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Small Business Stock Purchase Agreement

Small Business Stock Purchase Agreement Template for United States

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Key Requirements PROMPT example:

Small Business Stock Purchase Agreement

"I need a Small Business Stock Purchase Agreement for the acquisition of a local coffee shop chain with 3 locations, where 75% of shares will be purchased upfront and the remaining 25% will be subject to a 2-year earn-out based on performance metrics to be achieved by March 2025."

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Document background
The Small Business Stock Purchase Agreement is essential when transferring ownership interests in a small business through stock sale. It's commonly used in the United States when owners want to sell their stake, bring in new investors, or facilitate complete ownership changes. The agreement includes critical elements such as share valuation, payment structures, representations about the business's condition, and protections for both parties. It must comply with federal securities laws, state-specific requirements, and often includes provisions for due diligence findings. This document is particularly important for protecting both parties' interests and ensuring a clear understanding of the transaction's terms.
Suggested Sections

1. Parties: Identification of buyer(s) and seller(s) with full legal names and addresses

2. Background: Context of the transaction and brief description of the business

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale of Shares: Details of shares being sold, including quantity, class, and price

5. Purchase Price and Payment Terms: Total consideration and payment structure

6. Closing: Timing and mechanics of the transaction closing

7. Representations and Warranties: Statements of fact by both parties about the business and shares

8. Covenants: Ongoing obligations of the parties

Optional Sections

1. Earn-out Provisions: Additional provisions used when part of purchase price is contingent on future performance metrics

2. Employee Matters: Provisions regarding retention, compensation, and management of key employees post-closing

3. Non-compete Provisions: Restrictions on seller's future business activities to protect buyer's interests

Suggested Schedules

1. Disclosure Schedule: Detailed disclosures related to representations and warranties

2. Share Certificate(s): Copies of share certificates being transferred

3. Financial Statements: Recent financial statements of the business

4. Corporate Documents: Articles of incorporation, bylaws, and other corporate records

5. Material Contracts: List and copies of significant business contracts

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Linkedin in social icon imageX social icon image
alex.den.21@genieai.co
Relevant legal definitions
Agreement
Business Day
Closing
Closing Date
Company
Confidential Information
Disclosure Schedule
Effective Date
Encumbrance
Financial Statements
Governing Law
Intellectual Property
Knowledge
Law
Liabilities
Material Adverse Effect
Material Contracts
Ordinary Course of Business
Party
Parties
Person
Purchase Price
Purchased Shares
Representatives
Securities Act
Seller's Knowledge
Shares
Subsidiary
Tax
Taxes
Tax Returns
Transaction Documents
Adjusted Purchase Price
Board
Earn-out Payment
Earn-out Period
Employee Benefit Plans
Environmental Laws
ERISA
Escrow Account
Escrow Agent
Governmental Authority
Indemnified Party
Indemnifying Party
Intellectual Property Rights
Interim Period
Licensed IP
Material Customers
Material Suppliers
Permits
Real Property
Working Capital
Clauses
Parties and Recitals
Share Purchase
Purchase Price
Payment Terms
Closing Conditions
Representations and Warranties
Seller Representations
Buyer Representations
Company Representations
Due Diligence
Confidentiality
Non-Competition
Non-Solicitation
Transfer Restrictions
Closing Mechanics
Pre-Closing Covenants
Post-Closing Covenants
Indemnification
Survival
Tax Matters
Employee Matters
Access to Information
Further Assurances
Notices
Assignment
Amendments
Governing Law
Dispute Resolution
Force Majeure
Severability
Entire Agreement
Earn-Out Provisions
Escrow
Working Capital Adjustment
Environmental Matters
Intellectual Property Rights
Real Property
Material Contracts
Customer and Supplier Relations
Insurance
Bank Accounts
Transition Services
Right of First Refusal
Tag-Along Rights
Drag-Along Rights
Industries

Securities Act of 1933: Federal law governing registration requirements, disclosure obligations, and anti-fraud provisions for securities offerings

Securities Exchange Act of 1934: Federal law covering ongoing reporting requirements, trading regulations, and insider trading provisions for securities transactions

Internal Revenue Code: Federal tax regulations addressing tax implications of stock sales, capital gains considerations, and stock transfer tax requirements

Small Business Investment Act: Federal legislation specifically focused on regulations governing small business transactions and investments

Blue Sky Laws: State-specific securities laws covering registration requirements, disclosure obligations, and anti-fraud provisions at the state level

State Corporate Laws: State-level regulations governing corporate governance, shareholder rights, and stock transfer restrictions

State Contract Laws: State-level laws governing contract formation, enforcement, representations and warranties, and remedies for breach

Uniform Commercial Code (UCC): Standardized commercial laws, particularly Article 8 governing investment securities, transfer of securities, and rights of purchasers

Federal Trade Commission Regulations: Federal regulations governing fair trade practices and anti-competitive concerns in business transactions

Antitrust Laws: State and federal laws addressing market concentration issues and competition considerations in business transactions

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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