STOCK PURCHASE AGREEMENT
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TABLE OF CONTENTS
- Document Header...........................................................1
- Definitions................................................................2
- Operative Provisions.......................................................5
- Representations & Warranties...............................................7
- Covenants & Restrictions..................................................11
- Default & Remedies........................................................14
- Risk Allocation...........................................................16
- Dispute Resolution........................................................19
- General Provisions........................................................22
- Execution Block..........................................................26
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1. DOCUMENT HEADER
STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of [EFFECTIVE DATE] (the “Effective Date”), by and among:
- [SELLER NAME], a [STATE] [corporation/limited liability company/individual] (“Seller”);
- [BUYER NAME], a [STATE] [corporation/limited liability company/individual] (“Buyer”); and
- [COMPANY NAME], a [STATE] corporation (the “Company”).
Collectively, Seller and Buyer are the “Parties” and individually a “Party.”
Recitals
A. Seller owns [NUMBER OF SHARES] shares (the “Shares”), representing [PERCENTAGE]% of the issued and outstanding capital stock of the Company.
B. Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, all right, title, and interest in and to the Shares on the terms set forth herein.
C. The Parties hereto intend that such purchase and sale be consummated in accordance with the terms and subject to the conditions set forth in this Agreement (the “Transaction”).
NOW, THEREFORE, in consideration of the mutual covenants, representations, warranties, and agreements herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
2. DEFINITIONS
For purposes of this Agreement, the following capitalized terms have the meanings set forth below. Any term used but not defined herein has the meaning ascribed to it in the context in which it appears.
“Affiliate” – With respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with such Person.
“Agreement” – As defined in the introductory paragraph.
“Basket” – The aggregate amount of Losses that must be incurred before Seller’s indemnification obligations under Section 7.2(a) become operative, as specified in Section 7.4(a).
“Business Day” – Any day other than a Saturday, Sunday, or day on which banking institutions in [PRIMARY CITY, STATE] are authorized or required by law to close.
“Cap” – The maximum aggregate liability of Seller for indemnification pursuant to Section 7.4(b).
“Claim Notice” – Written notice of an indemnification claim made pursuant to Section 7.3(a).
“Closing” – The consummation of the Transaction, to occur on the Closing Date pursuant to Section 3.2.
“Closing Date” – [CLOSING DATE] or such other date as the Parties may mutually agree in writing.
“Company” – As defined in the introductory paragraph.
“Disclosure Schedules” – The schedules delivered by Seller to Buyer concurrently with the execution of this Agreement, setting forth exceptions to the representations and warranties of Seller.
“Fundamental Representations” – The representations and warranties set forth in Sections 4.1 (Organization; Power), 4.2 (Capitalization), 4.3 (Authorization; Enforceability), and 4.7 (Title to Shares).
“GAAP” – United States generally accepted accounting principles.
“Governmental Authority” – Any federal, state, local, or foreign government or political subdivision thereof, or any agency, authority, or instrumentality of such government or political subdivision.
“Indemnified Party” – A Party entitled to indemnification under Article 7.
“Indemnifying Party” – A Party obligated to provide indemnification under Article 7.
“Injunctive Relief” – As set forth in Section 8.5.
“Knowledge” – (a) with respect to Seller, the actual knowledge of [NAME OF SELLER KNOWLEDGE GROUP], after reasonable inquiry, and (b) with respect to Buyer, the actual knowledge of [NAME OF BUYER KNOWLEDGE GROUP], after reasonable inquiry.
“Law” – Any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, or other requirement of any Governmental Authority.
“Liens” – Any mortgage, pledge, lien, security interest, charge, encumbrance, or adverse claim.
“Losses” – Any and all damages, losses, liabilities, deficiencies, penalties, fines, costs, and expenses (including reasonable attorneys’ fees and court costs).
“Material Adverse Effect” – Any event, circumstance, change, or effect that, individually or in the aggregate, is materially adverse to the business, assets, liabilities, financial condition, or results of operations of the Company, taken as a whole, excluding events generally affecting the industry or the economy.
