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Sale Of Business By Transfer Of Capital

Stock of Closely Held Corporation

1. Introduction. Agreement made [date] between [name], residing at [address], and [name], residing at [address] (Sellers), and [name], residing at [address] (Buyer).

2. Sale and Purchase of Stock. Sellers will sell to Buyer [number] shares of the issued and outstanding capital stock of [name] (Corporation) free of all liens and encumbrances, that being all of Corporation's issued and outstanding capital stock, and Buyer will purchase the shares subject to the provisions of this Agreement. It is understood that [number] shares are owned by [name], and [number] shares are owned by [name].

3. Purchase Price. The purchase price is ..... dollars ($.....) per share or a total of ..... dollars ($.....).

4. Payment of the Purchase Price. The entire purchase price shall be paid to Sellers on the closing of the sale by certified check drawn on a local bank.

[Alternative Paragraph]

4. Payment of the Purchase Price in Installments. The purchase price shall be paid as follows: ..... dollars ($.....) on the closing of sale by certified check drawn on a local bank. The balance of the purchase price shall be paid in [number] equal monthly installments, the first of which shall be payable one month from the date of closing, and each succeeding payment shall be payable on the [number] day of each succeeding month. The purchase price shall be evidenced by a series of promissory notes, on for each installment, executed by Buyer and delivered to Sellers at the closing. The notes shall be payable at a local bank, shall bear interest at ..... percent (.....%) per annum, and shall provide that upon default in the payment of any one note in the series, the remaining unpaid notes shall become due and payable at the holders option.

[To be used in conjunction with Alternative Paragraph]

4A. Stock as Security for Promissory Notes. To secure the payment of the promissory notes described in Paragraph 4, Buyer shall, at the closing deposit with each Seller the stock sold by Seller and purchased by Buyer. The stock shall be indorsed in blank for transfer. If buyer defaults in the payment of any notes and Seller declares the remaining notes due and payable, Seller, at his option, may sell the stock and apply the proceeds first to the expenses of the sale and then to payment of the balance of notes with interest. Any surplus remaining after such application shall be remitted to Buyer.

5. Seller's Representations and Warranties. To induce Buyer to purchase their stock, Sellers jointly and severally represent and warrant the following:

a. Corporation Duly Organized. Corporation is a business corporation organized in accordance with the laws of [state] and is authorized to engage in the business of [nature of business].

b. Corporation in Good Standing. Corporation is in good standing. All taxes currently due, including income and franchise taxes, have been paid. There are no pending actions or proceedings to limit or impair Corporation's power to engage in business or to dissolve Corporation.

c. Stock Properly Issued. Sellers' shares constitute all the issued and outstanding shares of Corporation's stock. The shares have been properly issued and are fully paid and nonassessable.

d. Shares Free of Liens or Encumbrances. Sellers' shares are free of any liens, encumbrances, or agreements of any kind, including stockholders' agreements or voting trusts.

e. Corporation's Assets. Schedule A, attached to this Agreement [Omitted] and made a part of it, lists and describes each asset owned by Corporation as of the date of this Agreement. Unless otherwise stated, Corporation is the sole owner of each asset. None of the assets is subject to any liens or encumbrances except as otherwise stated in Schedule A.

f. Corporation's Liabilities. Schedule B, attached to this Agreement [omitted] and made a part of it, lists and describes Corporation's debts and liabilities as of the date of this Agreement, including the name and address of each of Corporation's creditors, the amount owed to each creditor, and the last date on which the debt or liability may be paid or discharged.

g. Corporation's Financial Condition. There is attached to this Agreement and made a part of it Corporation's most recent financial statements [omitted] consisting of a balance sheet as of [date] and an income statement for the year ended [date. These financial statements have been examined by [CPAs], whose report is annexed to the statements [omitted]. There will be no changes in Corporation's financial condition as set out in the balance sheet between the date of the balance sheet and the closing of this transaction except for those changes that will normally occur in the regular course of Corporation's business.

h. No Suits Pending or Imminent. There are no actions at law or equity or administrative proceedings pending against Corporation or in which Corporation is a plaintiff, defendant, petitioner, or respondent except [list of suits]. Corporation does not propose to commence an action at law or equity or an administrative proceeding in which it will be a plaintiff or petitioner. There are no actions at law or equity or administrative proceedings pending in which it is anticipated that Corporation will join or be joined as a party.

i. No New Contracts Before Closing. Corporation will not enter into any new contracts or agreements between the date of this Agreement and the closing except in the regular course of business and even then only for the purpose of [list of purposes].

j. No Dividends. The Board of Directors of Corporation have not declared any dividends since the date of the balance sheet attached to this Agreement and more fully described in Paragraph 5(g). There are no dividends unpaid that were declared in an earlier period. From the date of this Agreement to the closing, the Board of Directors of Corporation will declare no dividends.

k. No Salary Increases; No New Employees. From the date of this Agreement to the closing, Corporation will not increase any employee's salary or hire any new employee without first obtaining Buyer's written consent.

l. Going Business. At the time of the closing, Corporation will be a going business. If this representation is breached, Buyer may terminate this Agreement and demand any sums Buyer has paid Sellers on account of the purchase price of Seller's shares. Upon return of those sums, this Agreement shall...

(Excerpt)

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