Stock Purchase Agreement (Texas)

STOCK PURCHASE AGREEMENT (TEXAS)

Texas-Specific Notice. This Agreement governs the sale of shares in a Texas corporation formed under Title 2 of the Texas Business Organizations Code. Sellers and purchasers of Texas securities are subject to the Texas Securities Act (Tex. Gov't Code Ch. 4001–4008), which imposes civil liability for misrepresentations under § 4008.052 and criminal penalties under § 4008.053 for fraudulent offers and sales. Stock sales also may implicate appraisal rights under TBOC § 10.351 et seq.; franchise tax successor liability under Tex. Tax Code § 171.901 et seq.; and, for transactions under $500,000, the Texas Deceptive Trade Practices Act (unless waived under § 17.42).

1. PARTIES

This Stock Purchase Agreement ("Agreement") is made effective [__/__/____] (the "Effective Date") by and among:

Seller: [________________________________], [an individual/a corporation/LLC organized under the laws of [____]] ("Seller");

Buyer: [________________________________], a [________________________________] ("Buyer"); and

Company: [________________________________], a Texas [corporation/professional corporation] formed on [__/__/____], Texas SOS File No. [________________________________], having its registered office at [________________________________] (the "Company").

2. RECITALS

WHEREAS, Seller owns [____] shares of [common/preferred] stock of the Company, par value $[____] per share (the "Shares"), constituting [____]% of the issued and outstanding capital stock; and

WHEREAS, Buyer wishes to purchase and Seller wishes to sell the Shares upon the terms set forth herein;

NOW, THEREFORE, the parties agree as follows:

3. PURCHASE AND SALE

3.1 Shares. At Closing, Seller shall sell, transfer, assign, and deliver to Buyer, and Buyer shall purchase from Seller, all right, title, and interest in the Shares, free and clear of all liens, encumbrances, voting trusts, proxies, and transfer restrictions except as permitted herein.

3.2 Purchase Price. $[________________________________] (the "Purchase Price"), payable at Closing by wire transfer of immediately available funds to Seller's designated account.

3.3 Holdback / Escrow. $[____] of the Purchase Price shall be placed in escrow with [________________________________] pursuant to an escrow agreement for a period of [____] months to secure Seller's indemnification obligations.

3.4 Purchase Price Adjustment. The Purchase Price shall be adjusted based on Closing Date net working capital per Section 3.5.

3.5 Working Capital True-Up. [________________________________]

4. CLOSING AND DELIVERIES

4.1 Closing. The Closing shall occur on [__/__/____] at the offices of [________________________________], [____] County, Texas, or remotely.

4.2 Seller Deliveries at Closing.
☐ Original stock certificates duly endorsed for transfer with Medallion signature guarantee (or stock powers separate from the certificate)
☐ Resignations of officers and directors designated by Buyer
☐ Secretary's Certificate with updated corporate books, minute books, share register
☐ Certificate of Existence (Status) from the Texas Secretary of State dated within 10 days of Closing
☐ Certificate of Account Status (Good Standing) from the Texas Comptroller evidencing franchise tax compliance (Tex. Tax Code § 171.252)
☐ Corporate records including the Certificate of Formation and all amendments
☐ Bring-down certificate confirming representations are true as of Closing
☐ FIRPTA non-foreign affidavit (if applicable)

4.3 Buyer Deliveries at Closing.
☐ Purchase Price by wire
☐ Buyer's authorizing resolutions
☐ Counterparts of ancillary agreements

5. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer, as of the Effective Date and the Closing Date:

5.1 Authority; Ownership. Seller has full power and authority to sell the Shares. Seller is the sole record and beneficial owner of the Shares, free of liens, options, and preemptive rights.

5.2 Corporate Organization. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Texas. It is qualified to do business and in good standing in each jurisdiction where required, and its Texas franchise tax account status is "Active."

5.3 Capitalization. The authorized capital stock of the Company is [____] shares of [common/preferred] stock, of which [____] are issued and outstanding. All issued shares are duly authorized, validly issued, fully paid, and nonassessable. There are no outstanding options, warrants, convertible securities, preemptive rights under TBOC § 21.203, or rights of first refusal except as disclosed in Schedule 5.3.

5.4 No Conflicts. The execution and performance of this Agreement do not conflict with the Company's Certificate of Formation, Bylaws, any Texas shareholder agreement, or any material contract.

5.5 Financial Statements. Seller has delivered financial statements of the Company for the past [____] fiscal years, which fairly present the Company's financial condition in accordance with GAAP.

5.6 Undisclosed Liabilities. The Company has no material liabilities not reflected in the financial statements or Schedule 5.6.

