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a) Definition

A stock purchase agreement is a contract to transfer ownership of stocks from the seller to the purchaser. The key provisions of a stock purchase agreement have to do with the transaction itself, such as the date of the transaction, the number of stock certificates, and the price per share. In addition, the agreement should specify the name of the corporation whose stock is being sold in the transaction. A stock purchase agreement also contains certain terms and conditions that outline the nature of the contractual agreement. At the close of the transaction, the seller will transfer and deliver all certificates representative of the stocks sold and the purchaser will pay the price specified in the agreement as consideration for the stocks being bought. The key provisions that make up a stock purchase agreement are:

Date. The opening recital gives the date of the agreement as well as the name of the parties, the seller and purchaser, who are entering into the agreement. Number and price of shares. This provision states the name of the corporation that issued the stock, the number of shares involved in the transaction, and the dollar value of each share of common stock. Purchase and sale. At the end of the transaction, the seller conveys ownership of the certificates of stock to the purchaser. All certificates will be endorsed as needed for transfer and the seller will pay any transfer taxes. Representations and warranties of the seller. Warrants the corporation as being legally able to issue the stock, and that the corporation is in good standing. This provision also validates that the seller owns the stock and, as such, is able to sell the stock to the purchaser. Representations and warranties of seller and purchaser. All parties stipulate that there have been no omissions by the corporation, seller, or purchaser. Everything has been disclosed. General provisions. These provisions include the entire agreement clause and a statement that the agreement complies with the governing laws of the location where the contract is being executed. Witnesses. This is the section where witnesses sign the document. You must have witnesses for the agreement to be legally binding. Amount and payment of purchase price. Sets the exact terms of when the purchaser will pay the consideration to the seller for the purchase of the stocks.

This is often a percentage paid upon signing with the remainder paid when the contract is executed.

b) Differences Between Common and Preferred Stock
There are significant differences between common and preferred stock. Generally, you will want to issue common stock to founders and employees through the employee stock option program and offer preferred stock to investors. Common stock should be thought of as a vehicle for issuance in exchange for effort, or "sweat equity." Preferred stock has preferential rights in matters such as liquidation and board representation. These are rights generally reserved for those who have invested cash in the business. So why take on this complexity when you're just a startup? Having common and preferred stock is the simplest way to give preferred investors the protections they'll insist on. You may need to provide these investors the right to co-invest in additional rounds of financing and the right to a co-sale if a shareholder sells their ownership in the business. Investors may also ask for antidilution protection. This provision protects early investors from having their share of ownership reduced or diluted if subsequent investors invest in the company at a lower price. This essentially guarantees corporate tax investors' investments. All of these provisions can be incorporated into the rights of the preferred stock without requiring complex side agreements. There are also tax advantages to having two kinds of stock. You want the lowest price per share attributed to the common stock in order to issue it with the least tax consequences to those who work to earn the stock. You want the highest price per share associated with the stock you issue to cash investors. This distinction is important, because investors want the highest possible tax basis without paying more for the investment than its fair value. The common investors want the lowest value attributed so they don't get stuck with a tax liability for the shares they receive. This is one of the key issues for employee stock-ownership programs. It's not uncommon for the value of preferred-stock shares to be 10 times that of commonstock shares, although ultimately, both types of stock are converted into common shares at the time of the public offering.

____(5)_______. a _____(8)______ corporation. and the terms of such transfer or encumbrance. No stockholder shall transfer or encumber any of his shares of capital stock of the Corporation during his lifetime to any person. the number of shares of capital stock involved. A. there is not now. as used herein. unless the Stockholder desiring to make the transfer or encumber (hereinafter referred to also as the "Transferor") shall have first made the offer hereinafter described and such offer shall not have been accepted. made this _(1)_ day of _____(2)_____. and WHEREAS. IT IS THEREFORE AGREED. in consideration of the mutual promises and covenants hereinafter set forth. and WHEREAS. If such offer is not accepted . the parties desire to provide for the purchase by another Stockholder or by the Corporation of the stock of any party desiring to sell the same. the Stockholders are actively engaged in the conduct of the business of the Corporation. and WHEREAS. WITNESSETH: WHEREAS. elect to accept the offer. nor is there likely in the future to be a substantial market for the shares of the Corporation. and jointly as "Stockholders". and ________(7)_________. at $__(9)___ par value. Offer by the Transferor: The offer shall be given pro rata initially to the other Stockholder(s) and shall consist of an offer to sell or encumber all of the shares of the capital stock of the Corporation owned by the Transferor. and WHEREAS. to which shall be attached a statement of intention to transfer. without the consent of the Corporation and the other Stockholder. as follows: 1. _____(6)______. firm or corporation.SAMPLE AGREEMENT (1) AGREEMENT. and for the purchase by the Corporation of the stock of a deceased party. Restriction During Life. of the Corporation now owned or hereafter acquired by the parties. by and between _______(4)________. B. and it is contemplated that success or failure of the corporate enterprise will at all times depend in large measure on the personal abilities of the Stockholders. the Stockholders together own 100% of the outstanding shares of capital stock of the Corporation. the name and address of such prospective transferee. the term "shares" shall mean all shares of common stock. at their option. 19_(3)_. for the foregoing reasons. hereinafter separately referred to as "Stockholder". hereinafter referred to as the "Corporation". Acceptance of Offer: Within thirty (30) days after the receipt of such offer the other Stockholder(s) may.

