Define: Stock Purchase Agreement

A stock purchase agreement is a legally binding contract between a buyer and a seller for the purchase and sale of shares of stock in a company.

Key provisions in a stock purchase agreement include the purchase price, the number of shares being sold, representations and warranties of the seller, conditions to closing, and any post-closing obligations.

Yes, a stock purchase agreement can be used for both public and private companies, although there may be additional regulatory requirements for public companies.

Due diligence should include a review of the company’s financial statements, contracts, intellectual property, litigation history, and any other relevant information to assess the company’s value and potential risks.

Yes, a stock purchase agreement can be terminated before closing if certain conditions are not met, such as failure to obtain necessary approvals or breach of representations and warranties.

Yes, there may be tax implications for both the buyer and the seller, such as capital gains tax or tax on dividends received. It is advisable to consult with a tax professional to understand the specific tax consequences.

If the seller breaches the representations and warranties, the buyer may have the right to seek damages or terminate the agreement, depending on the terms of the agreement.

In most cases, a stock purchase agreement cannot be assigned to another party without the consent of all parties involved. However, there may be exceptions depending on the specific terms of the agreement.

The treatment of employees after a stock purchase agreement depends on the terms negotiated between the buyer and the seller. The buyer may choose to retain the employees or implement changes in the workforce.

While it is not legally required to have legal representation, it is highly recommended to have an attorney review and assist in the negotiation and drafting of a stock purchase agreement to ensure your rights and interests are protected.