5.7 Taxes. The Company has timely filed all federal, state, and local tax returns, including Texas franchise tax reports and Public Information Reports, and has paid all Texas franchise tax, sales tax under Tex. Tax Code Ch. 151, employment tax, and other amounts due. No Texas Comptroller audit is pending, and there are no outstanding tax liens under Tex. Tax Code Ch. 113.

5.8 Successor Liability Disclosure. Seller represents there are no outstanding Texas Workforce Commission unemployment tax deficiencies under Tex. Lab. Code Ch. 204 or Texas Comptroller franchise/sales tax liabilities that could result in successor liability.

5.9 Litigation. Schedule 5.9 lists all pending or threatened litigation.

5.10 Compliance with Laws. The Company is in material compliance with all applicable laws, including Texas occupational licensing requirements, environmental laws (including the Texas Solid Waste Disposal Act and Tex. Water Code Ch. 26), and OSHA/Texas Department of Insurance workplace safety rules.

5.11 Contracts. Schedule 5.11 lists all material contracts; there are no defaults.

5.12 Employment Matters. The Company is in compliance with the Texas Payday Law (Tex. Lab. Code Ch. 61), Texas Workers' Compensation Act (Tex. Lab. Code Title 5), and federal employment laws.

5.13 Intellectual Property / Trade Secrets. The Company owns or licenses all intellectual property necessary for its business, and maintains reasonable efforts to protect trade secrets under the Texas Uniform Trade Secrets Act, Tex. Civ. Prac. & Rem. Code Ch. 134A.

5.14 Brokers. No broker is entitled to a fee except as disclosed on Schedule 5.14.

6. REPRESENTATIONS AND WARRANTIES OF BUYER

6.1 Authority. Buyer has full power to enter into this Agreement.

6.2 Investment Intent. Buyer is acquiring the Shares for investment and not with a view to distribution in violation of federal or Texas securities laws.

6.3 Accredited Investor. Buyer is an "accredited investor" under Rule 501(a) of Regulation D or qualifies for an exemption under the Texas Securities Act (Tex. Gov't Code § 4005.011).

6.4 Sophisticated Party; Independent Counsel. Buyer is a sophisticated business entity, has conducted its own due diligence, and is represented by independent Texas counsel.

7. COVENANTS

7.1 Pre-Closing Conduct. Seller shall cause the Company to operate in the ordinary course.

7.2 No-Shop. Seller shall not solicit or entertain alternative offers.

7.3 Cooperation on Closing Conditions. Seller shall cooperate in obtaining the Certificate of Account Status from the Texas Comptroller and the Certificate of Existence from the Texas Secretary of State.

7.4 Non-Compete. For [____] years after Closing, Seller shall not directly or indirectly engage in the Restricted Business in the Restricted Territory. The parties intend this covenant to satisfy Tex. Bus. & Com. Code § 15.50 and consent to judicial reformation under § 15.51(c) if any provision is held unreasonable. "Restricted Business" means [________________________________]; "Restricted Territory" means [________________________________].

7.5 Non-Solicitation. For [____] years, Seller shall not solicit Company employees or customers.

7.6 Transfer Taxes. Texas does not impose a transfer tax on the sale of stock, but any filing fees for updates with the Texas Secretary of State or the Texas Comptroller shall be paid by [____].

8. SECURITIES LAW MATTERS

8.1 Exemptions Relied Upon. The sale is exempt from registration under Section 4(a)(2) of the Securities Act and, at the Texas level, under Tex. Gov't Code § 4005.011 (exempt transactions).

8.2 Restrictive Legend. The Shares shall bear a legend stating they are restricted securities under federal and Texas securities laws and may not be transferred absent registration or exemption.

8.3 Notice Filings. If required, Seller and Buyer shall cooperate in any Texas State Securities Board notice filing.

9. INDEMNIFICATION

9.1 Seller Indemnifies Buyer. Seller shall indemnify Buyer from Losses arising from (a) breach of any representation, warranty, or covenant; (b) pre-Closing tax liabilities including Texas franchise tax; (c) pre-Closing litigation; and (d) any matter on the Disclosure Schedules.

9.2 Survival. Representations and warranties survive Closing for [____] months, except that fundamental representations (authority, ownership, capitalization, taxes) survive for [____] months or the applicable statute of limitations, whichever is longer. Tax-related claims survive until the expiration of the applicable Texas and federal limitations period, plus 60 days.

9.3 Deductible and Cap.

• Deductible: $[____] (Seller is not liable until aggregate Losses exceed this amount, after which Seller is liable only for the excess)
• Cap: Seller's aggregate liability for breach of non-fundamental representations shall not exceed [____]% of the Purchase Price. Fraud and breach of fundamental representations are uncapped.