C. Release from Restriction: If the offer is neither accepted by the Corporation nor by the other Stockholder(s). all of the shares of the capital stock of the Corporation owned by him. Upon the death of a Stockholder (hereinafter referred to as Decedent). the Corporation then is an "S" corporation. voluntarily or involuntarily. However. 2. which shall not be more than thirty (30) days after the date of the giving of such notice. provided. and to which he or his estate shall be entitled. or the consideration for the encumbrance of the shares of the capital stock of the Corporation owned by the Transferor shall be set forth in paragraph 3 hereof. In either event. as the case may be. however. shall be delivered by the transferor not later than the date of closing. Purchase Price: The purchase price for. F. such transfer to be made only in strict accordance with the terms therein stated. shall be considered as of the date of such termination of employment to have made an offer of all of his shares of stock subject to the terms of this Agreement. The other Stockholder(s) shall exercise the election to purchase by giving notice thereof to the Transferor and to the Corporation. G. The consideration shall be paid as provided for in paragraph 3 hereof. property endorsed to the Corporation or to the purchasing Stockholder. Such written consent shall be executed and delivered prior to the delivery of the shares to the transferee at the closing of such sale and transfer. The Corporation shall exercise its election to purchase by giving notice thereof to the Transferor and to the other Stockholder(s). if the Transferor shall fail to make such transfer within __(10)__ (___) days following the expiration of the election period by the other Stockholder(s). such shares of capital stock shall again become subject to all of the restrictions of this Agreement. that nothing contained herein shall be construed as releasing any shares of this Corporation from any restriction or requirement of law concerning transfer of such shares. D.by the other Stockholder(s). Termination of Employment: Any shareholder whose employment in any capacity with the company or its subsidiaries terminates for any reason whatsoever. Certificates for all shares sold or encumbered hereunder. the Corporation may within thirty (30) days after the rejection of such offer. shall be sold and purchased as hereinafter provided: . the transferee and new stockholder shall be required to consent in writing not to revoke such "S" election without the unanimous approval of all other stockholders. the notice shall specify a date for the closing of the transaction. Closing of Transaction: The closing of the transaction shall take place at the principal office of the Corporation. the Transferor may make a bona fide transfer to the prospective transferee named in the statement attached to the offer. E. at the purchase price stated in paragraph 3 hereof. at its option. elect to accept the offer. Purchase Upon Death. Subchapter "S" Election: If at the time of a transfer of stock permitted hereunder.

such proceeds shall be used by the Corporation to pay the Decedent's Personal Representative to the extent of the purchase price of the Decedent's stock. such payment to be deemed made on account of such purchase price. the transferee and new stockholder shall be required to consent in writing not to revoke such "S" election without the unanimous approval of all other stockholders. and the Decedent's Personal Representative shall be obligated to sell to the Corporation. additional insurance on the life of such Stockholder proportionate to the increase in the holdings of such Stockholder. and the balance shall be represented by a promissory note executed by the purchaser payable in (15) (___) installments. In the event any Stockholder ceases to be a Stockholder of the Corporation. the Corporation shall terminate any such insurance on such Stockholder's life and in the event any Stockholder increases his holdings of the shares of the Corporation. If the corporation shall receive any proceeds of any policy on the life of the Decedent. C. at the price set forth in paragraph 3 hereof. Consideration.A. B. which note shall be secured by the stock of the deceased Stockholder. Obligation of the Corporation to Purchase: It shall be for the Corporation to purchase from the Decedent's Personal Representative. all of the shares of the capital stock of the Corporation owned by the Decedent and to which the Decedent or his Personal Representative shall be entitled. A. 3. D. "S" Election: If the corporation is an "S" corporation at the time of the transfer and sale of its stock. if so desired by it. Closing: The closing of such purchase and sale shall take place at the offices of the Corporation. the price for each share of capital stock to be sold under this Agreement shall be equal to its fair market value as an ongoing business concern as determined in the sole discretion of the company's Certified . the Corporation shall have the option to purchase policies of insurance covering the lives of each Stockholder in any amount deemed desirable. the Corporation shall procure and maintain. Such written consent shall be submitted prior to the delivery of the shares to the transferee. Balance of Purchase Price: If the amount of any insurance proceeds is insufficient to pay the purchase price of any Decedent's shares. Unless the parties agree to another price in writing. E. then the balance of the purchase price remaining after credit for any insurance proceeds shall be payable as follows: _(14)_% of the balance due to be paid shall be paid in cash. at a date selected by the Corporation upon _(11)_ days notice to the Transferor which date shall be not more than _(12)_ days following the date of the qualification of the Personal Representative and not less than _(13)_ days following such date. Insurance: To insure or partially insure its obligation under this Agreement to purchase from the estate of a deceased Stockholder the shares owned by him prior to his death.

such note to be secured by the stock being sold. increase the salary of any officer or executive employee of the Corporation. then in such event. the purchase price shall be paid as follows: i. 5. . The promissory note shall bear interest until paid in full at the prime rate as determined from time to time by Chase Manhattan Bank or any other bank as determined by and agreed upon by the Stockholders. incurred in such action. allow any of its obligations to become in default. declare or pay dividends on its capital stock. __(16)__ percent (___) of the amount determined to be due as the price to be paid at the closing in addition to any insurance proceeds and the balance to be payable by the execution of a promissory note in such amount to be repaid in _(17)_ (___) installments. reorganize its capital structure. D. E.Corporate Restrictions After Purchase. Limitation on Stockholder's Right to Pledge Stock. B.Public Accountant. (CPA) and such determination by the CPA shall be binding and conclusive upon the parties hereto. the Corporation shall not: A. C. B. 4. ii. allow any judgments against the Corporation or any liens against the Corporation's property to remain unsatisfied. So long as any part of the purchase price of shares of capital stock sold in accordance with this Agreement remains unpaid. in form acceptable to the Corporation that such lender will not dispose of such shares without first affording the Corporation and the other Stockholder(s) the right for a period of _(18)_ days to purchase shares at a price satisfactory to the Corporation and the other Stockholder(s). In the event that suit shall be required to collect on the promissory notes above referred to. merge or consolidate with any other corporation. or F. and courts costs. the defaulting Stockholder or the Corporation shall pay for attorney fees. iii. The restrictions of paragraph 1 above shall not apply to encumbrances as collateral for a note or notes in favor of the company or any one or more of the other Stockholders or in favor of a recognized lending institution. Unless the parties agree otherwise. or sell any of its assets except in the regular course of business. but only if the proceeds of such loan are used in their entirety to purchase shares of the Corporation and the borrowing Stockholder delivers to the Corporation and the other Stockholder(s) the written commitment of the lender.

