Purchase and Sale - Posting 13 - second to last

7. The Agreement should be subject to, and completed in accordance with, the "bulk sales" legislation of the jurisdiction in which the transaction is completed. This legislation requires that the Vendor complete a statutory declaration indicating that there are no secured or unsecured creditors of the "business". If the creditors are not satisfied at the closing of the transaction and the declaration is not provided on closing, the transaction may be set aside by the creditors of the practice and the Purchaser may find herself or himself in the position of having to deal with the prior debts of the Vendor.

8. The purchaser will likely expect the Vendor to represent and warrant that the clinic premises are zoned for usage as health care facilities and, in addition, that there are no notices of municipal deficiencies or outstanding work orders affecting the said clinic premises and its uses which might affect the ability of the Purchaser to carry on practice at the clinic premises.

9. Since the purchase price is inevitably established based upon billings of the practice as sustainable after the closing, the Purchaser requirement to complete the transaction is generally conditional upon the Vendor having continued to operate the practice in a normal and customary fashion from the execution of the Agreement until closing. In addition, the Parties generally agree that at the time of closing there will not be any issues outstanding which would affect the Purchaser's ability to maintain the practice in its usual and customary operation. The Purchaser may also require that the Vendor maintain office supplies in the normal and customary quantity for the operation of the Vendor=s practice until the closing date.

10. An Agreement usually provides that the Parties will be liable for and shall pay all federal and provincial sales taxes which may be their respective responsibility in connection with the transfer of the purchased assets by the Vendor to the Purchaser. Subject to any legislative amendment, the purchase of a chiropractic practice is not generally subject to G.S.T.

11. The preparation of the documents necessary to transfer title to the assets are usually prepared by the Vendor at his or her own expense. In addition, it will be expected by the Purchaser that the Vendor will on the day of closing provide a statutory declaration confirming the representations and warranties contained in this Agreement. The completion of the documentation is crucial to ensuring that the Parties fully understand their rights and obligations, and in particular, the terms relating to the non-competition and non-solicitation agreements.

12. If there are any outstanding obligations to be taken care of by the Purchaser and/or Vendor an undertaking to complete the obligations will be required to be executed by the relevant party prior to the completion of the transaction. Undertakings might include the registration of a release of any lien on any of the assets being transferred to the Purchaser together with the payment of any final accounts owed by the Vendor such as utility payments, or accounts.

13. As part of the transfer of the practice, the Purchaser will acquire all of the interest of the Vendor in the name of the Clinic and the Purchaser will generally be entitled to use the present name of the Clinic. In order to facilitate the transfer of the name, the Vendor will file a notice of discontinuance of the business name for the location of the Clinic with the appropriate government registry. In the case of a Vendor who is using his or her personal name as the practice name, the Purchaser should ensure that he or she conforms to the regulatory boards requirements relating to the use of a name other than that of a practitioner. As an example, while it may be acceptable for Dr. Jones to carry on practice as Main Street Chiropractic Clinic it may be improper for Dr. Jones to carry on practice as Smith Chiropractic Clinic. It is imperative, and may be a statutory requirement of the province or state in which the practice is located, to register the name of the practice after the acquisition of the practice.

14. The parties will usually acknowledge in the agreement that there are no representations, warranties, collateral agreements or conditions affecting the agreement other than those which are set out in the agreement. As such, it is important that the parties address any representations which they may find necessary such as representations relating to the operation of the practice. It is by virtue of this provision that the expression "caveat emptor" or "let the buyer beware" becomes a crucial part of the transaction.

15. If the premises in which the practice is located is the subject of a lease arrangement, the vendor will be required to provide the consent of the landlord to an assignment of the lease for the premises, together with an acknowledgement by the landlord that the lease is in good standing.

16. The purchaser may request that he or she be allowed, after the execution of the agreement, to attend at the premises to observe the vendor in all aspect of the practice. The vendor will want to ensure that any observation by the purchaser will not in any way whatsoever impede the vendor in practice or the goodwill of the practice. In some cases, the vendor may not want the purchaser attending at the premises until all conditions have been satisfied or waived by the parties. It would appear that this would be a prudent act since any attendance by a purchaser can be disruptive in some fashion to the practice. In the event that the conditions are not met and the transaction is aborted, and a subsequent purchaser must be found, the environment of the practice may be interfered with in a detrimental fashion. It would therefore be prudent to ensure that a sale of a practice not become a matter of public knowledge until the completion of the transaction is assured and imminent.

It will generally be a term of the agreement that the vendor will, at the time of closing, terminate all employees of the practice. The vendor will be required to pay all compensation to which the employees will be entitled to the date of closing including salaries, statutory deductions and vacation pay. The vendor will be required to substantiate to the purchaser that the monies have been paid to the employees. The purchaser will acknowledge that he or she will be a successor employer to the business being acquired herein. The implication of a "successor business" is that the employees are deemed to have commenced their employment from the day they started working at the clinic. This issue can be problematic if the employee had been at the clinic for example for a period of 5 years prior to the transfer of the practice. If the employee is terminated without cause by the purchaser one year after closing, the employee might claim entitlement to compensation for an amount resulting from six years of employment. It is unlikely that the purchaser will be able to overcome this predicament and as a result the purchaser should ensure that he or she is satisfied with any employee who will be remaining with the practice.

In addition, the purchaser will require that the vendor will provide on closing an acknowledgement by the employees that they have no outstanding issues in existence with the vendor or purchaser for which any action might be taken with respect to their past or continued employment at the Clinic. Finally, the vendor will agree to be responsible for all compensation that might otherwise be payable to the date of closing and will, on closing, provide to the purchaser an indemnification with respect to any compensation which may be required to be paid by the purchaser after closing for matters arising prior to closing. Again, this may not, however, be enough to deal with a claim for compensation relating to wrongful dismiss for a period of time prior to the purchase of the practice.