THE BUSINESS PURCHASE AGREEMENT

THE BUSINESS PURCHASE AGREEMENT

The licensee is encouraged, whenever possible, to use the Business Purchase Agreement and Joint Escrow
Instructions (C.A.R. Form BPA). While similar in content and language to the California Residential Purchase
Agreement and Joint Escrow Instructions (C.A.R. Form RPA-CA), the Form contains language unique to the
sale of a Business opportunity ( See chapter 22).

Significant differences in the Form include:

• Payment of Purchase Price. Provides provisions for new loans on any real property included in the
Business sale and also has provisions for loans secured by Business assets. The loan will be evidenced by a
note in favor of the Seller together with a security agreement covering all assets of the Business and a
UCC-1 to be filed with the Secretary of State.

• Assets Transferred. Provides that the Buyer is purchasing all assets of the Business with the exception of
cash or cash equivalents and any excluded assets as denoted.

• Liabilities Transferred. Establishes the Buyer is not purchasing any of the liabilities of the Business other
than those noted.

• Inventory. If checked, Seller typically has 7 days to provide the Buyer with an inventory list. The Buyer
has the right to confirm the inventory up to 5 days prior to the close of escrow.

• Seller Disclosure:, Buyer Investigation. Specifies the Seller, generally within 7 days, will provide Buyer
the lists of items or documents checked and made a part of the contract. This can include such items as
inventory, government licenses and permits, schedule of accounts receivable, Business appraisal, sales tax
returns for specified years, federal and state tax returns, etc. The Seller also represents that the books and
records provided are those maintained in the ordinary course of Business and the state and federal tax
returns are those filed with the applicable government agencies.

• Consulting and Training. Contains provisions for the Seller to consult with and train the Buyer for a
specified time as agreed to in the contract.

• Agreement Not To Compete. If checked, the Seller agrees not to compete with the Buyer in any Business
the same as, or substantially similar to the Business for a time and distance from as specified in the
contract.

• Lease. Specifies the Sale is contingent upon the Buyer obtaining an assignment, a new lease or sublease for
the Business.

• Purchase of Real Property. If checked, the sale is contingent upon the Buyer's ability to purchase the real
property in which the Business operates. A separate Real Property Purchase Agreement is required, such as
the Commercial Property Purchase Agreement and Joint Escrow Instructions (C.A.R. Form CPA).

• Licenses. The sale is contingent upon the transfer or obtaining of any licenses needed to operate the
Business.

• Franchise. If the Business is a Franchise, the sale is contingent upon the Buyer's acceptance of the terms of
the Franchise and the Franchisor's acceptance of the Buyer.

• Bulk Transfer. The seller agrees to comply with Bulk Sales provision of Division 6 of the Uniform
Commercial Code.

• Agency. The provisions of Civil Code 2079 relating to Agency do not apply to a Business Opportunity sale.
However, it is a violation of Business and Professions Code Section 10176(d) for a licensee to represent
more than one party in a transaction without the knowledge or consent of all parties. This section of the
contract establishes the Buyer and Seller acknowledge receipt of a disclosure that the licensee may be
acting for more than one Buyer or Seller and provides for a Confirmation of the agency elected for the
transaction.

Licensees should be aware of the importance, in those transactions where the sale is being secured with the
personal property of the business, of having the UCC-1 filed with the Secretary of State. Just as the Deed of
Trust provides the security and collateral for the promissory note in a loan secured by real property; the UCC-1,
when filed, gives notice to the world that there is an interest (lien) in personal property of the business. In order
to fully protect the lender's interest the UCC-1, which is only a notice and not an agreement, must be
accompanied by a promissory note and a security agreement covering all assets of the business.