If the Corporation breaches any of its obligations under this paragraph. or the Personal Representative of the Decedent shall have the right to examine the books and records of the Corporation from time to time and to receive copies of all accounting reports and tax returns prepared for the Corporation. the Transferor. Purchase By Stockholder. any tax liability resulting from such increase shall be borne by the selling Stockholder or his Personal Representative. the Stockholders and the Personal Representative of any Decedent shall do all things and execute and deliver all papers as may be necessary to consummate such purchase. 7. This Agreement may be amended or altered by execution of a written agreement authorized by corporate resolution and signed by all the parties hereto." 9. in addition to any other remedies available. as the case may be. following the delivery of the purchased stock. Whenever a Stockholder purchases shares of capital stock under this Agreement. 11. Any and all notices. in the case of the Stockholders. While such capital shall be so held as collateral security and so long as the Purchaser is not in default. Notices. offers. Amendments. Purchase By Corporation. endorse the new certificates of stock issued to such purchaser. Until all amounts due are paid. 8.So long as any part of such purchase price remains unpaid. such purchaser (unless he shall have paid the entire purchase price in cash) shall. and such capital stock shall be so held until the entire purchase price shall be paid. consents. shall be the value of the purchased shares for all tax purposes. In the event such value is later increased by any federal or state taxing authority. the stock certificates and a UCC-1 Financing Statement (to be recorded) shall be delivered to Seller. acceptances. be required to purchase shares of the capital stock of the Corporation. determined as set forth hereinabove. Each certificate representing shares of capital stock of the Corporation now or hereafter held by the Stockholders shall contain with a legend in substantially the following form: "The transfer or encumbrance of the shares of stock represented by the within certificate is restricted under the terms of an Agreement dated ____(19)______ a copy of which is on file at the Corporation office. Endorsement On Stock Certificates. and deliver the same to the Seller as collateral security for the payment of the unpaid purchase price. Any note required to be given hereunder by the Corporation as part of the purchase price shall be endorsed and guaranteed by the remaining or surviving Stockholders. the Purchaser shall be entitled to all voting rights with respect thereto. Whenever the Corporation shall. to his address appearing on the . modification or renewal of any such note. 6. the Transferor or the Personal Representative. Dividends paid shall be applied to the indebtedness. It is understood that the purchase price. may elect to declare the entire unpaid purchase price due and payable forthwith. pursuant to this Agreement. designations. or any other communication provided for herein. shall be given in writing by registered or certified mail addressed. Value of Purchase Price for Tax Purposes. 10. execute a UCC-1 Financing Statement (for recording). who shall not be discharged from such liability by reason of the subsequent extension.

pursuant to the provisions hereinabove. Modification. Prior Agreement. . or to his residence. Invalid Provision. and the two accountants shall then appoint a third Certified Public Accountant within __(21)__ (___) days after the two accountants are selected. shall inure to the benefit of the Executor. In the event that there is a purchase and sale of shares of stock or interest therein. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof and the Agreement shall be construed in all respects as if such invalid or unenforceable provision had been omitted.stockbooks of the Corporation. and a judgment on such determination may be obtained in any court of proper jurisdiction. 15. unless inconsistent with its provisions. and any amount to be paid for the stock being purchased shall be applied first to reduce and satisfy any indebtedness owed by the Selling Stockholder or his estate to any party under this Agreement. appoint a Certified Public Accountant. and the heirs and assigns of each of the Stockholders.Binding Effect. Deadlock. This Agreement shall bind and. postage prepaid. within __(20)___ (___) days after notice of such deadlock. 13. 14. In the event any one of the Stockholders shall fail within the given time to select a Certified Public Accountant to represent him to resolve the dispute. their executors. by United States Mail. Indebtedness of a Stockholder. Each Stockholder shall. and in the case of the Corporation. then. conclusive and binding upon the Stockholders. 17. the matter shall be submitted to arbitration in the following manner: A. and the average of purchase price determined by them shall be final. or to such other address as may be designated by him. It is understood between the parties that this Agreement contains the entire understanding of the parties and no change or modification of this Agreement shall be valid unless the same be in writing and signed by all the parties hereto. If at any time the Stockholders cannot agree on the Certified Public Accountant of the company and therefore are unable to establish an acceptable price for purchase. notwithstanding the said provisions relating to the payment of the purchase price. then and in such event. The cost of such accounting shall be borne equally by the parties unable to reach agreement hereunder. 16. and there is any indebtedness owed by the selling Stockholder or his estate to any party to this Agreement. This Agreement supersedes any prior Agreement of the parties. 12. administrators and personal representatives. and shall be considered to have been delivered on the 2nd day following the date stamped by the post office. Administrator or Personal Representative. the remaining Stockholder shall have the right to institute suit for specific performance under this Agreement. to the principal office of the Corporation. and the defaulting Stockholder shall pay for all attorney fees and court costs of such action.

B. 21. or any Security Agreement given to Sellers. The written agreement of the parties hereto or their successors in interest to that effect. the Purchaser shall have no voting rights whatsoever. Offer to Corporation. of the Withdrawing Stockholder's shares. the Corporation may. In the event of a default in the payment of any installment of the purchase price. Sellers or the Corporation shall have the right to purchase any or all of the collateral. Within _____(24)_____ (___) days after receipt of such notice. the covenants and conditions of this Agreement. or dissolution of the Corporation. and have a claim against Purchaser for the balance of such indebtedness in addition to any and all remedies available to them at law or in equity. Sellers may declare the entire unpaid portion of the purchase price to be immediately due and payable. sell or transfer all or any part of the collateral in such manner. at such price.18. and may proceed to enforce payment of same and to exercise any and all rights and remedies provided by the Uniform Commercial Code as well as any other rights and remedies either at law or in equity available to them. Default. shall terminate this Agreement as to such retiring or deceased Stockholder. 20. C. at its option. apply any unpaid indebtedness on account thereof. Laws Governed By. 19. Withdrawal from Corporation. The Corporation shall exercise its option to purchase by giving written notice thereof to the Withdrawing Stockholder within said ______(25)_______ (___) day period. Such Stockholder ("Withdrawing Stockholder") shall give notice to the Corporation at least _____(23)_______ (____) days prior to the date (he) (she) wants to withdraw ("Withdrawal Date") which notice shall set forth the Withdrawal Date. B. All of the issued and outstanding stock of the Corporation becoming owned by one of the Stockholders of the Corporation. This Agreement is executed in and shall be construed by and governed under the laws of the State of ______(22)______. This Agreement shall terminate upon the occurrence of one of the following events: A. Voting. in their sole and absolute discretion. Such written notice shall specify a date for the . Notice to Corporation. elect to purchase all. and Seller may assign. 22. or D. Any Shareholder may withdraw from participation in the Corporation at any time in accordance with the following provisions: A. The bankruptcy. The disposal of all the shares of stock of any Stockholder during his lifetime or by his Personal Representative or estate upon his death. It is understood and agreed that until the purchase price shall have been paid in full. receivership. Termination of Agreement. may determine. but not less than all. and on such terms and conditions as Sellers.

