THE SECRETARY OF STATE HAS NOT REVIEWED AND DOES NOT APPROVE, RECOMMEND, ENDORSE OR SPONSOR ANY BUSINESS BROKERAGE CONTRACT. THE INFORMATION CONTAINED IN THIS DISCLOSURE HAS NOT BEEN VERIFIED BY THE SECRETARY OF STATE; AND IF YOU HAVE ANY QUESTIONS, SEE AN ATTORNEY BEFORE YOU SIGN A CONTRACT OR AGREEMENT.
THIS BUSINESS BROKER ENGAGEMENT AGREEMENT IS PROVIDED WITH THIS DISCLOSURE STATEMENT AND IS AN INTEGRAL PART OF THIS DISCLOSURE STATEMENT.
READ BOTH THIS DISCLOSURE STATEMENT AND THE ENGAGEMENT AGREEMENT CAREFULLY. YOU ARE ENCOURAGED TO HAVE THE ENGAGEMENT AGREEEMENT REVIEWED BY AN ATTORNEY.
Organization Name: ___________________________________________ (“Business Broker”)
List of Business Broker’s officers, directors, trustees, general partners, general managers, principal executives and other performing similar duties:
President: _______________ Address: ________________________________________
Vice President:___________ Address: ________________________________________
Principal: _______________ Address: ________________________________________
The actual services the Business Broker undertakes to perform are set forth in the Business Broker Engagement Agreement, which are the only services the Business Broker is obligated to provide.
The circumstances under which you will be obligated to pay the Business Broker (or the Business Broker will be permitted to retain money you have paid) are set forth in the Business Broker Engagement Agreement.
READ THE ENGAGEMENT AGREEMENT CAREFULLY.
I received this Disclosure Statement and a copy of the Business Broker Contract (or Engagement Agreement) on the date set forth below.
Date: ______________________ Client Signature: ___________________________________ Client Name (printed): ______________________________
Sent via email
Business Broker Name:
City, State, ZIP:
Client Business Name:
City, State, ZIP:
This letter is the Business Broker Engagement Agreement (“Agreement”) by and between the above-named business broker (“Business Broker”) and the above-named client (“Client”) and confirms the complete understanding of the parties with respect to retaining and engaging Business Broker to represent and assist Client in connection with the sale of Client’s business entity (a “Transaction”).
Upon the terms and subject to the conditions set forth hereinafter, the parties hereto agree as follows:
1. Right of Refusal.
Client shall have the sole and absolute right to accept or reject any offer received from a prospective purchaser/investor. Success Fees (as defined in Paragraph 5 of this Agreement) shall be paid to Business Broker only if a Transaction is consummated.
This Agreement shall be in effect for the ____ (__) month period beginning _________, 20__ and ending ___________, 20__ (the “Term”).
For as long as this Engagement Agreement is in effect, Business Broker shall have an exclusive right of Transaction. During the Term, Client will proceed only through Business Broker and will not directly or through others negotiate a Transaction. If Client (either independently or through others) does negotiate a Transaction during the Term, Business Broker will receive the same Success Fee to which it would otherwise be entitled. After the initial Term, if a Transaction is consummated with a new investor unknown during the initial Term, Business Broker will only be eligible for Success Fees at the sole discretion of Client.
In the event that during the Term, Client or any of its officers, directors, employees or agents are contacted by or on behalf of any prospective purchaser, investor or other third party concerning the possibility of a Transaction, Client will promptly so inform Business Broker and will refer any such persons to Business Broker.
To accomplish the objectives of the Agreement, Business Broker shall use commercially reasonable means to assist Client in understanding the value of Client’s business entity as a going concern, identify prospective purchasers (“Buyers”) for Client, furnish related materials describing Client’s business operations and assets to Buyers based upon information supplied solely by the Client, to introduce such prospective Buyers to Client and may also assist with identifying, contacting and negotiating certain limited aspects of a potential sale including but not limited to Letters of Intent with Buyers as well as provide administrative support to Client in the sale or attempted sale of Client’s business (collectively, the “Services”). In performing under this Agreement, Business Broker shall not list, advertise, or offer corporate stock for sale as an investment, shall not have authority to sell or close on Client’s behalf, and shall not handle any funds on account for Client or Buyer.
4. Work Retainer Fee
The Client shall pay Business Broker a non-refundable, non-creditable work retainer fee in the amount of ___________ dollars ($______) per month for each month during the Term of this Agreement, due and payable via bank wire transfer on the ___ day of each month, totaling ____________ dollars ($__________.)
5. Success Fee
In the event of any Transaction during the Term of this Agreement, Client agrees to pay Business Broker at the closing of such Transaction, a fee based on the total consideration to be received directly by the Client and/or indirectly by owners, shareholders, affiliates and/or its subsidiaries (“Client Related Parties”) as a result of the Transaction. Consideration is the value the Client and Client Related Parties receive as a result of a Transaction and includes, but is not limited to cash, cash equivalents, securities, notes, liabilities assumed by purchasers or investors, assets to be retained by Client (including, but not limited to, cash, accounts receivable, inventory and equipment), earn-outs, royalties, real property sold or leased, equipment and/or intellectual properties sold or leased, employment agreements and consulting agreements in excess of fair market rates, non-competition agreements, and stock or other securities that are received in exchange for Client’s stock or assets (collectively, “Consideration”).
