill of the Seller
3.4 Personal Property
3.5 Commissions Receivable
3.5.1 Schools Exception
3.6 Contingency Commissions
3.7 Assumption of Liabilities
4.1 Purchase Price
4.4 Security -- Assets
4.5 Assignment, Replacement Property
4.7 Security-Escrowed Letter
5.1 Place and Time
5.2 Delivery of Documents and Consideration
6.1 Representations and Warranties
6.2.1 No Interruption in Business
6.2.3 Delivery of Receipts
6.2.5 Ownership Indemnity
6.2.6 E&O Coverage and Indemnification
7.1 Status of Buyer
7.2.2 E & O Coverage
9.1 Representations, Warranties and Covenants True
10.1 All Disputes
10.1.2 Equitable Relief
10.2 Notice of Arbitration
11.2 Waivers and Extension
11.5 Entire Agreement
11.6 Applicable Law/Venue
11.9 Successors, Assigns, and Subsidiaries
11.10 Duration of Warranties
11.11 Necessary Documents
11.13 Separate Counsel
11.14 Attorney Fees
INDEX OF EXHIBITS
Exhibit
Description
Paragraph
Schedule of Accounts
Schedule of Personal Property
Schedule of Liabilities Assumed
Promissory Note
Financing Statement
Security Agreement
Security Escrowed Letter
Bill of Sale for Equipment
Bill of Sale for Accounts
Able's Non-Compete
1.1 This AGREEMENT FOR PURCHASE AND SALE (the "Agreement") is executed as of the date set forth on the signature page hereto, by and between:
ABLE INSURANCE AGENCY, INC. ("Seller");
DALTON AGENCIES, INC. ("Buyer");
ALAN ABLE ("Able"); and
DON DALTON ("Dalton").
2.1 Status of Seller. Seller is a Washington corporation engaged in the insurance local agency business (such business shall be referred to herein as the "Agency"), with its principal place of business at 810 S. Grand Way N.E., Suite 1000, Podunk, Washington.
2.2 Status of Buyer. Buyer is a Washington corporation engaged in the insurance local agency business , with its principal place of business at 4321 Commercial Avenue, Suite 320, Any City, Washington, and a branch office located at 2222 Ocean Blvd., Walla Walla, Washington.
2.3 Status of Able. Able is the sole shareholder of Seller.
2.4 Status of Dalton. Dalton is the majority shareholder of Buyer.
2.5 Purpose. By this Agreement the parties desire to provide for the purchase and sale of assets of Seller in the manner described herein, and for Dalton personally to remain obligated to Seller and Able as specified herein.
2.6 Move. As of Closing, all of the assets acquired shall be relocated to Buyer's office at the Any City address set forth above.
NOW, THEREFORE, the parties agree as follows:
3. Purchase and Sale
Seller shall sell and transfer to Buyer at Closing as further described herein, all right, title and interest in and to the following assets ofSeller (collectively, the "Assets"):
3.1 Insurance Accounts. All insurance records and accounts (other than accounting records), expirations and expiration data, daily reports of Seller, renewals of the business and policies in force and all supporting documents, papers, and files relating to all accounts of Seller now or hereafter carried upon the income and expense statement of Seller, specifically including without limitation those accounts set forth on Exhibit "A" attached hereto. All Assets referred to in this paragraph 3.1 are collectively referred to herein as the "Accounts."
3.1.1 Valuation. The values ascribed by the parties to each individual Account on Exhibit "A" have been negotiated and bargained for in good faith, and shall be binding upon them for all purposes.
3.1.2 Risk of Loss. Except as expressly provided to the contrary herein, Buyer assumes all hazards due to the Agency business operation, and agrees that no failure of consideration or charge-back attributable to cancellation shall occur due to Buyer's failure to retain an Account for any reason.
3.2 All Goodwill of the Seller. All goodwill of the Agency including the exclusive right to use the trade name "ABLE INSURANCE" or any derivation thereof (to the fullest extent owned by Seller), the rights to Seller's Agency telephone numbers including FAX, and all rights relating to the marketing, underwriting, and adjusting of all insurance business transferred herewith.
3.3 Name Change. Following Closing, Seller shall promptly dissolve or change its corporate name, and execute a consent and/or other necessary documentation transferring the exclusive rights to the trade name "ABLE INSURANCE" to Buyer.
3.4 Personal Property. All tangible personal property of the Seller, including without limitation all furniture and equipment set forth on Exhibit "B" attached, located at Seller's office as of September 1, 19__, and used in its insurance local Agency business.
3.5 Commissions Receivable. The parties agree that this sale shall not include any commissions earned by Seller for sales of new policies or renewals completed prior to close of business on August 31, 19__, which commissions may not be received until after August 31, 19__. In the event Seller receives commissions or bonuses after August 31, 19__ for sales or renewals completed by Seller on or before that date, direct bill or otherwise, Seller shall be entitled to retain said commissions. Commissions for sales of new policies or renewals made after August 31, 19__, shall belong exclusively to Buyer.
3.5.1 Schools Exception. The only exception to this transfer of commissions shall be the commissions paid on both the Podunk and Any City School District business renewed during September 19__. These prepaid one-time school renewal commissions for the period September 1, 19__ through August 31, 1996 shall remain the property of Seller.
3.5.2 Repayment. Notwithstanding the above, in the event that as a result of a return, credit, cancellation, or any form of audit, an insurance carrier requests from Seller (or from Buyer as Seller's successor in interest) a refund for commissions paid prior to August 31, 19__, then Seller shall immediately pay said sum to that carrier, or to Buyer if said request is made to Buyer. If said request is made to Buyer and repayment thereof is not forthcoming from Seller, then Buyer would further be entitled to offset that sum against any payments next due to Seller hereunder.
3.6 Contingency Commissions. Any contingency or bonus commission earned by Seller attributable to sales completed on or before August 31, 19__ on the Accounts shall also belong to Buyer.