the parties hereto have hereunto set their hands and seals the day and year first above written. not counting the shares proposed to be sold). C.closing of the purchase. IN WITNESS WHEREOF. the other Stockholder(s) agree to execute a consent voluntarily dissolving the Corporation. If the Corporation fails to exercise said option within said _____(27)_______ (____) day period. Signed. In addition. The purchase price for the shares to be paid by the Corporation and terms of payment therefor shall be as set forth in Paragraph 3 hereof. the Stockholder(s) agree to liquidate the assets of the Corporation as soon as practicable thereafter. The option may be exercised by the Stockholders pro rata (based on that proportion which the number of shares owned by each other Stockholder bears to the total number of shares then outstanding. D. Sealed and Delivered in the Presence of: "STOCKHOLDERS" __________(29)______________ __________(35)_________________ __________(30)______________ __________(31)______________ __________(36)_________________ __________(32)______________ "CORPORATION" __________(33)______________ By:___________(37)________________ President of the Corporation __________(34)______________ . such option to be exercised in the same manner as that of the Corporation. In the event that neither the Corporation nor the other Stockholder(s) purchase the shares of the Withdrawing Stockholder. and the purchase price and terms of payment to be the same for the Stockholder(s) as for the Corporation as set forth in Paragraph 3 hereof. which shall not be more than ___(26)____ (___) days after the date of the giving of such notice. the shares proposed to be sold or the shares owned by any Stockholder who does not desire to exercise his option). then for a ______(28)_______ (____) day period thereafter the other Stockholder(s) of the Corporation shall have the option to purchase such shares. Acceptance by Stockholders. Dissolution and Liquidation. then his option shall be exercisable on a pro rata basis by the other Stockholders (not counting for any purpose. and if one (or more) of the Stockholders does not desire to exercise his option. or the option may be exercised by the other Stockholders on such basis as they may agree upon.

19_(3)_. (hereinafter referred to as "Seller") and ________(5)___________. NOW. city.ATTEST: _________(38)________ Secretary of the Corporation (CORPORATE SEAL) NOTICE The information in this document is designed to provide an outline that you can follow when formulating business or personal plans. the Seller is the record owner and holder of the issued and outstanding shares of the capital stock of ____(6)____. a ___(7)___ corporation. which Corporation has issued capital stock of _(8)_ shares of $___(9)___ par value common stock. and deliver to the Purchaser certificates representing such stock. we recommend that you seek professional legal counseling before entering into any contract or agreement. Sample Agreement (2) THIS AGREEMENT is made and entered into this _(1)_ day of ________(2)_______. in either case with signatures guaranteed in the customary fashion. THEREFORE. county and state laws. transfer. W I T N E S S E T H: WHEREAS. PURCHASE AND SALE: Subject to the terms and conditions hereinafter set forth. . upon the terms and subject to the conditions hereinafter set forth. and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller. and in order to consummate the purchase and the sale of the Corporation's Stock aforementioned. by and between _________(4)_________. it is hereby agreed as follows: 1. The certificates representing the Corporation's Stock shall be duly endorsed for transfer or accompanied by appropriate stock transfer powers duly executed in blank. the Purchaser desires to purchase said stock and the Seller desires to sell said stock. at the closing of the transaction contemplated hereby. and WHEREAS. in consideration of the mutual covenants and agreements contained in this Agreement. Due to the variances of many local. and the Purchaser shall purchase from the Seller the Corporation's Stock in consideration of the purchase price set forth in this Agreement. (hereinafter referred to as "Purchaser"). (hereinafter referred to as the "Corporation"). the Seller shall sell. convey.

nor are there any securities convertible into such stock. shall be held at ________(10)_________. REPRESENTATIONS AND WARRANTIES OF SELLER. finder's fee. AMOUNT AND PAYMENT OF PURCHASE PRICE. between the parties hereto with respect to the subject matter hereof. redemption agreements. calls or rights to subscribe of any character relating to the stock. liens. encumbrances. The total consideration and method of payment thereof are fully set out in Exhibit "A" attached hereto and made a part hereof. options. 5. 4. GENERAL PROVISIONS (a) Entire Agreement. 3. iii. or other like payment in connection with the transactions contemplated hereby. Seller hereby warrants and represents: (a) Organization and Standing. validly existing and in good standing under the laws of the State of ____(13)____ and has the corporate power and authority to carry on its business as it is now being conducted. ii. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER. i. The Seller is not a party to any agreement. on ______(11)______. Seller is the lawful owner of the Stock. or such other place. written or oral. creating rights in respect to the Corporation's Stock in any third person or relating to the voting of the Corporation's Stock. Seller and Purchaser hereby represent and warrant that there has been no act or omission by Seller. There are no existing warrants. free and clear of all security interests. at ______(12)______. Purchaser or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission. restrictions of any nature. (b) Restrictions on Stock. oral and written. Corporation is a corporation duly organized. 2. .The closing of the transactions contemplated by this Agreement (the "Closing"). date and time as the parties hereto may otherwise agree. equities and other charges. stock purchase agreements. This Agreement (including the exhibits hereto and any written amendments hereof executed by the parties) constitutes the entire Agreement and supersedes all prior agreements and understandings.