9.4 Fraud Carve-Out. Nothing limits recovery for actual fraud or for Texas Securities Act violations under Tex. Gov't Code § 4008.052.

10. DTPA WAIVER

10.1 Transaction Exceeds $500,000. ☐ If the Purchase Price is $500,000 or more, the parties acknowledge that Tex. Bus. & Com. Code § 17.49(g) generally exempts the transaction from the DTPA.

10.2 Written Waiver Under § 17.42. ☐ If the Purchase Price is less than $500,000, to the extent the DTPA otherwise applies, Buyer, as a sophisticated business represented by counsel not selected by Seller and not in a significantly disparate bargaining position, knowingly and voluntarily WAIVES the protections of the DTPA (Tex. Bus. & Com. Code Ch. 17, Subchapter E) to the fullest extent permitted by Tex. Bus. & Com. Code § 17.42, except for claims that cannot be waived under § 17.42(b).

11. APPRAISAL RIGHTS NOTICE

If this transaction constitutes a merger, conversion, interest exchange, or sale of all or substantially all Company assets to which TBOC § 10.354 applies, shareholders of the Company may be entitled to dissent and demand payment of the fair value of their shares under TBOC §§ 10.351–10.368. [If not applicable, check:] ☐ Not applicable — this is an individual stock sale and does not trigger corporate appraisal rights.

12. DISPUTE RESOLUTION

12.1 Governing Law. This Agreement is governed by Texas law. The corporate internal affairs of the Company remain governed by TBOC Title 2.

12.2 Venue. Exclusive venue in the state district courts of [________________________________] County, Texas or the U.S. District Court for the [____] District of Texas, [____] Division.

12.3 Attorney's Fees. The prevailing party shall recover reasonable attorney's fees under Tex. Civ. Prac. & Rem. Code § 38.001, as amended eff. 9/1/2021.

12.4 Limitations. Breach of this written contract is subject to the 4-year SOL under Tex. Civ. Prac. & Rem. Code § 16.004. Securities fraud claims under Tex. Gov't Code § 4008.052 are subject to § 4008.203 limitations.

12.5 Jury Waiver. EACH PARTY KNOWINGLY AND VOLUNTARILY WAIVES THE RIGHT TO JURY TRIAL IN ANY PROCEEDING ARISING FROM THIS AGREEMENT.

12.6 Specific Performance. The Shares being unique, Buyer shall be entitled to specific performance.

13. MISCELLANEOUS

13.1 Entire Agreement. This Agreement, the Schedules, and the ancillary agreements constitute the entire agreement.

13.2 Amendment. Written amendments only.

13.3 Assignment. No assignment without consent, except Buyer may assign to an affiliate.

13.4 Counterparts; Electronic Signatures. Enforceable under Tex. Bus. & Com. Code Ch. 322 (Texas UETA).

13.5 Severability. Invalid provisions shall be reformed to minimum extent.

14. SIGNATURES

SELLER: [________________________________]
By: [________________________________]
Title: [________________________________]
Date: [__/__/____]

BUYER: [________________________________]
By: [________________________________]
Title: [________________________________]
Date: [__/__/____]

COMPANY: [________________________________]
By: [________________________________]
Title: [________________________________]
Date: [__/__/____]

SOURCES AND REFERENCES

• Tex. Bus. Orgs. Code Title 2 (Corporations): https://statutes.capitol.texas.gov/Docs/BO/htm/BO.21.htm
• TBOC § 10.351 et seq. (Dissenter/Appraisal Rights): https://statutes.capitol.texas.gov/Docs/BO/htm/BO.10.htm
• Tex. Gov't Code Ch. 4001–4008 (Texas Securities Act): https://statutes.capitol.texas.gov/?link=GV
• Tex. Bus. & Com. Code Ch. 15 (non-compete): https://statutes.capitol.texas.gov/Docs/BC/htm/BC.15.htm
• Tex. Bus. & Com. Code § 17.42, § 17.49 (DTPA waiver/exemption): https://statutes.capitol.texas.gov/Docs/BC/htm/BC.17.htm
• Tex. Tax Code § 171.252, § 171.901 (franchise tax status certificate; successor liability): https://statutes.capitol.texas.gov/Docs/TX/htm/TX.171.htm
• Texas Comptroller, Certificate of Account Status: https://comptroller.texas.gov/taxes/franchise/
• Texas Secretary of State, Certificate of Existence: https://www.sos.state.tx.us/corp/sosda/index.shtml