3.6.1 The only exception shall be the multi-peril contingency bonus from American International Insurance, which shall remain the property of and be paid to Seller.
3.7 Assumption of Liabilities. As part of the purchase of assets hereunder, Buyer shall assume and agree to pay according to their respective terms the outstanding obligations of Seller, including interest thereon, set forth on Exhibit "C" attached hereto, not to exceed the amounts shown there; payments thereon shall be prorated for the month as of Closing.
4.1 Purchase Price. The purchase price for all of the Assets conveyed shall be One Hundred Thousand Dollars ($100,000) (the "Purchase Price").
4.2 Allocation. The Purchase Price shall be allocated as follows:
Furniture and Equipment
$8,636
Accounts
$80,364
Goodwill
$11,000
TOTAL:
$100,000
4.2.1 Buyer and Seller both agree to report to the Internal Revenue Service the allocation as set forth above.
4.2.2 All sales and use tax due as a result of this transaction shall be promptly paid by Buyer at its expense.
4.3 Terms. The Purchase Price shall be paid as follows:
4.3.1 A down payment of $17,000.00 to Seller at Closing, comprised of $5,000.00 cash plus a credit in the amount of $12,000.00 as the agreed-upon value of the school commissions left with Seller pursuant to paragraph 3.4.1 above; and
4.3.2 A Promissory Note (the "Note") to Seller in the form attached hereto as Exhibit "D"; Buyer shall have the right of offset against the Note for default on any obligations of Seller or Able hereunder.
4.3.3 The Note shall be unconditionally personally guaranteed by Dalton (and his spouse) as majority shareholder of Buyer.
4.4 Security - Assets. As security for payment of the Note and other obligations of Buyer hereunder, Buyer does hereby grant to Seller and Able a first lien security interest in all of Buyer's assets as follows, herein called "collateral":
All assets of the insurance local agency business owned by Debtor, including without limitation its insurance accounts, policies in force, expirations, daily reports, renewals, all computer data attributable to those accounts, prospect lists, accounts receivable, goodwill, furniture, telephone numbers, fixtures, equipment, corporate and trade names including the corporate and trade names "ABLE INSURANCE AGENCY" and "DALTON AGENCIES", belonging to Buyer, now owned or hereafter acquired, and the proceeds thereof. This security interest is given to secure payment of all obligations of Buyer hereunder to both Seller and Able, presently existing and hereafter arising, and all expenses including reasonable attorney's fees incurred by Seller or Able as prevailing party in an arbitration or legal action with respect to this Agreement and/or the executed originals of all Exhibits thereto. At closing, Buyer shall execute an appropriate standard UCC-1 Financing Statement and Security Agreement in the form attached hereto as Exhibit "E" and Exhibit "F" to perfect Seller's security interest.
4.5 Assignment, Replacement Property. Buyer shall not assign, mortgage, pledge or otherwise encumber the collateral which is the subject matter of this Agreement, nor this Agreement nor any interest herein, without the prior written approval of the Seller, which Seller shall not unreasonably withhold provided such action by Buyer will not, in the opinion of Seller's counsel, materially jeopardize Seller's security. This paragraph is not, however, intended to preclude Buyer from conducting its business in the ordinary course, nor is it intended to preclude Buyer from selling and replacing equipment needed and used in the Agency during the period of this Agreement.
4.6 Default. Default and remedies shall be as set forth in the Note and Security Agreement attached hereto.
4.7 Security-Escrowed Letter. Buyer shall execute at Closing a set of undated Broker-of-Record Letters ("Letters") pursuant to Exhibit "G" attached hereto, for each insurance carrier handling the Accounts at time of Closing. Upon default by Buyer, Seller may proceed in accordance with the provisions set forth in Exhibit "G ."
4.8 Cross-Default. Since the obligations of Buyer to Seller and Able are all interdependent, the parties intend for them all to be cross-secured. Therefore, a default by Buyer under this Agreement or the executed original of any Exhibit hereto shall also, at Seller and Able's option, be deemed a default by Buyer under the others as well.
5.1 Place and Time. Regardless of the date upon which the various Exhibits are executed and consideration exchanged in accordance herewith (the "Closing"), the agreed date of closing hereof for prorations and all other purposes (the "Date of Closing") shall be deemed to be September 1, 19__.
5.2 Delivery of Documents and Consideration. At Closing, the parties shall deliver to one another all documentation and consideration specified herein, including without limitation the executed original Bill of Sale for Equipment, a copy of which is attached hereto as Exhibit "H", and that Bill of Sale For Accounts, a copy of which is attached hereto as Exhibit "I."
5.2.1 Seller shall deliver all of the Accounts and corresponding documentation within 24 hours after Closing.
5.2.2 Seller and Buyer shall each deliver to the other at Closing a copy of a resolution of its Board of Directors authorizing this transaction.
5.3 Adjustments. The parties recognize that there may be some overlooked or unclear technicalities that need to be cleared up after Closing, and they shall attempt to resolve those by mutual agreement; failing to do so, any such issues shall be submitted to arbitration in accordance with Section 10 hereof.
6. Seller's Representations, and Covenants
6.1 Representations and Warranties. Seller, and Able personally, do hereby represent and warrant that as of the date of this Agreement and as of Closing, the following are true and correct:
6.1.1 Seller is the sole and lawful owner of the Assets to be sold and transferred by this Agreement;
6.1.2 No other person or entity has any right or interest in or any liens or encumbrance against such Assets. No other person or entity has brokered to Seller any of the Accounts, nor has any claim of right to any part of any commissions or fees earned with respect thereto been made;
6.1.3 Seller is validly incorporated, has the right and power to enter into this Agreement, and has obtained all necessary consents and approvals of Directors, shareholders and others; and
6.1.4 To the best of Seller's and Able's knowledge, all of the information contained in Seller's last three years' statements of commissions and all other information provided to and reviewed by Buyer are true and correct.