(c) Governing Law. such total consideration to be referred to in this Agreement as the "Purchase Price". The Purchase Price shall be paid as follows: i. . and all other expenses. court costs. pursuant to this Agreement. The sum of ______(21)_______ Dollars ($_________) to be delivered to Seller upon the execution of this Agreement. in addition to any other relief to which the prevailing party may be entitled. the parties agree to reimburse the prevailing party's reasonable attorney's fees. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in ______(15)____ County. this Agreement has been executed by each of the individual parties hereto on the date first above written. shall be governed by. In the event that litigation results from or arises out of this Agreement or the performance thereof. and all transactions contemplated hereby. (b) Payment. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. whether or not taxable by the court as costs. construed and enforced in accordance with the laws of the State of ____(14)_____. sealed and delivered in the presence of: ______________(17)______________ _____________(18)______________ ______________(17)______________ ______________(17)______________ _____________(19)______________ ______________(17)______________ EXHIBIT "A" AMOUNT AND PAYMENT OF PURCHASE PRICE (a) Consideration. the Purchaser shall pay to the Seller the sum of _______(20)_______ Dollars ($__________). State of ___(16)____. Signed. This agreement.(b) Sections and Other Headings. IN WITNESS WHEREOF. As total consideration for the purchase and sale of the Corporation's Stock.

by and between [specify seller] (hereinafter referred to as "Seller"). or all or substantially all of the assets of the Corporation are sold. and WHEREAS Seller is hereby resigning as an officer and Director of the Corporation effective as of [specify date]. we recommend that you seek professional legal counseling before entering into any contract or agreement. THEREFORE.findlaw interest at the rate of seven (7%) percent per annum. NOW. the obligation due to Seller shall have priority over any and all liquidating dividends given to Shareholders. county and state laws. and the Corporation is hereby purchasing same under the terms and conditions set forth in this Agreement.ii. and are evidenced by a Non-Negotiable Promissory Note being signed and delivered simultaneously herewith. Sample agreement (3) Stock Purchase Agreement AGREEMENT made this ___________ day of __________ 199 . and shall be paid at the rate of [specify rate] Dollars per week over a period of [specify term] consecutive weeks commencing [specify date]. In the event of a liquidation. Due to the variances of many local. FOURTH: Simultaneously herewith the Corporation is assigning to Seller all life insurance policies owned by the . THIRD: The entire purchase price shall become immediately due and payable upon any of the following occurrences: A. or the Corporation is liquidated or substantially liquidated. D. as well as any and all accrued bonuses in excess of normal salaries that are made to the existing Shareholders. NOTICE The information in this document is designed to provide an outline that you can follow when formulating business or personal plans. as evidenced by ten (10) shares of common stock. WITNESSETH WHEREAS Seller is hereby selling his ten (10) shares of stock representing his one-half (1/2) stock interest in the Corporation. all of the remaining Shareholders of the Corporation sell all or substantially all of the shares of stock owned by them to any third party. C. and WHEREAS the Corporation is hereby purchasing and redeeming said shares from the Seller. city. B. SECOND: The purchase price is the sum of [specify amount] Dollars. The sum of ______(22)_______ Dollars ($_________) to be delivered to Seller at Closing. In the event there is a default in any payment thereunder and such default continues over a period of five (5) days after notice is given to the Corporation of such default. Payments are to be made on Wednesday of each week and includes. it is mutually agreed as follows: FIRST: Seller is hereby selling and transferring back to the Corporation all of Seller's shares of stock in the Corporation. and [specify buyer] (hereinafter referred to as the "Corporation").

and the maker hereof agrees to pay all costs of collection including. payable at the rate of [specify rate] Dollars per week. By: DATE: .findlaw interest at the rate of seven (7%) percent per annum. Seller hereby waives any and all dividends. The Corporation shall sign any and all further documents that may be required by the life insurance companies to effectuate the transfer of said policies including any Cash Surrender Value which may have accumulated. increments and claims which may be due him from the Corporation from the shares of stock being sold hereby. interests. B. and in the event there is a default in any of the payments hereunder as set forth in Article "THIRD" of said Stock Purchase Agreement. the undersigned agrees to pay to the order of [specify] at such place or places as may be designated by [specify] the sum of [specify amount] Dollars. However. non-assessable and is owned by Seller free and clear of any liens and encumbrances of any nature whatsoever. of whatsoever kind. but not limited to. EIGHTH: The parties hereto agree that all contracts heretofore existing between them. on the Friday of each and every week commencing [specify date] for a period of five hundred (500) consecutive weeks thereafter. then and in such event interest shall accrue on the unpaid balance thereof as of date of default at the rate of one (1%) percent per month. legal representatives. Said sum includes. Stock sold hereby is fully paid for. their respective heirs. and Seller is hereby released from all personal liability he may have incurred on behalf of the Corporation. NINTH: Each and all of the covenants and conditions of this Agreement shall be binding and inure to the benefit of the parties hereto. are hereby cancelled and declared null and void between the within parties and are of no effect. SEVENTH: Seller is hereby resigning as an officer and Director of the Corporation effective [specify date]. General Releases are being signed simultaneously herewith between Seller. the Corporation. obligations or commitments of any nature. reasonable attorneys' fees.Corporation on the life of the Seller. By: By: DATE: DATE: NON-NEGOTIABLE PROMISSORY NOTE FOR GOOD AND VALUABLE CONSIDERATION. Seller shall continue to remain as an employee of the Corporation under a separate Employment Agreement. either orally or in writing. hereinafter or by operation of law (except this Agreement and any other Agreement being signed simultaneously herewith). signed by each of the parties hereto. IN WITNESS WHEREOF the parties hereto have hereunto set their hands and seals the day. This Note is being paid pursuant to a Stock Purchase Agreement being signed simultaneously herewith. month and year first above written. nature and description. FIFTH: Simultaneously herewith Seller is signing and delivering back to the Corporation a Stock Certificate for ten (10) shares. SIXTH: Seller warrants and represents as follows: A. C. and shall not be changed or modified except in writing. Seller has incurred no liabilities. successors and assigns. except such liabilities or commitments which may be listed on the books and records of the Corporation. duly endorsed in blank for transfer. or all contracts which may be construed as continuing to exist in the future between them. kind or description on behalf of the Corporation.

