The Preliminary Share Purchase Agreement is utilized in the early stages of share acquisition negotiations under U.S. jurisdiction. It serves as a stepping stone toward a definitive agreement, typically employed when parties have reached preliminary understanding but require additional time for due diligence and detailed negotiations. This document outlines essential terms while maintaining flexibility for modifications, including purchase price mechanisms, conditions precedent, and basic warranties. It often includes provisions for exclusivity periods and break fees, crucial for protecting both parties' interests during the negotiation phase. The agreement must comply with federal securities laws and state-specific regulations.
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1. Parties: Identification of buyer(s) and seller(s) with full legal names and addresses
2. Background: Context of the transaction and brief company history
3. Definitions: Key terms used throughout the agreement
4. Subject Matter of Sale: Description of shares being sold, including class and number
5. Purchase Price: Agreed price and payment terms
6. Conditions Precedent: Conditions that must be met before closing
7. Representations and Warranties: Statements of fact and assurances from both parties
8. Closing: Process and requirements for completion of the transaction
9. Governing Law: Specification of applicable law and jurisdiction
1. Due Diligence: Process and timeline for buyer's investigation of company
2. Break Fee: Compensation if deal fails under specific circumstances
3. Exclusivity: Prohibition on seller negotiating with other parties during specified period
4. Confidentiality: Obligations regarding confidential information exchanged during the transaction
5. Employee Matters: Provisions relating to employee stock ownership or other employment considerations
1. Schedule A - Share Certificate Details: Copy of share certificates and transfer forms
2. Schedule B - Disclosure Schedule: Exceptions to representations and warranties
3. Schedule C - Corporate Documents: Key corporate documents including articles, bylaws
4. Schedule D - Financial Statements: Recent financial statements of the company
5. Schedule E - Due Diligence Requirements: List of documents and information required for due diligence
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