(a) In the event material discrepancies are later discovered, Buyer may request of Seller an offset from the purchase price (and the Promissory Note to Seller) for an appropriate amount; if Seller disagrees with Buyer's requested offset, then the offset issue shall be submitted to arbitration pursuant to Section 10 hereof.
(b) However, Buyer shall not reduce nor amend any such payments to Seller or Able without either (i) Seller's or Able's prior written consent, or (ii) an award of arbitration permitting such offset and deduction.
6.2 Covenants. Seller, and Able personally, do hereby agree and covenant as follows:
6.2.1 No Interruption in Business. Seller shall continue to operate its insurance local agency business in the usual manner between the date of this Agreement and Closing;
6.2.2 Liabilities. Seller shall pay when due all accounts payable and trade debts of Seller which accrue through the Date of Closing;
6.2.3 Delivery of Receipts. Seller shall promptly deliver to Buyer in the form in which they are received, and endorse to Buyer, all checks or other proceeds which may be received by Seller after August 31, 19__ for commissions on sales or renewals of insurance as further described in paragraph 3.4 herein, except for the school commissions as provided above;
6.2.4 Cessation. Immediately upon Closing, Seller shall cease doing insurance business;
6.2.5 Ownership Indemnity. Seller shall defend, indemnify, and hold Buyer harmless from and against any and all claims or demands, including all costs and reasonable attorneys' fees in connection therewith, by any person or entity who may assert any right to or any interest in any Asset transferred to Buyer pursuant to this Agreement, other than post-Closing balances on those liabilities expressly assumed by Buyer as set forth on Exhibit "C" attached hereto;
(a) In the event any claim or legal action on any such Liabilities arises against Buyer or the Assets either in excess of or not covered by the E&O policies, Seller and Able shall defend such claim or action at their own expense. Buyer shall cooperate in such defense, or at Buyer's election may assume the defense at the expense of Seller. Buyer shall have the right to join Seller and Able as parties defendant in any legal action brought against Buyer with respect to any such Liabilities, and Seller and Able hereby consent to the entry of an order making them a party defendant.
(b) Should any suit or action be commenced on any claim asserted against Buyer with respect to such Liabilities, Buyer shall be obligated to give Seller and Able prompt written notice thereof. Thereupon, Seller and Able shall at their own cost and expense assume the defense of any such suit or action either in excess of or not covered by the E & O policies (or join with Buyer in such defense) if so requested and shall satisfy, pay, and discharge at Seller and Able's sole expense any and all such claims and/or judgments.
(c) The indemnities and assumptions of Liabilities and obligations provided for herein shall continue in full force and effect notwithstanding the expiration of this Agreement, whether by time, by operation of law, or otherwise, and shall continue by Able personally despite any dissolution or other failure of Seller corporation to do so. 6.2.7 Carriers/Transition. If Buyer is unable to promptly secure an appointment by Seller's carriers for various Accounts, Seller and Able shall allow Buyer to continue that portion of the book of business under Seller's name or producer codes as necessary until transfer of those Accounts can be completed.
7. BUYER'S REPRESENTATIONS AND COVENANTS
7.1 Status of Buyer. Buyer and Dalton personally represent and warrant that Buyer has the right and power to enter into this Agreement and has obtained all necessary consents and approvals of its Directors, shareholders, and others.
7.2 Covenants. Buyer and Dalton covenant that:
7.2.1 Non-Disclosure. Information concerning the Accounts being sold and transferred, including specifically the customer lists and expiration data in connection therewith, is confidential information. Neither Buyer nor Dalton nor any party under their control shall directly or indirectly make use of any such information or reveal any customer lists or other confidential records or data to any party prior to the date of Closing, nor thereafter in the event Closing does not occur for any reason. Buyer and Dalton have not heretofore divulged any such information, nor revealed any customer lists or other confidential records or data to any other party, other than Buyer's professional consultants assisting in this acquisition.
Able shall at Closing execute and become bound by a Non-Compete in the form attached hereto as Exhibit "J" (the "Able Non-Compete").
This Agreement is contingent upon fulfillment of the following at or before Closing:
9.1 Representations, Warranties and Covenants True. All of the representations, warranties, and covenants of the parties shall be true as of Closing and are merged into this document.
9.2 Exhibits. Execution of originals of all Exhibits hereto by all parties indicated on the signature pages thereto.
10. Dispute Resolution
10.1 All Disputes. All disputes relating to this Agreement and the relationship of the parties hereto shall be settled and finally determined by arbitration in King County, Washington, by, and in accordance with the Rules of Commercial Arbitration of, the American Arbitration Association ("AAA"), or its successor. A single arbitrator shall be used.
10.1.1 Alternative. In the event the American Arbitration Association or its successor is not in existence or fails or refuses to act within a reasonably prompt period of time [but in no event exceeding sixty (60) days from the date a request for arbitration is filed], then (a) Chapter 7.04 of the Revised Code of Washington ("RCW") shall control whether any of the disputed issues are subject to mandatory arbitration, and (b) in the event any of the disputes are subject to mandatory arbitration, then the parties shall stipulate under MAR 8.1(b) to arbitration of all disputed issues.
10.1.2 Equitable Relief. Provided, however, that such arbitration requirements shall not apply in such a manner that they delay or prevent any judicial or arbitrator's injunctive or other equitable relief hereunder, which relief can be effective immediately but remains subject to any final and binding arbitration decision over the parties' dispute.
10.2Notice of Arbitration. The party demanding arbitration shall serve upon the other party notice of intent in accordance with either the AAA Rules of Commercial Arbitration or Chapter 7.04 RCW, whichever applies.
10.3Authority. The arbitrator shall have the authority to enter an award for damages or other affirmative relief, including specific performance and injunctive relief, and such arbitrator's award or decision shall be subject to appeal only pursuant to Chapter 7.04 RCW.