the Seller shall sell. Subject to the terms and conditions hereinafter set forth. on the day of . in consideration of the mutual covenants and agreements contained in this Agreement. Procedure for Closing. 2. shall be held at . PURCHASE AND SALE: CLOSING. The total consideration and method of payment thereof are fully set out in Exhibit "A" attached hereto and made a part hereof. the Purchaser desires to purchase all of the issued and outstanding capital stock of the Corporation (referred to as the "Corporation's Stock"). The certificates representing the Corporation's Stock shall be duly endorsed for transfer or accompanied by appropriate stock transfer powers duly executed in blank. the Seller is the record owner and holder of the issued and outstanding shares of the capital stock of . all of the Corporation's Stock and deliver to the Purchaser certificates representing such stock. date and time as the parties hereto may otherwise agree (such date to be referred to in this Agreement as the "Closing Date"). and shall have all the necessary documentary transfer tax stamps affixed thereto at the expense of the Seller. by and between . upon the terms and subject to the conditions hereinafter set forth. NOW. conveyed or transferred. WITNESSETH: WHEREAS. and in order to consummate the purchase and the sale of the Corporation's Stock aforementioned. at the closing of the transaction contemplated hereby. The closing of the transactions contemplated by this Agreement (the "Closing"). THEREFORE. it is hereby agreed as follows: 1. or cause to be sold. 19 . a corporation. convey and transfer. in either case with signatures guaranteed in the customary fashion. hereinafter collectively referred to as the "Seller" and and/or assigns and/or nominees.Sample agreement (4) STOCK PURCHASE AGREEMENT THIS AGREEMENT is made and entered into this ____ day of . and the Seller desires to sell or cause to be sold all of the Corporation's stock. and WHEREAS. a. Purchase and Sale of Corporation's Stock. . hereinafter collectively referred to as the "Purchaser" (the term "Purchaser" shall extend to in the first instance the original Purchaser named herein and also the assigns of such Purchaser). 20 . and the Purchaser shall purchase from the Seller the Corporation's Stock in consideration of the purchase price set forth in Section 2 and Exhibit "A" of this Agreement. which Corporation has issued capital stock of shares of $ par value common stock. AMOUNT AND PAYMENT OF PURCHASE PRICE. b. hereinafter referred to as the "Corporation". at or such other place.

Subsidiaries. By-Laws. iii. written or oral. equities and other charges. Seller hereby warrants and represents: a. Restrictions on Stock. ii. the Seller has full power and authority to execute this Agreement and carry out the transactions contemplated by it and no further action is necessary by the Seller to make this Agreement valid and binding upon Seller and enforceable against it in accordance with the terms hereof. its Certificate of Incorporation and all amendments thereto to date certified by the Secretary of State of the State of . its Bylaws as now in effect. liens. result in the creation of any lien. or by which it is bound. charge or encumbrance upon its assets or properties. will be delivered by Seller to the Purchaser prior to the Closing Date. indenture. constitute a breach or a violation of the Corporation's Certificate of Incorporation. or of any law. deed of trust. There are no existing warrants. restrictions of any nature. i. The execution. e. Corporation is a corporation duly organized. agreement. encumbrances. The authorized capital stock of the Corporation consists of shares of $ par value common stock. except as stated herein. Organization and Standing. stock purchase agreements. Neither the Corporation nor Seller is a party to any agreement. judgment or decree to which it is a party or by which its assets or properties are bound or affected. nor are there any securities convertible into such stock. The Corporation has no subsidiaries. free and clear of all security interests. A true and correct copy of: i. calls or rights to subscribe of any character relating to the capital stock of the Corporation. and ii. c. Seller is the lawful owner of all the Corporation's Stock. delivery and performance of this Agreement by the Seller will not : I. b. REPRESENTATIONS AND WARRANTIES OF SELLER. Capitalization. d. The Corporation's minute books will be made available to the Purchaser and its representatives at any reasonable time or times prior to the Closing for inspection and will be complete and correct as of the date of any such inspection. redemption agreements. . validly existing and in good standing under the laws of the State of and has the corporate power and authority to carry on its business as it is now being conducted. options. constitute a violation of any order. mortgage. or iii. ii. loan agreement or other instrument to which it is a party. Authority Relative to this Agreement. Except as otherwise stated herein. or to carry out the actions contemplated hereby.3. creating rights in respect to the Corporation's Stock in any third person or relating to the voting of the Corporation's Stock.

