Stock Exchange Agreements effectuate contractual arrangements between two parties who have agreed on the exchange of each company’s stock. This exchange is generally part of either a merger or sale of one of the companies.

A typical Stock Exchange Agreement will outline that, subject to the terms and conditions of this Agreement, Company A agrees to transfer an aggregate of 100 Class A common shares of the Company, which represent 100% of the issued and outstanding shares of Company A’s common stock, to the Purchaser, and the Purchaser agrees to issue to Seller an aggregate of 100,000 newly issued, restricted shares of Purchaser’s common stock, representing approximately 51% of the outstanding shares of common stock of Purchaser. At the completion of the exchange, the Company will be a wholly owned subsidiary of Purchaser.

Once these agreements are executed, ownership of the company is transferred to the purchaser.

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Popularity: 5% [?]

Stock Exchange Agreements effectuate an exchange of stocks between two separate entities. These agreements typically contain, at the very minimum provisions addressing the terms of the stock exchange, the specific representations and warranties of both the seller and purchaser, and miscellaneous subjects such as arbitration, modification, waiver, severability, notices, and attorney’s fees. Here is a breakdown of terms:

1. Stock Exchange. This provision should recite something to the effect of: “Subject to the terms and conditions of this Agreement, the company aggress to transfer an aggregate of xyz common shares of the company, representing approximately X% of the issued and outstanding shares of the company, to the purchaser, and the purchaser agrees to issue to the seller an aggregate of xyz newly issued, restricted shares of purchaser’s common stock, representing approximately X% of the outstanding shares of common stock of purchaser.”

2. Representations and Warranties of Seller. Here the seller must represent and warrant that they are duly organized corporation, in good standing under the laws of the applicable jurisdiction, and has all necessary corporate powers to carry on the business of the firm. They must further represent that all shares involved in the agreement are issued and outstanding, fully payable, and free of any liens, encumbrances, options, restrictions, and legal or equitable rights of others not a party to the agreement. Lastly, the seller should represent that it does not have any debt or liability not reflected in the company’s financial statements, nor is it aware of any pending, threatened or asserted claims, lawsuits, or contingencies involving the company that is has not previously disclosed to the purchaser.

3. Representations and Warranties of Purchaser. Similar to the previous section, the purchaser must represent that it is a corporation duly organized under the laws of the applicable jurisdiction, has all necessary corporate powers to own properties and carry on a business, and is duly qualified to do business in the applicable state. They must also represent that the relevant shares being exchanged are issued and outstanding, that it is a “reporting company” as defined under the Securities Exchange Act of 1934, and is current in all of its obligations. Lastly, the purchaser should represent that it is in compliance with all local, state, and federal securities laws, and that is has fully disclosed all material facts, in either its financial statement or prospectus.

4. Miscellaneous. Finally, the agreement should cover whether or not the parties agree to binding arbitration if a dispute should arise, under what conditions the agreement can be modified, whether the agreement can be executed in counterparts or must be executed simultaneously, and where all notices should be sent.

After executing a Stock Exchange Agreement, the trade of such shares should be effectuated.

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SmartRules provides step by step guides to local rules and civil procedure for state courts & federal courts throughout the country.

Popularity: 6% [?]

A Note Purchase Agreement is a contract for the purchase of a type of financial instrument called a “note”, the purchase of which acts as an investment in that company. Upon selling the note, the company receives a significant amount of cash that it can invest into the business. As with any investment arrangement, certain conditions must be met, and the company must provide certain promises, covenants, representations and warranties to the purchaser of the note.

The most important provisions in the agreement are the representations and warranties that must be made by the company to the purchaser of the note. The company must promise several things, including: (1) that it is an entity duly organized and validly existing and in good standing; (2) that it has “due authorization” to conduct this transaction; (3) that all agreements related to the transaction, other than the notes themselves, are of “binding effect” and enforceable against third parties; (4) that the execution of the financing documents does not contravene or conflict with any of the Company’s organization documents; (5) that the company has previously furnished to the purchasers all important SEC Reports, including its Form 10-K Annual Report and Definitive Proxy Statement; (6) that the sale of the notes constitutes a valid issuance of stock; and (7) that there is no pending litigation against the company except as disclosed.

Only if it can honestly make these representations can a company validly execute a Note Purchase Agreement.