10.4Costs. The arbitrator (or if no issues are arbitrable by the AAA or its successor under Ch. 7.04 RCW, the court) shall determine which of the parties shall bear the fees and expenses incurred in the arbitration, appeal thereof, underlying lawsuit (if necessary to activate the provisions of Ch. 7.04 RCW) or any other litigation with respect hereto, including the parties' respective attorneys fees.
11.1Notices. Any notice, request, instruction, or other document to be delivered in accordance with this Agreement after the execution date hereof, shall be in writing sent by certified mail, postage prepaid, to the parties at their addresses set forth on the signature page hereof, or such other address of which a party may later notify the others in the same manner. Notice shall be deemed effective three (3) days after mailing.
11.2Waivers and Extension. The parties may, by written instrument, extend the time for the performance for any of the obligations of any other party hereto, and (a) waive any inaccuracies of such other party in the representations and warranties contained herein or in any document delivered pursuant to this Agreement, (b) waive compliance with any of the covenants of such other party contained herein, or © waive such other parties' performance of any of the obligations set out in this Agreement. Any waiver or extension shall not constitute a waiver or extension of any other provision of this Agreement.
11.3Expenses. Buyer and Seller shall each bear their own expenses incurred in connection with this Agreement and all things required to be done by each.
11.4Amendment. This Agreement may be amended at any time prior to Closing, by a written instrument executed by all parties.
11.5Entire Agreement. This Agreement and its Exhibits constitute the entire understanding of the parties relative to the subject matter therein contained.
11.6Applicable Law/Venue. This Agreement shall be governed by and construed in accordance with the laws of the state of Washington. Each of the parties consents to venue in King County, Washington, or the U.S. District Court for the Western District of Washington in Seattle, as appropriate.
11.7Headings. The headings of and Sections and paragraphs herein are inserted for reference only, and are not intended to be a part of nor to affect the meaning or interpretation of this Agreement.
11.8Counterparts. For the convenience of the parties hereto, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same instrument.
11.9Successors, Assigns, and Subsidiaries. This Agreement shall be binding on the parties, their successors, assigns, and subsidiaries.
11.10Duration of Warranties. The covenants and warranties of each party hereto shall survive and extend beyond the date of Closing.
11.11Necessary Documents. Each party hereto agrees to execute, at such time as is reasonably required, such additional documents as may be reasonably required to effectuate the intention and terms hereof.
11.12Exhibits. The attached Exhibits are hereby incorporated as though fully set forth herein.
11.13Separate Counsel. The parties hereto have been represented by separate counsel.
11.14Attorney Fees. See Section 10 above.
11.15Assignment. This Agreement may be assigned by Buyer only: (a) if Seller's compensation, obligations, or restrictions are not materially affected as a result of such assignment and such assignment and the terms thereof have received the prior written approval of Able, which shall not be unreasonably withheld; or, (b) if all obligations payable by Buyer to Seller and Able have been paid in full.
DATED effective the 1 st day of August, 19__
ABLE INSURANCE AGENCY, INC. DALTON AGENCIES, INC.
Alan Able, President Don Dalton, President
810 S. Grand Way NE 4321 Commercial Ave.
Suite 1000 Suite 320
Podunk, WA 98123 Any City, WA 12345
ALAN ABLE, Individually DON DALTON, Individually
1111 S. Grand Ave 1234 S. Whatever Avenue
Podunk, WA 98123 Any City, WA 12345
I ACKNOWLEDGE THAT I have read the foregoing Agreement for Purchase and Sale, including all Exhibits thereto, and that I know and understand their contents. I am aware that by their provisions my spouse individually guarantees substantial obligations which are an obligation of our marital community. I hereby consent to and personally join in such guarantee, approve of the provisions of the Agreement and the Exhibits, and agree that I will take no action at any time to hinder operation thereof.
EXHIBIT "D" TO AGREEMENT FOR PURCHASE AND SALE
September 1, 19__
FOR VALUABLE CONSIDERATION RECEIVED, the undersigned Maker hereby promises to pay to ABLE INSURANCE AGENCY, INC., a Washington corporation ("Payee"), the sum of Eighty-Three Thousand Dollars ($83,000.00) at Payee's address set forth below or at such other address as specified by Payee. Said sum shall bear simple interest at the rate 9.5% per annum, and shall be paid in twenty-four (24) equal monthly payments of principal and interest. The first payment shall be due October 15, 19__, and successive payments by the 15 th day of each month thereafter. Maker shall have full privilege of prepayment of all or any part of the principal and interest at any time, without penalty or bonus. Any prepaid sums shall be applied against the installments thereafter falling due in inverse order of their maturity, or against all other remaining installments equally, at the option of the Maker. In the event of the latter, interest and payments for the remaining term of the Note shall be recalculated to reflect the reduced principal amount owed. There shall be a penalty of five percent (5%) of the installment due, upon written demand therefore, if any installment is more than ten (10) days late. In the event of any default in payment which continues for a period of twenty(20) days, then upon written notice of acceleration to Maker not less than ten (10) days prior to acceleration, and Maker's failure to cure the default within that 10 days, all of the remaining principal and accrued interest shall be accelerated and become due and payable immediately. In the event that it shall be necessary for any party to secure counsel to enforce the terms hereof, the prevailing party shall be entitled to be paid its costs and reasonable attorneys' fees.
This Note is secured by a security interest in all assets of Maker, DALTON AGENCIES, INC., a Washington corporation, and is subject to right of offset and other provisions of an AGREEMENT FOR PURCHASE AND SALE OF ABLE INSURANCE AGENCY between Payee and Maker, effective September 1, 19__, and a NON-COMPETE between Maker and ALAN ABLE executed concurrently therewith. This Note shall be negotiable only with written consent of Maker, which shall not be unreasonably withheld.
All notices hereunder shall be to the parties' addresses set forth below, by Certified Mail; notice shall be deemed effective three (3) days after mailing in the prescribed manner.