Such Success Fee shall be based on the following schedule:
__________ Percent (__%) of Consideration.
The Success Fee shall be paid in full at closing by cashier’s check or by bank ACH transfer.
Business Broker shall be entitled to fees hereunder for ______ (__) months following termination of this Agreement (the “Post-Termination Period”) for any Transaction within that period involving a purchaser or purchasers, investor or investors, including their affiliates and successor entities, Business Broker identified or contacted at any time prior to the effective date of such termination as prospective purchasers or whom Client otherwise became aware of as a prospective purchaser prior to the termination of this Agreement.
6. Payment Instructions
All fees and other payments made by the Client pursuant to this Agreement shall be made directly to Business Broker via bank wire transfer pursuant to the instructions below:
Receiving Bank Name:
Bank Routing Number:
Name on Receiving Bank Account:
Bank Account Number:
Client agrees to indemnify and hold harmless Business Broker, its officers, directors, employees, agents, representatives, attorneys, parents and affiliates against any loss, damage, liability, claim or expense, including reasonable attorneys’ fees, arising out of, relating to or in connection with this Agreement or the Services of Business Broker hereunder, except to the extent solely attributable to the gross negligence or willful misconduct of Business Broker.
The provisions of this Section 7 shall survive termination of this Agreement and shall be binding upon any successor or assign of Client.
Client hereby agrees that venue and jurisdiction of any legal action regarding this Agreement shall be solely in the State of __________. Each party hereby irrevocably (a) agrees that any suit or other legal proceeding arising out of or relating to this Agreement may be brought only in a court of the State of __________ or in the United States District Court located in ___________ county of the state of _____________, (b) consents, for itself and in respect of its property, to the jurisdiction of each such court in any such suit or proceeding, and (c) waives any objection that it may have to the laying of venue of any such suit or proceeding in any of such courts and any claim that any such suit or proceeding has been brought in an inconvenient forum. This Agreement shall be governed by the laws of the State of _____________, without regard to such state’s rules concerning conflicts of laws.
9. No Representations
Business Broker makes no representations expressed or implied that it will effect a Transaction as a result of the services furnished under this Agreement. The duties of Business Broker shall not include legal or accounting services which shall be procured by the Client at Client’s own expense. Client is solely responsible for all information provided to prospective Buyers in any format, and Business Broker has no responsibility for incorrect or inaccurate information.
If a Transaction is consummated, Business Broker may at its option and expense claim appropriate credit for its services to Client, including placing a “tombstone” announcement and press releases in such newspapers, periodicals and/or websites as it may select.
By signing this Agreement, the signing parties represent that they have unconditional authority to enter this Agreement on behalf of the Client.
12. Duty to Cooperate
Client agrees to cooperate with Business Broker in providing any information requested and shall not prevent Business Broker’s full participation and attendance at any closing or sale of Client’s business.
13. Securities Law Compliance
In compliance with the Securities and Exchange Commission letter of November 8, 2006, Business Broker has a limited role in the negotiations of Client’s business in that Business Broker does not have the power to bind the Client or the Buyer in the Transaction. Client understands and agrees that under this Agreement Business Broker shall attempt to sell Client’s business as a going concern and not a “shell” organization. In addition, it is understood and agreed that Client satisfies the criteria for a “small business” pursuant to the Small Business Size Regulations issued by the U.S. Small Business Administration. Business Broker is attempting to effectuate an asset sale for Client, however if the transaction is effectuated by means of securities, Client agrees that it will be a conveyance of all the company’s membership units and/or securities to a single purchaser or group of purchasers formed without the assistance of Business Broker. Client understands and agrees that Business Broker will not advise Client and or Buyer whether to issue securities or to sell the Client’s business by means of securities and that Business Broker will not assess the value of any securities sold (other than by valuing the company as a going concern). Client understands and agrees that Business Broker’s compensation is determined by this Agreement prior to any decision regarding whether or how to effectuate the sale of Client’s business and that Business Broker’s compensation is computed in advance under the provision defining Success Fee. Client understands and agrees that the amount of Success Fee shall not vary according to whether the Client enters into an asset sale or stock sale in that Business Broker’s compensation is paid in the amount and at time as defined herein. In addition, it is understood and agreed that Business Broker shall not assist Buyers or potential Buyers with obtaining financing, other than providing uncompensated introductions to third-party lenders or help with completing the paperwork associated with loan applications. Client understands that Business Broker does not negotiate the terms and conditions of acquisition to be made for securities issued by Client, and furthermore that Business Broker does not advise Client or its shareholders as to the value of the securities to be issued or transferred in the acquisition. Business Broker will not accept commissions in the form of an equity interest in Client.
14. Severability / Compliance
The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect in accordance with the terms hereof. Client agrees that it will be solely responsible for ensuring that the Transaction or any transaction complies with applicable law.
15. Entire Agreement
This is the entire agreement between the parties pertaining to its subject matter and supersedes all prior agreements, representations and understandings between the parties. No modification of this Agreement shall be binding unless agreed in writing by both parties.
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Please confirm that the foregoing terms are in accordance with your understanding by signing and returning the enclosed duplicate original of this Engagement Agreement.
On behalf of CLIENT
On behalf of BUSINESS BROKER