“Purchase Price” – The aggregate consideration payable by Buyer to Seller for the Shares as specified in Section 3.1(a).
“Taxes” – All federal, state, local, or foreign taxes, charges, fees, levies, or other assessments, including income, gross receipts, ad valorem, value-added, excise, franchise, transfer, gains, profits, withholding, payroll, employment, property, sales, use, license, and estimated taxes, and any interest, penalties, or additions thereto.
“Transaction Documents” – This Agreement, the Disclosure Schedules, and each other agreement, certificate, or instrument executed in connection herewith.
[// GUIDANCE: Add, delete, or modify definitions as needed for deal-specific terms.]
3. OPERATIVE PROVISIONS
3.1 Purchase and Sale
(a) Seller hereby sells, assigns, transfers, and delivers to Buyer, and Buyer hereby purchases from Seller, all of Seller’s right, title, and interest in and to the Shares, free and clear of all Liens.
(b) The consideration for the Shares shall be an aggregate purchase price of $[PURCHASE PRICE] (the “Purchase Price”), payable as follows:
(i) $[CASH PORTION] in cash, by wire transfer of immediately available funds to an account designated by Seller in writing at least two (2) Business Days prior to the Closing Date;
(ii) [OPTIONAL: issuance of [NUMBER] shares of [BUYER] common stock]; and
(iii) [ESCROW/NOTE/HOLD-BACK, if any].
3.2 Closing Mechanics
(a) The Closing shall take place remotely via the electronic exchange of documents on the Closing Date or at such other time and place as the Parties may mutually agree.
(b) At Closing, (i) Buyer shall deliver the Purchase Price as provided in Section 3.1(b); (ii) Seller shall deliver certificates representing the Shares, duly endorsed for transfer or accompanied by stock powers; and (iii) each Party shall deliver the additional documents set forth in Section 3.3.
3.3 Deliverables at Closing
(a) By Seller:
(1) Certificates for the Shares;
(2) [Secretary’s] certificate regarding corporate approvals;
(3) Bring-down certificate confirming accuracy of representations;
(4) Resignations of officers/directors as requested by Buyer; and
(5) Any other Transaction Documents.
(b) By Buyer:
(1) Purchase Price;
(2) [Board] resolutions authorizing the Transaction; and
(3) Any other Transaction Documents.
3.4 Conditions Precedent
(a) Buyer’s obligation to consummate the Transaction is conditioned upon:
(i) Accuracy of Seller’s representations and warranties as of the Closing Date;
(ii) Performance in all material respects of Seller’s covenants;
(iii) Absence of any Law or order restraining the Transaction;
(iv) Receipt of all required third-party and Governmental Authority consents listed on Schedule 3.4(a); and
(v) No Material Adverse Effect since the Effective Date.
(b) Seller’s obligation to consummate the Transaction is conditioned upon analogous conditions set forth in Schedule 3.4(b).
4. REPRESENTATIONS & WARRANTIES
4.1 Seller’s Representations and Warranties
Seller represents and warrants to Buyer that, except as set forth in the Disclosure Schedules:
(a) Organization; Power. Seller is duly organized, validly existing, and in good standing under the Laws of the jurisdiction of its formation and has full power and authority to own, lease, and operate its assets and to execute, deliver, and perform this Agreement.
(b) Capitalization. The authorized, issued, and outstanding capital stock of the Company is as set forth on Schedule 4.1(b). All issued and outstanding shares are duly authorized, validly issued, fully paid, and non-assessable. There are no outstanding options, warrants, calls, or other rights to acquire equity of the Company, except as disclosed on Schedule 4.1(b).
(c) Authorization; Enforceability. Seller has all requisite corporate power and authority to execute and deliver the Transaction Documents and to consummate the Transaction. The Transaction Documents constitute legal, valid, and binding obligations of Seller, enforceable against Seller in accordance with their terms.
(d) No Conflicts; Consents. The execution, delivery, and performance of the Transaction Documents will not (i) conflict with Seller’s organizational documents, (ii) violate any Law or order applicable to Seller or the Company, or (iii) require any consent of any Person, other than those set forth on Schedule 4.1(d).