DALTON AGENCIES, INC.
Don Dalton, President
Address of Payee: Address:
1111 S. Grand Ave. 4321 Commercial Avenue
Podunk, WA 98123 Suite 320
Any City, WA 12345
In consideration of financial accommodations given to the Maker on the above Note, and in consideration of Payee agreeing to deal with Maker, the undersigned guarantor absolutely guarantees to Payee payment and performance of the above Note, including attorney fees and costs of collection. Payee may apply all money received from Maker or from collateral upon such part of Maker's indebtedness as Payee may determine, without in any way limiting or lessening the liabilities of the undersigned under this guaranty.
Payee shall not be bound to exhaust its recourse nor to take any action against Maker or other parties on the collateral it may hold before being entitled to payment by the undersigned of all amounts hereby guaranteed, but may make such demands and take such actions as it deems advisable.
This shall be a continuing guaranty, made for a business purpose, and shall be binding without notice to the undersigned of its acceptance. Notice of default on the part of Maker is hereby waived; and the undersigned agrees to remain bound notwithstanding any extensions or renewals of any indebtedness or the liabilities hereby guaranteed, or any part thereof.
Consent is hereby given to Payee to make such renewals and extensions as Payee, at its option, may choose to grant or accept. Payee may at its option further compromise and settle with Maker without notice to the undersigned and without affecting in any way the obligations of the undersigned to Payee.
1234 S. Whatever Avenue
Any City, WA 12345
Exhibit "f" to Agreement for Purchase
and Sale Security Agreement
SECURED PARTY: ABLE INSURANCE AGENCY, INC. and
ALAN ABLE, individually
1111 S. Grand Avenue
Podunk, WA 98123
DEBTOR: DALTON AGENCIES, INC.
4321 Commercial Avenue, Suite 320
Any City, WA 12345
1. SECURITY AGREEMENT
1.1 Security Interest. For valuable consideration, the above-named Debtor, and if more than one, then all Debtors jointly and severally, hereby grant(s) to the above-named Secured Party a security interest in the personal property described in paragraph 1.2 below, all of which is herein collectively referred to as the "Collateral". That security interest applies only to property owned by Debtor or in which Debtor has an interest.
1.2 Description of Collateral. All assets of the insurance local agency business owned by Debtor, including without limitation its insurance accounts, policies in force, expirations, daily reports, renewals, all computer data attributable to those accounts, prospect lists, accounts receivable, goodwill, furniture, telephone numbers, fixtures, equipment, corporate and trade names including "ABLE INSURANCE AGENCY" and "DALTON AGENCIES", belonging to Debtor, now owned or hereafter acquired, and the proceeds thereof.
1.3 Loans and Obligations. The security interest granted hereby is given to secure: (i) payment of the principal sum of $83,000.00 plus interest thereon, as evidenced by a Promissory Note executed by Debtor in favor of Secured Party; (ii) all other existing and future obligations of Debtor to Secured Party; (iii) all funds expended by Secured Party to perform or fulfill obligations of Debtor; (iv) all expenditures made by Secured Party for the protection, preservation, or recovery of or realization upon the security of the collateral, pursuant to the terms of this security agreement or otherwise; and (v) interest on all obligations mentioned in this paragraph 1.3 at the rate specified in the writings evidencing the respective obligation(s) , and to the extent not so specified then at the rate of thirteen percent (13%) per annum; and (vi) all renewals and extension of any or all of the above-mentioned indebtedness, obligations and liabilities, herein collectively called "obligations". Debtor hereby covenants and agrees to promptly and faithfully pay and perform all of said obligations.
2. TERMS AND CONDITIONS
2.1 Notes and Security Interest. Debtor agrees that to the extent requested by Secured Party, Debtor's obligations shall be evidenced by promissory note(s) of the Debtor in such form and containing such terms as the Secured Party shall require. Secured Party has the right, at its option, from time to time, to render a statement of account to Debtor.
2.2 Debtor's Representations and Warranties. Debtor represents and warrants as follows:
2.2.1 Corporate Power. If the Debtor is a corporation, it is duly organized and existing under the laws of the state of its incorporation; it is duly qualified and in good standing in any other state in which it is doing business; and the execution and delivery and performance hereof are within the Debtor's corporate powers, have been duly authorized, are not in contravention of law or the terms of Debtor's Articles, bylaws, or of any agreement or undertaking of which Debtor is a party or by which it is bound.
2.2.2 Ownership and Location of Collateral. Except for the security interest granted hereby, Debtor is the owner of the collateral free from any lien, security interest, or encumbrance.
(a) Debtor shall give Secured Party written notice of each location at which the collateral is kept other than for temporary processing, storage, or like purpose.
(b) Nothing herein shall prevent Debtor from granting purchase money security interests to third parties for new equipment purchased, which purchase money security interest, if perfected, may be superior to that of Secured Party.
2.3 Fixtures. In the event that all or any portion of the collateral is or will be attached to real property, the description of such real property is as set forth on the attachment(s) hereto. Debtor shall notify Secured Party of the legal description of any other real property to which any of the collateral may become affixed, and if the collateral is attached to real property prior to perfection of the security interest granted herein, then Debtor upon demand by the Secured Party, shall furnish the latter with a disclaimer or disclaimers signed by all persons having an interest in the real property, of any interest in the collateral which is or could be superior to Secured Party's interest. Debtor agrees to notify Secured Party in writing of any intended sale, mortgage, or conveyance of such realty and to give written notice of the terms and conditions of this agreement to any prospective purchaser, mortgages, or grantee of said realty and a copy of such notice to Secured Party.
2.4 Financing Statements. To the extent applicable, the Uniform Commercial Code of Washington shall govern the security interests provided herein.
