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Sale Of Business By Transfer Of Capital
Stock of Closely Held Corporation
1. Introduction. Agreement made [date] between [name],
residing at [address], and [name], residing at [address]
(Sellers), and [name], residing at [address] (Buyer).
2. Sale and Purchase of Stock.Sellers will sell to Buyer
[number] shares of the issued and outstanding capital stock of
[name] (Corporation) free of all liens and encumbrances, that being
all of Corporation's issued and outstanding capital stock, and Buyer
will purchase the shares subject to the provisions of this Agreement.
It is understood that [number] shares are owned by [name], and
[number] shares are owned by [name].
3. Purchase Price.The purchase price is ..... dollars
($.....) per share or a total of ..... dollars ($.....).
4. Payment of the Purchase Price.The entire purchase price
shall be paid to Sellers on the closing of the sale by certified check
drawn on a local bank.
4. Payment of the Purchase Price in Installments. The
purchase price shall be paid as follows: ..... dollars ($.....) on the
closing of sale by certified check drawn on a local bank.The balance
of the purchase price shall be paid in [number] equal monthly
installments, the first of which shall be payable one month from the
date of closing, and each succeeding payment shall be payable on the
[number] day of each succeeding month.The purchase price shall be
evidenced by a series of promissory notes, on for each installment,
executed by Buyer and delivered to Sellers at the closing.The notes
shall be payable at a local bank, shall bear interest at ..... percent
(.....%) per annum, and shall provide that upon default in the payment
of any one note in the series, the remaining unpaid notes shall become
due and payable at the holders option.
[To be used in conjunction with Alternative Paragraph]
4A. Stock as Security for Promissory Notes.To secure the
payment of the promissory notes described in Paragraph 4, Buyer shall,
at the closing deposit with each Seller the stock sold by Seller and
purchased by Buyer.The stock shall be indorsed in blank for transfer.
If buyer defaults in the payment of any notes and Seller declares the
remaining notes due and payable, Seller, at his option, may sell the
stock and apply the proceeds first to the expenses of the sale and then
to payment of the balance of notes with interest.Any surplus remaining
after such application shall be remitted to Buyer.
5. Seller's Representations and Warranties.To induce Buyer
to purchase their stock, Sellers jointly and severally represent and
warrant the following:
a. Corporation Duly Organized.Corporation is a
business corporation organized in accordance with the laws of [state]
and is authorized to engage in the business of [nature of business].
b. Corporation in Good Standing.Corporation is in good
standing.All taxes currently due, including income and franchise
taxes, have been paid.There are no pending actions or proceedings to
limit or impair Corporation's power to engage in business or to dissolve
c. Stock Properly Issued.Sellers' shares constitute
all the issued and outstanding shares of Corporation's stock. The
shares have been properly issued and are fully paid and nonassessable.
d. Shares Free of Liens or Encumbrances.Sellers' shares
are free of any liens, encumbrances, or agreements of any kind,
including stockholders' agreements or voting trusts.
e. Corporation's Assets.Schedule A, attached to this
Agreement [Omitted] and made a part of it, lists and describes each
asset owned by Corporation as of the date of this Agreement. Unless
otherwise stated, Corporation is the sole owner of each asset. None of
the assets is subject to any liens or encumbrances except as otherwise
stated in Schedule A.
f. Corporation's Liabilities.Schedule B, attached to
this Agreement [omitted] and made a part of it, lists and describes
Corporation's debts and liabilities as of the date of this Agreement,
including the name and address of each of Corporation's creditors, the
amount owed to each creditor, and the last date on which the debt or
liability may be paid or discharged.
g. Corporation's Financial Condition.There is attached
to this Agreement and made a part of it Corporation's most recent
financial statements [omitted] consisting of a balance sheet as of
[date] and an income statement for the year ended [date. These
financial statements have been examined by [CPA's], whose report is
annexed to the statements [omitted].There will be no changes in
Corporation's financial condition as set out in the balance sheet
between the date of the balance sheet and the closing of this
transaction except for those changes that will normally occur in the
regular course of Corporation's business.
h. No Suits Pending or Imminent.There are no actions
at law or equity or administrative proceedings pending against
Corporation or in which Corporation is a plaintiff, defendant,
petitioner, or respondent except [list of suits]. Corporation does<
not propose to commence an action at law or equity or an administrative
proceeding in which it will be a plaintiff or petitioner.There are no
actions at law or equity or administrative proceedings pending in which
it is anticipated that Corporation will join or be joined as a party.
i. No New Contracts Before Closing.Corporation will
not enter into any new contracts or agreements between the date of this
Agreement and the closing except in the regular course of business and
even then only for the purpose of [list of purposes].
j. No Dividends.The Board of Directors of Corporation
have not declared any dividends since the date of the balance sheet
attached to this Agreement and more fully described in Paragraph 5 (g).
