Business Purchase Misrepresentation Concerns

One of the most significant contributing factors to the Purchasers' decision to purchase the business was the representation that the business was free of debt and was profitable at the time of purchase. This representation was a key element in the Purchasers' evaluation and willingness to proceed with the purchase. However, upon further investigation and discovery, it was revealed that the business is in fact in more debt than profit at the time of purchase, directly violating the terms of the Original Agreement.

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is this a fair contract One of the most significant contributing factors to the Purchasers' decision to purchase the business was the representation that the business was free of debt and was profitable at the time of purchase. This representation was a key element in the Purchasers' evaluation and willingness to proceed with the purchase. However, upon further investigation and discovery, it was revealed that the business is in fact in more debt than profit at the time of purchase, directly violating the terms of the Original Agreement.

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THIS AGREEMENT , dated for reference purpose this ______ day of December, *, between YESENIA MANJARES ( Seller) and EMMANUEL REYES and ELIZABETH SALGADO (Purchaser) is made with reference to the following facts: A. The seller is the owner of the business known as "Universal Insurance Services LLC" located at * N 3rd St, Suite *, Yakima, WA, * & 3A S Toppenish Ave, Toppenish WA *. Seller desires to convey all her interest in the business to Purchaser, and Purchaser desires to acquire the business from Seller on the terms and conditions herein. BASED UPON THE FOREGOING, and the mutual covenants and conditions herein, the parties hereby agree as follows: Purchase and Sale *.* Per the terms and conditions set forth in this agreement, Seller hereby agrees to sell, and Purchaser hereby agrees to purchase all the assets and business and business of Seller including, but not necessarily limited to, good will, trade name, phone number and book of business and any debt arising after the sale. All equipment and supplies are included in this agreement. *.* This agreement, upon payment by Purchaser of the down payment to Seller as provided in paragraph * herein, shall act as the document of conveyance conveying to Purchaser, with a warrant of good title free of all liens and encumbrances, all Sellers' rights, title and interest in the business and assets listed above. *.* Guarantors, EMMANUEL REYES and ELIZABETH SALGADO agree to personally cover the costs of the purchase whether the business survives or not. *. Purchase Price. *.* Book of Business and Goodwill: The parties, agree the value of the book of business and goodwill is valued at One Million and Six Hundred Thousand Dollars ($*,*,*.*). The purchase price shall be paid, at Purchaser's option, as follows: *.* In cash at closing, or *.* In twelve equal monthly installments for Fifteen Years (* yrs) of Eight Thousand Eight Hundred and Eighty Eight. ( $*,*.*) Eight Thousand Eight Hundred and Eighty Eight. ( $*,*.*) with the first installment due on January *, *. No interest shall accrue on the unpaid principal balance so long as installments are timely paid. The Purchaser may prepay at any time, without penalty, the unpaid balance of the obligation. The terms of payment for the purchase obligation shall be set forth on a promissory note executed at the same time as this agreement and attached as Exhibit No. * to this Agreement. *.* Lease. The Purchaser, before time of closing, shall transfer lease under new owner. There will be no balance owing or balance to be returned to business at time of this agreement becomes effective. *.* The terms of the obligation shall be included in a promissory note in the form attached as Exhibit No. *. The note shall be secured by a UCC-* (a) Security Agreement, which agreement shall be perfected by the filing of a Financing Statement with the Washington State Secretary of State. The Security Agreement shall continue to be in full force and effect until the later of (a) full payment by Purchasers of all note obligations. *.* Allocation. The allocation of the purchase price shall be as follows: *.*.* Good Will and book of Business & Assets Total: $*,*,*.* This allocation is intended to comply with requirements of the Internal Revenue Code of *, as amended. The parties agree to submit any and all required notices and returns to the Internal Revenue Service, or other taxing authorities, in conformity with this allocation of purchase price. The parties further agree that the remainder of this Agreement shall continue in full force and effect in the event the above allocation of purchase price is challenged and/or modified upon audit by the Internal Revenue Service. *. Liabilities * .* Seller agrees to NOT be responsible for all liabilities and debts which have accrued prior to date of closing including, but not necessarily limited to, obligations owing to local, state or federal taxing authorities, lease payments owing to the landlords for the lease of the property upon which the business is located, and obligations owing for the acquisition of inventory, equipment and supplies. * .* Purchaser hereby agrees to assume, except as otherwise set forth herein, all obligations, debts and liabilities arising from the operation of the business which arise, or first accrue, after the closing date including, but not necessarily limited to, obligations owing to local, state and federal taxing authorities, and obligations owing to the sellers of equipment, supplies and inventory. Purchaser acknowledges that a failure to timely pay lease payments, or any other obligation in which the Seller has continuing liability, shall be deemed a default of this agreement, as well as the Promissory Note and Security Agreement providing Seller with all rights and remedies available in law or equity. *. Representations of Seller *.