3. Debtor's Additional Agreements and Further Assurances
3.1 Risk of Loss, Liens, Insurance. Debtor shall (i) assume all risk of loss or damage to the collateral; (ii) keep the collateral in good condition and repair, free from liens, assessments and encumbrances; (iii) pay before delinquency all taxes; (iv) keep the collateral (together with all property covered by documents which are collateral hereunder) insured against risks of loss or damage by fire, theft, transportation, and other hazards designated by Secured Party, at Debtor's own expense, all in such amounts (not more than the full insurable value) under such forms of policies, upon such terms, for such periods, and written in such companies as Secured Party shall approve, losses in all cases to be payable to Secured Party and Debtor as their interests shall appear. Except as provided in paragraph 2.2.2 above, Debtor shall not sell nor offer to sell or otherwise encumber or suffer to exist a security interest in the collateral without the prior written consent of Secured Party, and shall not waste or destroy the collateral or any part thereof nor use the collateral in violation of applicable statute or ordinance or policy of insurance thereon.
3.2 Protection of Collateral. Secured Party shall have the right in the event of default by Debtor, to obtain insurance, pay taxes, liens, or encumbrances, or to order and pay for repairs, and all amounts expended by Secured Party shall, with interest thereon at the rate of thirteen percent (13%) per annum, constitute indebtedness of Debtor secured hereby and be immediately payable; however, no such act or expenditure of Secured Party shall relieve Debtor from the consequence of such default.
3.3 Records. Debtor shall maintain complete records pertaining to the collateral.
4.1 Default/Acceleration. Default, arbitration, remedies, and acceleration shall be as set forth in the documents evidencing obligations of Debtor to Secured Party referenced in paragraph 1.3 above.
4.2 Remedies Upon Default. Upon the occurrence of any such default and the failure of Debtor to cure any such defaults within the time period, if any, permitted by Secured Party, and subject to the "Dispute Resolution"
Section of the AGREEMENT FOR PURCHASE AND SALE entered into by these parties concurrently herewith (the "Purchase Agreement"), which Section is incorporated herein by reference, Secured Party shall have the remedies of a Secured Party under the Uniform Commercial Code of Washington, RCW Ch. 62A.
5. GENERAL PROVISIONS
5.1 Waivers. Debtor waives demand, notice, protest, notice of acceptance of this agreement, notice of credit extended, Collateral received or delivered or other action taken in reliance hereon. With respect to both Debtor's obligations and the Collateral, Debtor assents to any extension or postponement of the time of payment or an other indulgence, to any substitution, exchange, or release of Collateral, to the addition or release of any party or person primarily or secondarily liable, to the acceptance of partial payments thereon and the settlement, compromise, or adjustment of any thereof, all in such manner and at such time or times as Secured Party may deem advisable.
5.1.1 Secured Party shall have no duty as to the collection or protection of Collateral or any income from the Collateral, nor as to the preservation of rights against prior parties, nor as to the preservation of rights pertaining to the Collateral beyond the safe custody thereof. Secured Party may exercise its rights with respect to any Collateral without resorting to or regard for other Collateral or sources of payment or performance of Debtor's obligations to Secured Party.
5.1.2 Secured Party shall not be deemed to have waived any of its rights unless such waiver is in writing and signed by Secured Party. No delay or omission on the part of Secured Party in exercising any right shall operate as a waiver of such right or any other right. A waiver on any one occasion shall not be construed as a bar to or waiver of any right on any future occasion.
5.1.3 All rights and remedies of Secured Party with respect to any obligations or Collateral, whether evidenced hereby or by any other instrument or writing, shall be cumulative and may be exercised singularly or concurrently.
5.2 Expenses; Proceeds of Collateral. Debtor shall pay to Secured Party on demand any and all charges and expenses, including reasonable attorneys' fees, incurred or paid by Secured Party in protecting or enforcing its rights respecting Debtor's obligations or the Collateral. After deducting all of said charges and expenses, the balance of any proceeds of collection or sale of Collateral shall be applied to the payment of principal or interest on Debtor's obligations in such order of preference as Secured Party shall determine. Any surplus shall be returned to Debtor, and Debtor shall remain liable for any deficiency.
5.3 Transfer, Construction. If at any time or times by assignment or otherwise, Secured Party transfers any obligations of Debtor and the Collateral therefore, such transfer shall carry with it Secured Party's powers and rights under this agreement with respect to the obligations and Collateral transferred, and the transferee shall become vested with said powers and rights whether or not they are specifically referred to in the transfer document(s). If and to the extent that Secured Party retains any obligations of Debtor or any of the Collateral, Secured Party will continue to have the rights and powers set forth herein with respect thereto. This agreement and all rights and obligations hereunder, including matters of construction, validity and performance shall be governed by the laws of the State of Washington.
5.4 Effective Date; Acceptance. This agreement shall be deemed effective upon its execution by Debtor and delivery to Secured Party, and it shall not be necessary for Secured Party to execute or otherwise signify or express an acceptance.
5.5 Location of Records. Debtor shall give Secured Party written notice of each office of Debtor at which records of Debtor pertaining to the Collateral are kept. Except as such notice is given, all records of Debtor pertaining to contract rights and accounts receivable are and shall be kept at its location described on the face hereof.
5.6 Business Purpose. Debtor's acquisition and use of the Collateral is and shall be for business purposes.
5.7 Notices. Any demand or notice with respect to this agreement shall be sent by certified mail, return receipt requested, postage prepaid. The notice shall be mailed to the party's address set forth on page 1 hereof, or such other address a party may specify in that same manner from time to time. Notices shall be deemed effective three (3) days after mailing in the prescribed manner.
5.8 Dispute Resolution/Conflicts. All disputes relative to this agreement or the parties hereto shall be resolved and finally determined in accordance with the Dispute Resolution Section of the Purchase Agreement, and in the event of conflict herewith the Purchase Agreement shall control.
IN WITNESS WHEREOF, this agreement is executed effective this 1 st day of September, 19__.
DALTON AGENCIES, INC.