There are no dividends unpaid that were declared in an earlier period.
From the date of this Agreement to the closing, the Board of Directors
of Corporation will declare no dividends.
k. No Salary Increases; No New Employees.From the date
of this Agreement to the closing, Corporation will not increase any
employee's salary or hire any new employee without first obtaining
Buyer's written consent.
l. Going Business.At the time of the closing,
Corporation will be a going business.If this representation is
breached, Buyer may terminate this Agreement and demand any sums Buyer
has paid Sellers on account of the purchase price of Seller's shares.
Upon return of those sums, this Agreement shall terminate and have no
further effect, and Buyer and Sellers shall have no further rights
against each other.
m. Officers and Directors.Sellers are the only
officers and directors of Corporation.From the date of this Agreement
to the closing, Sellers will not elect any other directors or appoint
any other officers except as Buyer may direct in writing.
6. Sellers' Indemnity.Sellers jointly and severally
guarantee payment of any obligations, debts, and liabilities of
Corporation that exist before the closing and are not included in the
balance sheet attached to this Agreement unless they were incurred
following the date of the balance sheet in the regular course of
business or pursuant to the terms of this Agreement.The obligations,
debts, and liabilities described in this Paragraph 6 include any that
mature after the closing but are based upon Corporation's activities
before the closing.Sellers will indemnify Buyer and hold Buyer
harmless by reason of any loss, including attorney fees, that Buyer or
Corporation may suffer because of Seller's failure to make any payment
required pursuant to this Paragraph 6.
7. Buyer's Representations.Buyer represents and warrants
that Buyer has inspected Corporation's premises, inventory, furnishings,
fixtures, equipment, and other physical assets and knows their
condition.Buyer further represents and warrants that Buyer has
examined Corporation's books of account and other business records and
is satisfied that they properly reflect Corporation's past and present
earnings and financial condition.Buyer represents and warrants that
Buyer has not relied upon any representations by Sellers or others as to
Corporation's past or present earnings or its prospects of future
8. Representation to Survive Closing.The representations and
warranties contained in Paragraph 5 and 7 shall survive the closing.
9. Risk of Loss or Destruction.If Corporation's business is
terminated before the closing by loss or damage caused by fire, wind, or
other casualty, Buyer may terminate this Agreement and demand the return
of any sums Buyer may have paid to Sellers on account of the purchase
price of Seller's shares.Upon return of those sums, this Agreement
shall terminate and have no further effect, and Buyer and Sellers shall
have no further rights against each other.If the loss or damage is not
sufficiently severe to terminate or interrupt Corporation's business,
the purchase price of the shares shall be adjusted to represent the
actual monetary loss to Corporation.
10. Documents to Be Delivered to Buyer at Closing. At the
closing, Sellers shall deliver to Buyer the following:
a. Stock Certificates.Certificates
representing [number] shares of
Corporation's capital stock, indorsed for
transfer in blank, with all necessary transfer
tax stamps affixed;
b. Corporate Books and Records.Corporation's
books of account and business records, minute
book, stock transfer book, blank stock
certificates, and seal;
c. Resignations.Sellers' resignations as
officers and directors of Corporation; and
d. Agreements.All agreements, contracts,
and leases to which Corporation is a party.
11. Sellers' Restrictive Covenants.For a period of
[number] years from the date of closing, Sellers will not either
jointly or severally, directly or indirectly, either as principals,
partners, agents, managers, employees, stockholders, directors,
officers, or in any other capacity, engage or be interested in the
conduct of a business similar to the one in which Corporation is
presently engaged in any of the following states or territories of the
United States [list].
11.Employment of Sellers by Corporation.At the closing of
this transaction and as condition thereof, Corporation will enter into
employment agreements with Sellers.The form and terms of the
agreements shall conform to the employment contracts that are attached
to this Agreement [omitted] and made a part of it.
12. Arbitration. Any and all disputes between the parties
arising under this Agreement shall be determined by arbitration in
[city] before the American Arbitration Association in accordance with
its rules then obtaining, and judgement may be entered upon the award.
13. Time and Place of Closing.The closing shall take place
at [address], Corporation's office, on [date] at [hour] AM [PM]
[time zone], or such other time or place as the parties may agree upon
14. Agreement Binding.This Agreement is binding upon and
shall inure to the benefit of the parties' heirs, executors,
administrators, representatives, successors, and assigns.
15. Applicable Law.This Agreement shall be constructed in
accordance with the laws of [state], the state in which Corporation is
*** If Required By State Law ***
This Section for Notary:
State of _________
County of ________ [COUNTY]
On [DATE] before me, [NAME OF NOTARY], notary, personally appeared [NAME OF PERSON(S) INVOLVED], personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
My commission expires: _____