(e) Financial Statements. Seller has delivered to Buyer true and complete copies of the Company’s unaudited balance sheet as of [DATE] and the related statements of income and cash flows for the [12-month] period then ended (collectively, the “Financial Statements”). The Financial Statements have been prepared in accordance with GAAP and fairly present the financial position and results of operations of the Company.
(f) Absence of Changes. Since [DATE OF LAST FINANCIAL STATEMENTS], the Company has conducted its business in the ordinary course and there has not been any Material Adverse Effect.
(g) Title to Shares. Seller is the record and beneficial owner of, and has good and valid title to, the Shares, free and clear of all Liens.
(h) Taxes. The Company has timely filed all Tax returns required to be filed and paid all Taxes due and owing.
(i) Compliance with Laws. The Company is in material compliance with all applicable Laws.
(j) Litigation. There is no pending or, to Seller’s Knowledge, threatened litigation or governmental investigation involving the Company or the Shares that would reasonably be expected to impair Seller’s ability to consummate the Transaction.
(k) Brokers. No broker, finder, or investment banker is entitled to any brokerage or similar fee in connection with the Transaction based on arrangements made by Seller.
[// GUIDANCE: Add industry-specific reps (e.g., IP, environmental, regulatory) as appropriate.]
4.2 Buyer’s Representations and Warranties
Buyer represents and warrants to Seller that:
(a) Organization; Power. Buyer is duly organized, validly existing, and in good standing under the Laws of its jurisdiction of incorporation and has full power and authority to execute, deliver, and perform this Agreement.
(b) Authorization; Enforceability. Buyer has obtained all necessary corporate approvals to execute and deliver the Transaction Documents, each of which constitutes a legal, valid, and binding obligation of Buyer.
(c) No Conflicts; Consents. The execution, delivery, and performance of the Transaction Documents will not (i) conflict with Buyer’s organizational documents, (ii) violate any applicable Law, or (iii) require any consent of any Person, other than those set forth on Schedule 4.2(c).
(d) Investment Intent. Buyer is acquiring the Shares for its own account for investment and not with a view to distribution in violation of federal or state securities Laws.
(e) Brokers. No broker, finder, or investment banker is entitled to any brokerage or similar fee in connection with the Transaction based on arrangements made by Buyer.
4.3 Survival
(a) The representations and warranties of Seller contained in this Agreement shall survive the Closing and remain in full force and effect until [18] months following the Closing Date, except that Fundamental Representations shall survive indefinitely (or, if shorter, until the expiration of the applicable statute of limitations).
(b) Buyer’s representations and warranties shall survive the Closing for [18] months.
5. COVENANTS & RESTRICTIONS
5.1 Conduct of Business Prior to Closing
From the Effective Date until the Closing, Seller shall cause the Company to operate in the ordinary course of business and refrain from any action outside the ordinary course without Buyer’s prior written consent.
5.2 Access; Confidentiality
Seller shall afford Buyer reasonable access to the Company’s books, records, properties, and personnel, subject to confidentiality obligations under the Confidentiality Agreement dated [DATE] between the Parties.
5.3 No Solicitation
Prior to the earlier of the Closing or termination of this Agreement, Seller shall not, and shall cause its Representatives not to, directly or indirectly solicit or encourage any inquiries or proposals relating to any transaction involving the sale of the Shares or the Company.
5.4 Further Assurances
Following the Closing, each Party shall execute and deliver such further instruments and take such further actions as may be reasonably requested by another Party to carry out the purposes of this Agreement.
5.5 Post-Closing Covenants
(a) Buyer shall cause the Company to preserve its corporate existence and conduct its business in compliance with applicable Laws.
(b) Seller shall refrain from using any Company intellectual property following the Closing.
[// GUIDANCE: Add non-competition, non-solicitation, or earn-out covenants if negotiated.]