EXHIBIT "G" TO AGREEMENT FOR PURCHASE
AND SALE SECURITY-ESCROWED LETTER
As additional security for the payment of monies due pursuant to the terms of the Note referenced as Exhibit "D" of the AGREEMENT FOR PURCHASE AND SALE (the "Agreement") to which this is attached, and as additional protection and an additional remedy in the event of Buyer's default with respect to the Agreement itself and/or any executed originals of Exhibits thereto, Seller and Buyer hereby agree as follows:
1. Buyer shall execute a letter addressed to each of its carriers in the form attached as Exhibit "G-1" (the "Letters") for the purpose of effectuating a transfer of all of Buyer's interest in and to any Accounts (as defined in the Agreement), insurance records, Account expirations and expiration data, daily reports, renewals of the business and policies in force, and all supporting documents, papers and files relating thereto, including commissions and renewal commissions held and/or controlled by Buyer and/or others, in particular insurance companies in the name of or for the account of Buyer, and directing the transfer and delivery of such Accounts, commissions and/or records that Buyer would otherwise be entitled to, instead to be delivered to and for the account of Seller.
2. These Letters shall be held as part of the security provided to Seller, and shall constitute a remedy in addition to all other remedies to protect Seller in the event of Buyer's default according to the terms of the Agreement and/or the executed originals of any other Exhibits attached thereto.
3. At such time as all obligations of Buyer to Seller have been fulfilled, then the Letters shall be rescinded and all such Accounts, commissions, records, and the Letters themselves shall be returned to Buyer.
4. The executed Letters shall be placed in escrow at FIRST PERSON ESCROW COMPANY, S. Grand, Washington. The parties shall at Closing execute Escrow Instructions in the form attached hereto as Exhibit "G-2".
EXHIBIT "G-1" TO AGREEMENT FOR PURCHASE
AND SALE BROKER OF RECORD LETTER
FROM: DALTON AGENCIES, INC. and DON DALTON, individually
RE: DALTON AGENCIES, INC. and DON DALTON insurance
business and accounts
The purpose of this letter is to inform you that the undersigned are authorizing and directing that all insurance business held for theundersigned, including but not limited to all accounts, policies, renewals, policies in force, and/or commissions (whether due but unpaid or to become due in the future), shall forthwith be delivered to and/or paid to the following:
Able Insurance Agency, Inc.
1111 S. Grand Avenue
Podunk, Washington 98123
Attn: Alan Able, hereinafter referred to as "Able".
This letter is intended to be and is evidence of the direction and authorization of the undersigned pursuant to a previous contract with Able, and shall constitute authorization for you to deal with Able on all accounts and account commissions existing or renewals thereof from the date of your receipt of this letter.
By reason of this direction, the undersigned hereby releases you and waives any action of any nature whatsoever against you as a result of your acting in accordance with the directions of this letter.
This letter is dated in accordance with the prior contract of the undersigned with Able, and shall be irrevocable without the prior written consent of Able.
DATED this ___ day of ________________, 19____.
Dalton Agencies, Inc.
By:____________________________
Don Dalton, President
4321 Commercial Avenue
Suite 320
Any City, Washington 12345
Don Dalton, Individually
1234 S. Whatever Avenue
Any City, Washington 12345
Exhibit "g-2" to Agreement for Purchase and Sale
Escrow Instructions to First Person Escrow Company
The enclosed BROKER OF RECORD LETTERS (the "Letters") are to be held by you as Escrow Agent, and the undersigned corporations shall share equally the costs of the escrow fees.
1. Hold. You are to unconditionally hold the Letters until such time as you are presented with either:
1.1 Arbitrator's instructions or court order to you that such Letters should be released to Seller; or
1.2 Further instruction executed by both Seller and Buyer confirming full satisfaction of all obligations between them (in which case the Letters shall be released to Buyer).
2. Exoneration. You shall not be liable for any acts or omissions in good faith not resulting from lack of due care on your part. You shall not be responsible for failure to notify any party regarding matters other than this escrow.
3. Interpleader. In the event of any dispute or misunderstanding, the undersigned authorize you to deposit the Letters in the King County Superior Court of the State of Washington and, upon doing so, you shall be absolved from all further charges and obligations with respect hereto. You shall be entitled to recover your costs, expenses, and reasonable attorneys' fees from either of the undersigned corporations in the event either of them fails to pay their agreed one-half share thereof.
4. Dispute Resolution. All aspects of this arrangement shall be settled and finally determined in accordance with the "Dispute Resolution" Section of the AGREEMENT FOR PURCHASE AND SALE between the parties executed effective September 1, 19__, which Section is incorporated herein by reference.
Able Insurance Agency, Inc. Dalton Agencies, Inc.
By:__________________________ By:________________________
Alan Able, President Don Dalton, President
1111 S. Grand Avenue 4321 Commercial Avenue
Podunk, WA 98123 Suite 320
Any City, WA 12345
Exhibit "H" to Agreement for Purchase
and Sale Bill of Sale for Equipment
Know all men by these presents that ABLE INSURANCE AGENCY, INC. ("Seller"), for valuable consideration, receipt of which is hereby acknowledged, does hereby bargain, sell, grant, convey, transfer, and deliver unto DALTON AGENCIES, INC. ("Buyer") all of those goods, personal property, equipment, furniture, and chattels located on the premises of Seller as of the date of execution hereof.
Executed effective the _____ day of ____________, 19__
Able Insurance Agency, Inc.
By:_____________________________
Alan Able, President
Exhibit "I" to Agreement for Purchase and Sale
Bill of Sale for Accounts
Know all men by these presents that ABLE INSURANCE AGENCY, INC. ("Seller"), for valuable consideration, receipt of which is hereby acknowledged, does hereby bargain, sell, grant, convey, transfer, and deliver unto DALTON AGENCIES, INC. ("Buyer"), all insurance records and accounts, expirations and expiration data, daily reports of Seller, renewals of the business and policies in force, and all supporting documents, papers, and files relating to all insurance accounts of Seller, including without limitation all those now or heretofore carried upon the income and expense statement of Seller.