To the extent that liabilities are discovered by Purchaser after Closing which relate to events prior to Closing. The Corporation is in compliance with all applicable laws. Financial Statements. or alternatively. Moreover. or those specifically set out in Exhibit "B". secured or unsecured. Properties. Seller is furnishing financial statements of the Corporation as an inducement to Purchaser to purchase the Corporation's Stock and accordingly. None of the actions of the Corporation shall conflict with or result in any breach of any of the provisions of. including. Litigation. the aforementioned indemnity shall not apply to any tax liability which may occur by reason of actions taken by the Purchaser including. if Seller objects to such liabilities in good faith. and/or county and state . or result in the creation of any lien. I. conditional sales agreement. The Corporation has good and merchantable title to all of its properties and assets which are those properties and assets set out in Exhibit "C" attached hereto and made a part hereof. mortgage. lien. Seller warrants and represents the financial operating history or condition of the Corporation as indicated by the financial statements turned over to Purchaser. but not limited to. h. Seller warrants and represents that at closing the Corporation and the Corporation's Stock will not be subject to any liability save and except those specifically enumerated in Exhibit "B" attached hereto and made a part hereof. zoning regulations. lease. corporate laws. The Corporation has timely prepared and filed all federal. The Corporation is not a party to any litigation. j. except for real estate taxes and tangible personal property taxes which shall be prorated as of the date of closing. such properties and assets will be subject to no mortgage. Compliance with Applicable Laws. or upon any of the assets of the Corporation. restaurant and beverage laws and regulations. the liquidation of the Corporation. if applicable. litigate the issue and indemnify and save harmless Purchaser from any claim for such liability. security agreement. pledge. loan agreement or other agreement to which the Corporation and/or the Seller is a party or by which the capital stock or properties and assets of the Corporation are bound to effect it. or constitute a default under. state and local tax returns and reports as are and have been required to be filed and all taxes shown thereon to be due have been paid in full. including income tax liabilities in cash within fifteen (15) days thereof. city. but not limited to. proceeding or administrative investigation and to the best knowledge of the Seller none is pending against the Corporation or its properties. This indemnification as it relates to income tax liabilities of the Corporation shall terminate on the tenth (10th) day after the expiration of the applicable period of limitations on assessments and collections applicable to such taxes under the Internal Revenue Code. At closing. None of the Corporation's actions are prohibited by or have violated or will violate any law in effect on the date of this Agreement or on the date of closing.f. under the provisions of the Certificate of Incorporation or Bylaws or any indenture. encumbrance or charge. Tax Matters. Moreover. charge or encumbrance upon the capital stock of the Corporation. g. security interest. Seller shall be responsible to forthwith pay such liabilities.

6. and any and all other laws which may effect the operation or liability of the Buyers herein. including the fees and expenses of its counsel and its certified public accountants and other experts. and no alterations or modifications thereof have been made. Seller will deliver to Purchaser prior to the Closing Date the resignation of each director and officer of the Corporation. if existing or known at the date hereof. d. Between the date hereof and the Closing Date. REPRESENTATIONS AND WARRANTIES OF SELLER AND PURCHASER. and correct copies of the originals. authentic. covenants and statements and agreements contained in this Agreement and the exhibits hereto.occupational laws and regulations. internal revenue laws. if appropriate. 5. 4. The Corporation's documents enumerated in Exhibit "D". each such resignation to be effective on the Closing Date. Seller will not enter into any transaction. would have been required to be set forth herein or disclosed pursuant to this Agreement. TRANSACTIONS PRIOR TO THE CLOSING. Seller will deliver to Purchaser on the Closing Date a satisfaction from any mortgage and lien holder of the Corporation's property. to be not true on the Closing Date. or which would represent a material fact the disclosure of which would be relevant to the Purchaser. any of the representations and warranties of Seller contained in this Agreement. Resignations. k. satisfactory in form and substance to the Purchaser and his counsel indicating that the then outstanding unpaid principal balance of any promissory note secured thereby has been paid in full prior to or simultaneously with the Closing. Seller and Purchaser hereby represent and warrant that there has been no act or omission by Seller. c. Except as Purchaser may otherwise consent in writing prior to the Closing Date. Satisfactions. Survival of Representations and Warranties. Except as set forth in this Agreement. Purchaser or the Corporation which would give rise to any valid claim against any of the parties hereto for a brokerage commission. Seller hereby covenants the following: a. Each of the parties hereto shall pay its own expense in connection with this Agreement and the transactions contemplated hereby. the originals themselves. finder's fee. EXPENSES. Documents for Review. Advice of Changes. a. Each of the parties to this Agreement covenants and agrees that the Seller's representations. Conduct of Corporation's Business Until Closing. GENERAL. shall survive the Closing Date and terminate on the second anniversary of such date. b. the exhibits hereto or in the documents and . or other like payment in connection with the transactions contemplated hereby. 7. or. warranties. or could reasonably be expected to result in or cause. Seller will promptly advise Purchaser in writing of any fact which. are true. attached hereto and made a part hereof. take any action or fail to take any action which would result in. and in any documents delivered by Seller to Purchaser in connection herewith.

d. warranties or covenants by or among the parties hereto with respect to the subject matter hereof. b. The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement. there are no other agreements. Entire Agreement. postage prepaid: To Seller: To Purchaser: or to such other address as such party shall have specified by notice in writing to the other party.papers delivered by Seller to Purchaser in connection herewith. between the parties hereto with respect to the subject matter hereof. therein and in any documents delivered in connection herewith or therewith. In such event. demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered or mailed. including any investigation by or on behalf of any party shall be deemed to constitute a waiver by the party taking such action or compliance with any representation. In the event that litigation results from or arises out of this Agreement or the performance thereof. warranty. Notices. no action shall be entertained by said court or any court of competent jurisdiction if filed more than one year subsequent to the date the cause(s) of action actually accrued regardless of whether damages were otherwise as of said time calculable. Waivers. h. construed and enforced in accordance with the laws of the State of . and all transactions contemplated hereby. No action taken pursuant to this Agreement. c. It is understood and agreed by the Purchaser that none of the consideration furnished by Purchaser hereunder ($ ) shall be for treasury stock and such consideration. Treasury Stock. The parties herein waive trial by jury and agree to submit to the personal jurisdiction and venue of a court of subject matter jurisdiction located in County. The Conditions Precedent to the enforceability of this Agreement are outlined in Exhibit "E". representations. subject to the terms hereof. this Agreement shall be deemed null and void and any deposits paid shall be returned to the Purchaser forthwith. This Agreement (including the exhibits hereto and all documents and papers delivered by Seller pursuant hereto and any written amendments hereof executed by the parties hereto) constitutes the entire Agreement and supersedes all prior agreements and understandings. g. covenant or agreement contained herein. All notices. Sections and Other Headings. in addition to any other relief to which the prevailing party may be entitled. whether or not taxable by the court as costs. In the event that said Conditions Precedent are not fulfilled by the appropriate dates thereof. requests. first class mail. attached hereto and made a part hereof. Conditions Precedent. Governing Law. court costs. . This agreement. e. the parties agree to reimburse the prevailing party's reasonable attorney's fees. oral and written. f. shall be governed by. The waiver by any party hereto of a breach of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent breach. State of . and all other expenses.