Popularity: 4% [?]

A Shareholder Agreement is a written understanding between or among the shareholders of a company. It may also be called a Stockholders’ Agreement. They are more prevalent among small, closely held companies. Their purpose is to supplement the primary governing documents-the articles of incorporation and other constitutional documents-of the company, to allow the shareholders to elaborate on the running of the company. The constitutional documents remain controlling, however, especially against outside parties.

Average Shareholder Agreements may be full of a number of important provisions, which may or may not be of importance either to the directors or the shareholders.

For management, relevant clauses include rules or guidelines on:

• The transfer of shares;
• Rights of first refusal, either for the company or other shareholders;
• Share distribution;
• The composition, duties, and rights of the board of directors;
• Compensation for the board of directors; and
• Change of control scenarios, especially death and retirement.

For shareholders, the relevant provisions talk to:

• The duties and rights of the shareholders;
• Capital contributions;
• Classes of stock;
• Price of stock;
• Vesting dates;
• Dispute resolution mechanisms; and
• Voting.

The reasons for the use of Shareholder Agreements include:

• Privacy - constitutional documents are open to the public; shareholder agreements may be kept private.
• Ease of use - shareholder agreements are easier to produce, implement, change, and terminate than are constitutional documents; and they may be less expensive, too.
• Adaptability - they can conform to whatever purpose the shareholders have in mind for them.
• Additional protection - for minority shareholders.

Popularity: 4% [?]

An engagement agreement is a written agreement in which two parties contract for the provision of goods and/or services. One party provides the good or service, the other party receives and pays for it. Exactly who, what, when, where, and why are all matters left to the parties. Not to sound too nebulous, there are in fact guidelines and even rules. But the engagement agreement is very much a creature of the parties’ design.

One can be excused for believing that an engagement agreement is basically an employment agreement. Indeed, in certain circumstances, there are virtually no differences between the two types of contracts. For example, if a company signs an engagement agreement with an individual-say, General Motors engages Ms. Jones to be its Vice President in charge of marketing-then this arrangement is pretty much identical to GM having hired Ms. Jones by way of an employment agreement. In both scenarios and in both documents, Ms. Jones works for GM, is compensated by GM, and likely receives a number of the same benefits-stock, options, healthcare coverage, severance compensation, even relocation expenses perhaps. Further, both agreements will carry a term of employment, provisions for termination by the parties, and non-competition and/or non-solicitation clauses. What is more, in both cases, Ms. Jones will probably be authorized to sign documents on behalf of GM, binding it. Ms. Jones is thus not an independent contractor but rather, an employee, with all the benefits and all the liabilities attendant to that position. Thus, in this scenario of Ms. Jones working for GM, there is nothing to separate engagement agreements-as a category, bear in mind-from employment agreements.

Let us take another scenario, however-one that shows engagement agreements in a different, perhaps more familiar light. In this scenario, GM signs an agreement with Ernst & Young for the latter to provide accounting services to the former. In this case, Ernst & Young works for GM but in the capacity of an independent contractor. Ernst & Young receives compensation from GM for its services (and probably gets reimbursed for its expenses, too), but the employees of Ernst & Young do not receive the same benefits-healthcare, 401K, severance, and so forth-from GM as do the regular GM employees, like Ms. Jones. Moreover, while Ernst & Young may have the capacity to act on behalf of GM, as its agent, it also may not. GM would have to grant this right to Ernst & Young-the mere fact of engagement by GM does not convey this right. At the same time, the engagement agreements for Ms. Jones and for Ernst & Young probably both discuss term, termination of the agreement, and non-competition, among a number of boilerplate provisions.

In the latter scenario with Ernst & Young, perhaps the definitive characteristic is the independent contractor status of the party being engaged. Typically, such party is being asked to perform a service that a normal employee cannot and would not to that level. This service could be nearly anything, from legal and accounting services to artistic and entertainment ones.

As was previously mentioned, engagement agreements are highly adaptable to the parties’ wishes. Whereas an engagement agreement to hire a law firm would talk about malpractice, client’s funds, billing, and confidentiality, among other matters, an engagement agreement to hire a carpenter would talk about craftsmanship, timeliness of services, installation of the finished product, and so forth.

Popularity: 13% [?]