Executed effective the ________ day of ___________, 19__
Able Insurance Agency, Inc.
By:___________________________
Alan Able, President
Exhibit "J" to Agreement for Purchase and Sale Non-Compete
In consideration of the purchase by DALTON AGENCIES, INC. ("Buyer") of certain assets of ABLE INSURANCE AGENCY, INC. ("Seller"), all outstanding stock of which is owned by ALAN ABLE ("Able"), pursuant to an AGREEMENT FOR PURCHASE AND SALE executed by Buyer and Seller concurrently herewith (the "Purchase Agreement"), the parties hereby enter into this Non-Compete agreement (the "Non-Compete") and agree that:
1. Existing Customers. For a period of five (5) years beginning with the date of this Non-Compete, Able shall not directly or indirectly service, divert, nor compete for the insurance Accounts, customers or insurance expirations and/or renewals of insurance policies purchased concurrently herewith by Buyer from Seller (collectively, the "client"). Without limiting the generality of the foregoing, neither Able nor any person or entity under his control shall directly or indirectly, for itself or as an agent of, or on behalf of, or in connection with, any person, partnership, association, or corporation do any of the following:
2. Territory. For a period of five (5) years from the date of this Agreement, Able shall not, except as an associate of Buyer, directly or indirectly engage in the insurance local agency or brokerage business within a fifty (50)-mile radius of Seller's office as of the date of this Agreement. 3. Compensation. As consideration for this Non-Compete, Buyer shall pay to Able One Thousand Dollars ($1,000.00) per month during the 5-year term hereof as follows:
3. Liquidated Damages. In the event Able breaches this Non-Compete, then Buyer shall be entitled to damages for any insurance business or prospective business lost as a result thereof. Able agrees that the valuation of such lost business is not susceptible to precise calculation, and agrees that in the event of such breach he shall pay to Buyer liquidated damages in an amount equal to seventy-five percent (75%) of the gross commissions payable to or at the direction of Seller for a period of two (2) years commencing with the first date of each such breach, and which are earned in breach of this Non-Compete.
4. Termination. In the event of Buyer's failure to pay Able hereunder, or failure to make payments into escrow as required by paragraph 3 above, and a confirmation by arbitration as set forth below that payments have not been paid into escrow as required or that Buyer's default was not justified by a material default of Able hereunder, then Able shall be released from this Non-Compete entirely. However, Buyer shall remain liable for any monthly payments (and default interest as set forth above on any payments not timely made) until the date of such arbitrator's decision, and for further scheduled payments thereafter if the arbitrator determines that Buyer's non-payment was not justified.
5. Cross Default. An arbitrator's determination of a party's default under this Non-Compete or the Purchase Agreement shall, at the option of the non-defaulting party, also constitute and be treated as a default under the other of those two agreements as well. Provided, however, that the non-defaulting party may in the alternative elect not to treat it as a cross-default, and instead pursue arbitration and damages under the agreement violated, treating the other as still valid and enforceable according to its terms.
6. Assignability. Buyer may assign its rights under this Non-Compete to any of its successors in interest for the insurance Accounts, business, and expirations purchased from Seller.
7. Dispute Resolution/Conflicts. All disputes relating to this Agreement and the relationship of the parties hereto shall be settled and finally determined in accordance with the "Dispute Resolution" Section of the Purchase Agreement, which Section is incorporated herein by reference, and in the event of conflict herewith the Purchase Agreement shall control.
8. Governing Law/Venue. This Non-Compete shall be governed and construed in accordance with the laws of the state of Washington. Each of the parties consents to venue of any legal action permitted hereunder as King County, Washington, or the United States District Court for the Western District of Washington in Seattle, as appropriate.
9. Notices. Any notice, request, instruction, or other document to be given under this Non-Compete after the execution date hereof by any party, shall be in writing by certified mail, postage prepaid, to the parties at their addresses set forth on the signature page hereof, or such other address of which a party may later notify the others in the same manner. Notice shall be deemed effective three (3) days after mailing in the prescribed manner.
DATED effective this 1 st day of September, 19__.
DALTON AGENCIES, INC.
___________________________
By:____________________ Alan Able
Don Dalton, Pres.
Address:
1111 S. Grand Avenue 4321 Commercial Avenue Podunk, WA 98123 Suite 320
Any City, WA 12345
In consideration of financial accommodations given to the Buyer on the above Non-Compete, and in consideration of Able agreeing to deal with Buyer, the undersigned guarantor absolutely guarantees to Able payment and performance of the above Non-Compete, including attorney fees and costs of collection.
Able may apply all money received from Buyer or from any collateral upon such part of Buyer's indebtedness as Able may determine, without in any way limiting or lessening the liabilities of the undersigned under this guaranty.
Able shall not be bound to exhaust its recourse nor to take any action against Buyer or other parties on the collateral it may hold before being entitled to payment by the undersigned guarantor of all amounts hereby guaranteed, but may make such demands and take such actions as it deems advisable.
This shall be a continuing guaranty, made for a business purpose, and shall be binding without notice to the undersigned of its acceptance. Notice of default on the part of Buyer is hereby waived; and the undersigned agrees to remain bound notwithstanding any extensions or renewals of any indebtedness or the liabilities hereby guaranteed, or any part thereof.
Consent is hereby given to Able to make such renewals and extensions as Able, at his option, may choose to grant or accept. Able may at his option further compromise and settle with Buyer without notice to the undersigned and without affecting in any way the obligations of the undersigned to Able.
1234 S. Whatever Avenue
Any City, WA 12345
Revised 02/10/95
Copyright 1992 by The Contracts Company
All Rights Reserved
Copyright 19__ by Gary E. Jacobson, JD Revised 1/16/__ and Business Transition Network, Inc. (Copyright Waived)