6. DEFAULT & REMEDIES
6.1 Events of Default
The occurrence of any of the following constitutes an “Event of Default”:
(a) Failure of either Party to perform any material covenant or agreement herein within ten (10) Business Days after receipt of written notice from the nondefaulting Party;
(b) Any representation or warranty of a Party proving to have been materially false or misleading as of the Effective Date or Closing Date;
(c) A Party’s insolvency, receivership, or the institution of bankruptcy proceedings by or against such Party that is not dismissed within sixty (60) days.
6.2 Remedies
Upon an Event of Default, the nondefaulting Party may, in addition to other rights and remedies available at Law or in equity:
(a) Terminate this Agreement pursuant to Section 6.3;
(b) Pursue specific performance or injunctive relief;
(c) Recover actual damages subject to the limitations set forth in Article 7; and
(d) Recover reasonable attorneys’ fees and costs incurred in enforcing this Agreement.
6.3 Termination Rights
This Agreement may be terminated:
(a) By mutual written consent of the Parties;
(b) By either Party if the Closing has not occurred on or before [OUTSIDE DATE], provided the terminating Party is not in material breach;
(c) By Buyer upon a Seller Default; or
(d) By Seller upon a Buyer Default.
7. RISK ALLOCATION
7.1 Indemnification by Seller
Subject to the limitations in this Article 7, Seller shall indemnify, defend, and hold harmless Buyer and its Affiliates (each, a “Buyer Indemnified Party”) from and against any and all Losses arising out of or resulting from:
(a) Any breach of any representation or warranty of Seller contained in Article 4;
(b) Any breach of any covenant or agreement of Seller contained in this Agreement; and
(c) Any Taxes of the Company for all taxable periods (or portions thereof) ending on or prior to the Closing Date.
7.2 Indemnification by Buyer
Buyer shall indemnify, defend, and hold harmless Seller and its Affiliates from and against any and all Losses arising out of or resulting from:
(a) Any breach of any representation or warranty of Buyer contained in Article 4; and
(b) Any breach of any covenant or agreement of Buyer contained in this Agreement.
7.3 Procedures
(a) A Party seeking indemnification (the “Indemnified Party”) shall deliver a Claim Notice to the Party from whom indemnification is sought (the “Indemnifying Party”) promptly after becoming aware of any fact, event, or circumstance that may give rise to a claim for indemnification.
(b) Failure to timely give notice shall not relieve the Indemnifying Party of its obligations except to the extent it is materially prejudiced.
(c) The Indemnifying Party shall have thirty (30) days after receipt of the Claim Notice to respond, accepting or disputing the claim.
7.4 Basket; Cap
(a) Basket. Seller shall not be liable for any indemnification claims under Section 7.1(a) until the aggregate amount of Losses exceeds $[BASKET AMOUNT] (the “Basket”), after which Seller shall be liable for all Losses in excess of the Basket (a “tipping basket”).
(b) Cap. Seller’s aggregate indemnification liability under Section 7.1(a) shall not exceed $[CAP AMOUNT] (the “Cap”); provided, however, that the Cap shall not apply to (i) breaches of Fundamental Representations, (ii) breaches of covenants, or (iii) claims arising from fraud, intentional misrepresentation, or willful misconduct, for which Seller’s liability shall be unlimited.
[// GUIDANCE: Adjust basket type (deductible vs. tipping) and cap levels per deal.]
7.5 Exclusive Remedy
Except in cases of fraud or equitable relief, the indemnification provisions of this Article 7 constitute the Parties’ sole and exclusive remedy for any and all claims arising out of this Agreement.
7.6 Insurance
Each Party shall maintain, at its own expense, insurance policies reasonably adequate to cover the risks associated with its obligations under this Agreement.
7.7 Force Majeure
No Party shall be liable for any failure or delay in performance caused by events beyond its reasonable control, including acts of God, war, terrorism, civil unrest, strikes, epidemics, or government orders, provided that the affected Party gives prompt notice and uses commercially reasonable efforts to resume performance.
