Stock Repurchase Agreement is used in the following scenarios:
- You are a stockholder and you want to sell your stock back to the Company
- A company would like to repurchase its shares from its public and private stockholders
You may want to re-sell your stocks to a company for many reasons. For example, this might be a lucrative time for you to re-sell. Or, you want to exit that particular investment.
Similarly, a company may buyback its shares for they offer the greatest potential return for shareholders – a better return than it could get from expanding operations into new markets, investing in the brand or any of the other uses that the company has for cash. In recent times, share buyback has overtaken dividend as a preferred way to return cash to shareholders.
Sample Stock Repurchase Agreement
The following sample agreement for stock purchase will help you get started:
THIS STOCK REPURCHASE AGREEMENT (the “Agreement”) is hereby executed this 6th day of June, 2017 (the “Execution Date”) between XYZ, INC., a Delaware corporation (the “Company”), and [name] (the “Seller”).
The Seller is the owner of a total of 100 shares stock (the “Stock”) of the Company.
The Seller desires to sell the Stock to the Company and the Company desires to repurchase the Stock from the Seller.
IN CONSIDERATION OF and as a condition of the parties entering into this Agreement and other valuable consideration, the receipt and sufficiency of which consideration is acknowledged, the parties to this Agreement agree as follows:
#2 PURCHASE PRICE
The Seller agrees to sell and the Company agrees to purchase all the rights, title, interest, and property of the Seller in the Stock for $600.00 United States Dollars (USD) (the “Purchase Price”).
Upon closing of this agreement, the Corporation will pay the Seller the Purchase Price as a single lump sum.
The Purchase Price shall be paid by cash, check or wire transfer of immediately available funds to an account or accounts to be designated by the Seller.
By this Agreement the Seller understands and agrees that the consideration provided by the Company to purchase the Stock is fair, reasonable and just, and that no additional consideration or compensation will be required with regard to the purchase of the Stock.
#4 REPRESENTATIONS AND WARRANTIES
The Seller warrants and represents to the Company the following:
4.1. Ownership of Shares: <<REDACTED>>
4.2. Authorization: <<REDACTED>>
4.3. No Conflict: <<REDACTED>>
4.4. No Future Participation.<<REDACTED>>
4.5. Access to Information: <<REDACTED>>
4.6. Tax Matters.<<REDACTED>>
#6 Termination of Rights as the Seller
Upon payment of the Repurchase Amount, the Shares shall cease to be outstanding for any and all purposes, and the Seller shall no longer have any rights as a holder of the Shares, including any rights that the Seller may have had under the Company’s Certificate of Incorporation or otherwise.
#7 Withholding Rights
The Company shall be entitled to deduct and withhold from the Purchase Price such amounts as it may be required to deduct and withhold with respect to the making of such payment under the U.S. Internal Revenue Code of 1986, as amended, or any provision of foreign, state or local tax law.
To the extent that amounts are so withheld by the Company, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Seller.
#8 SUCCESSORS AND ASSIGNS
Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any Shares). Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.
#9 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of the State of New York.
#10 ENTIRE AGREEMENT
This Agreement contains the entire understanding of the parties, and there are no further or other agreements or understandings, written or oral, in effect between the parties relating to the subject matter hereof, except as expressly referred to herein.
#11 FURTHER ACTION
Each party hereto agrees to execute any additional documents and to take any further action as may be necessary or desirable in order to implement the transactions contemplated by this Agreement.
The representations and warranties herein shall survive the Closing.
Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.
All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed effectively given (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile, if sent during normal business hours of the recipient or, if not, then on the next business day, (c) five days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one day after deposit with a nationally recognized overnight courier, specifying next-day delivery, with written verification of receipt. All communications shall be sent to the respective parties at the addresses set forth on the signature pages attached hereto (or at such other addresses as shall be specified by notice given in accordance with this Section 10).
IN WITNESS WHEREOF, each of the parties has executed this Stock Repurchase Agreement as of the day and year first above written.
ANNEXURE 1: ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the Seller hereby sells, assigns and transfers unto XYZ, Inc. (the “Company”) 100 shares of the Company’s common stock standing in the Seller’s name on the books of the Company and represented by Certificate Number XXXXXX herewith and does hereby irrevocably constitute and appoint XXXXXX, the Stockholder’s attorney-in-fact, to transfer such stock on the books of the Company with full power of substitution in the premises.
This Assignment Separate from Certificate was executed pursuant to the terms of that certain Stock Repurchase Agreement by and between XYZ, Inc. and the Seller dated XXXXXX