* Seller has provided Purchaser, and/or Purchaser's representatives, with full access to review all books and records of the business. Seller represents that the books and records accurately reflect the financial health of the business. *.* All equipment on the premises is owned by Seller free and clear of liens and encumbrances. *.* Seller is current in the payment of all obligations, including obligations owing to local, state and federal taxing authorities. * .* There are no actions, suits, or proceedings pending, or to the best of Seller's knowledge threatened, against Seller. *.* Conditions to Purchase Obligation. The obligations of Purchaser under this Agreement are, at the option of Purchaser, subject to the following conditions: (a) Seller shall have permitted Purchaser from the date of the signing of this agreement until closing, to remain on the business premises during all hours of operation, and other hours if one of the Sellers is on the premises. (b) That the representations and warranties made by Seller herein are correct as of the closing date. Obligations which have accrued subsequent to the date of the Purchase and Sale Agreement, but remain unpaid prior to date or closing, shall not be deemed a violation of this condition if said obligation would not have typically been paid in the ordinary course of business during said period of time. The obligation is to be paid by the Purchaser . (c) That subsequent to the date of this Agreement, but as of the date of closing, the business and operations of Seller have not been adversely affected in any material way as a result of fire, accident or other casualty. (d) That the landlord for the lease of the premises upon which the business is located has consented to the assignment of Seller's interest in the Lease Agreement upon terms and conditions acceptable to the Purchaser. It is anticipated the lease will have expired by the time of the ownership transfer. *. Indemnification. *.* Seller hereby indemnifies and holds Purchaser harmless from any and all damage resulting from the breach of any representation, warranty or agreement set forth herein. Seller also indemnifies and holds Purchaser harmless from all debts, liabilities, tax obligations, lawsuits or claims of any other nature whatsoever, absolute or contingent, which accrued or are the result of operation of the business by Seller prior to the closing of this transaction. *.* Purchaser hereby indemnifies and holds Seller harmless from any debts, liabilities, tax obligations, lawsuits, or claims of any nature whatsoever, absolute or contingent, which accrue or arise from the operation of the business subsequent to the date of closing. *. Covenant Not To Compete *.* Seller agrees that she will not, unless acting as an employee of Purchaser, or with the prior written consent of Purchaser, directly or indirectly, own any business similar to that which is to be conveyed to Purchaser, for a period of one ( *) years from the date of this Agreement, and within a six ( * ) mile radius of the present location of said business. Seller agrees not to use, copy or contact the current book of business clients in the foreseeable future, unless acting as an employee of the Purchaser or to notify such of the sale of the business to Purchaser. Sellers acknowledge that a remedy at law for a breach of this covenant would be inadequate and that Purchaser shall, in addition to all of the remedies available at law or equity, be entitled to injunctive relief. *. Closing *.* Closing shall occur on December *, *. Purchasers shall pay the fee for filing the UCC-* Financing Statement with the Secretary of State. *. Miscellaneous *.* The parties agree that the representations and warranties contained in this Agreement shall survive closing. *.* This Agreement shall be binding upon and/or inure to the benefit of the heirs, successors and assigns of the parties herein. *.* This Agreement shall be governed and construed in accordance with the laws of the State of Washington. Venue for any litigation or dispute shall be in the Superior Court in and for King County, Washington. In the event of any litigation arising from this Agreement, the the prevailing party shall be entitled to reasonable attorney's fees and costs. *.* Purchasers may not assign their rights under this Agreement, either before or after closing, without the prior written consent of Sellers, which consent shall not be unreasonably withheld. *. Purchaser agrees to pay seller even if the company closes, sells, or the company or They are going bankrupt. *. Representation. The parties represent that Notary ___________, was jointly retained by them to reduce to writing the terms of this Agreement which they negotiated without the assistance of counsel. The parties further acknowledge that ____________________ did not render individual legal advice to either party or (b) that she/he has recommended THAT EACH PARTY SEEK THE ADVICE OF INDIVIDUAL COUNSEL BEFORE SIGNING THIS AGREEMENT. SELLER: __________________________ DATED: ____________ Yesenia Manjares, Seller _______________________ DATED: ____________ Emmanuel Reyes, Purchaser _______________________________ DATED: _____________ Elizabeth Delgado Cazarez, Purchaser STATE OF WASHINGTON ) COUNTY OF YAKIMA ) I certify that I know or have satisfactory evidence that ____________________ is the person who appeared before me, and said person acknowledged that she signed this instrument, on