8. DISPUTE RESOLUTION
8.1 Governing Law
This Agreement, and any dispute arising out of or relating to this Agreement, shall be governed by and construed in accordance with the laws of the State of [GOVERNING LAW STATE], without giving effect to any choice or conflict of law rule that would cause the application of the laws of any other jurisdiction.
8.2 Forum Selection
Each Party irrevocably submits to the exclusive jurisdiction of the state and federal courts located in [FORUM COUNTY, STATE] for any action or proceeding arising out of or relating to this Agreement, and each Party waives any objection to venue or inconvenient forum.
8.3 Optional Arbitration
[OPTIONAL – STRIKE IF NOT ELECTED]
(a) At the election of either Party, any dispute not resolved by good-faith negotiation within thirty (30) days may be submitted to binding arbitration administered by [ARBITRATION ADMINISTRATOR] in accordance with its rules then in effect.
(b) The arbitral tribunal shall consist of [one/three] arbitrator(s) with experience in mergers and acquisitions.
(c) The seat of arbitration shall be [CITY, STATE]; the language shall be English; and judgment on any award may be entered in any court of competent jurisdiction.
[// GUIDANCE: Delete Section 8.3 entirely if the Parties prefer litigation only.]
8.4 Jury Trial Waiver
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
8.5 Injunctive Relief
The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with its specific terms. Accordingly, in addition to any other remedy to which a Party may be entitled, such Party shall be entitled to seek specific performance or injunctive relief, without the necessity of posting bond, to prevent or remedy breaches of this Agreement.
9. GENERAL PROVISIONS
9.1 Amendment and Waiver
No amendment or waiver of any provision of this Agreement shall be effective unless in writing and signed by the Party against whom enforcement is sought. No failure or delay by any Party in exercising any right hereunder shall operate as a waiver thereof.
9.2 Assignment
This Agreement shall not be assigned by any Party without the prior written consent of the other Party, except that Buyer may assign its rights to an Affiliate or financing source, provided Buyer remains liable for all obligations hereunder.
9.3 Successors and Assigns
This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.
9.4 Severability
If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force and effect, and the invalid or unenforceable provision shall be reformed to the minimum extent necessary to render it valid and enforceable.
9.5 Entire Agreement
This Agreement, together with the Transaction Documents and the Confidentiality Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, and negotiations.
9.6 Notices
All notices required or permitted under this Agreement shall be in writing and deemed given when (a) delivered personally, (b) sent by recognized overnight courier, or (c) transmitted by email (with confirmation of receipt), to the addresses set forth below (or such other address designated in writing):
Seller:
[SELLER NOTICE ADDRESS]
Email: [SELLER EMAIL]
Buyer:
[BUYER NOTICE ADDRESS]
Email: [BUYER EMAIL]
9.7 Counterparts; Electronic Signatures
This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together constitute one instrument. Signatures delivered by electronic means (e.g., PDF, DocuSign) shall be deemed original signatures.
9.8 Expenses
Except as otherwise expressly provided herein, each Party shall bear its own expenses incurred in connection with the negotiation, execution, and performance of this Agreement.
9.9 Interpretation
Headings are for convenience only and do not affect interpretation. The Parties have participated jointly in the negotiation and drafting of this Agreement, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of authorship.
10. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties have executed this Stock Purchase Agreement as of the Effective Date.
SELLER:
[SELLER NAME]
By: __________
Name: [AUTHORIZED SIGNATORY NAME]
Title: [TITLE]
BUYER:
[BUYER NAME]
By: __________
Name: [AUTHORIZED SIGNATORY NAME]
Title: [TITLE]
COMPANY (solely for purposes of acknowledging Article 5 and covenants to be performed by the Company):
[COMPANY NAME]
By: __________
Name: [AUTHORIZED SIGNATORY NAME]
Title: [TITLE]
[NOTARY BLOCK OR WITNESS SIGNATURES IF REQUIRED BY STATE LAW]
[// GUIDANCE: Attach Disclosure Schedules, Officer’s Certificates, and any ancillary documents (Escrow Agreement, Promissory Note, etc.) as needed.]