should litigation arise hereunder. The Purchase Price shall be paid as follows: I. pursuant to this Agreement. iii. return receipt requested. ii. sealed and delivered in the presence of: (CORPORATE SEAL) ______________________________ By:___________________________ Witness It's President ______________________________ Attest: ______________________ Witness It's Secretary ______________________________ ______________________________ Witness Seller ______________________________ Witness ______________________________ ______________________________ Witness Buyer ______________________________ Witness EXHIBIT "A" AMOUNT AND PAYMENT OF PURCHASE PRICE a. Payment. Check of Purchaser in the sum of Dollars ($ ) to be delivered to Seller upon Seller's examination and approval of the books and records of the Corporation. Signed. Check of Purchaser in the sum of Dollars ($ ) to be delivered to Seller upon the execution of this Agreement. such total consideration to be referred to in this Agreement as the "Purchase Price". b. iv. service of process therefor may be obtained through certified mail. all on the date first above written. Contractual Procedures. Consideration. As total consideration for the purchase and sale of the Corporation's Stock. I. IN WITNESS WHEREOF. this Agreement has been executed by each of the individual parties hereto and signed by an officer thereunto duly authorized and attested under the corporate seal by the Secretary of the corporate party hereto. Check of Purchaser in the sum of to Seller at Closing. Dollars ($ ) to be delivered . Unless specifically disallowed by law.shall be the sole property of Seller. the Purchaser shall pay to the Seller the sum of Dollars ($ ). Check of Purchaser in the sum of Dollars ($ ) to be delivered to Seller's attorney as escrow agent at closing to be held by said agent for a period of sixty (60) days to insure that the Corporation's liabilities have been fully satisfied and liquidated. the parties hereto waiving any and all rights they may have to object to the method by which service was perfected.

all deposits paid to that date shall be returned to Purchaser with no further liability. Bills of Sale (If applicable) EXHIBIT "E" CONDITIONS PRECEDENT Buy/Sell Agreement Checklist Buy/Sell Agreements .Has Your Company Addressed the Critical What If's? The time to prevent disputes is before they occur. Corporate Minutes and Resolutions iv. after a complete review of the Corporation's books. bank statements. Answer Yes or No to each question. Accounts Payable Ledgers ix. Use the checklist below to determine areas where you may need assistance. sales tax receipts. responsibility or obligation. and any other document required by Purchaser to verify the standing. Warranty Deeds (If applicable) xii. Dealing with these contingencies before they manifest themselves is the secret to a harmonious business relationship with other owners. EXHIBIT "B" LIABILITIES OF CORPORATION EXHIBIT "C" PROPERTIES AND ASSETS OF CORPORATION EXHIBIT "D" DOCUMENTS FOR REVIEW i. are inversely proportional to the effort they spend addressing business problems in the event that they should happen. Applicability . Accounts Receivable Ledgers x. Income Tax Returns viii. then. Sales Tax Returns vi. Financial and Operating Statements v. Legal fees as well as sleepless nights will be minimized if you agree to the "What If's" now. records. Alcoholic Beverage Returns (If applicable) vii. Corporate Bylaws iii. status or performance of the Corporation. financial statements. check books . does not approve said purchase. Leasehold Agreement(s) (If applicable) xi. In the event that the Purchaser. Corporate Articles of Incorporation ii.c. Our experience is that owners anxieties created in dealing with one another. in that event.

paid-up life. universal life or an endowment policy?) Should a life insurance trust be used? Should all of the policy proceeds be required to be used to redeem the interest? .e. when should it be paid? ________ Should the buyout price to an owner who goes bankrupt be addressed? If yes. ordinary life. last to die. when should it be paid?________ What interest rate should the obligation bear?_________ Should the buyout price to a disabled owner be addressed? If yes. when should it be paid?________ Should there be a difference in price if there is an amiable parting of ways? If yes. term life. when would it be paid?_______ Should the buyout price to an owner who resigns or is dismissed be addressed? If yes.) Type of Agreement • • • Should the agreement be structured as a redemption agreement or as a crosspurchase agreement? Should the agreement be structured: o To require the seller to sell and the buyer to buy? o To give the buyer an option to require the seller to sell? o To give the seller an option to require the buyer to buy? o To give a right of first refusal to the buyer? o As a combination of any of the above? Should the death of an owner cause an automatic buyout of the owners interest or should his/her family be allowed to remain as an owner? Buyout Price and Time for Payout • • • • • • Should the buyout price from the estate or heirs of a deceased owner be addressed? If yes. when should it be paid? _________ Should the price reflect the fact that you are selling to a long time business associate rather than an outsider? Funding • • • • Should the agreement provide that the buyout be funded by life insurance or some other investment vehicle? If funded with life insurance: Should the type of life insurance used be addressed (i.• • • Should the agreement apply only to the current owners or should it be binding on all owners throughout the life of the business entity? Should the agreement provide that it supersedes all other agreements to redeem a business interest? Is the agreement being reviewed annually? (Changes of price or terms should require a unanimous vote of the owners.

for estate-tax planning purposes. should there be geographic and time limitations? Other • • • • Should there be a period of disability before the other owners of the business have the right to buy out a disabled owner? Should an owner have the right to transfer or assign to a trust. in the event of termination because of death or disability be addressed? Should the disposition of owners' loans in the event of termination other than because of death or disability be addressed? Covenant Not to Compete • Should there be a covenant not to compete? If so. their rights and interests in the business? Should the spouses of the owners sign the buy/sell agreement? Do other family members presently own any stock? . whether receivables or payables.• • Can part of the proceeds be used to help the entity recover from the loss of the owner? Should whole life insurance policies with cash values be transferred to the owner at termination or retirement? Security • • Should the agreement be guaranteed or secured? If so. paying dividends or making loans until all outstanding liabilities to the beneficiaries are paid? Loans • • Should the disposition of owners' loans. should the security be in the form of: o A pledge of business assets? o A personal guarantee by the other owners? o An agreement obligating the entity to refrain from increasing salaries.