Equity Buyback Agreement Template for United States

A legally binding agreement under U.S. law that outlines the terms and conditions under which a company repurchases its own shares from existing shareholders. The agreement details the purchase price, number of shares, payment terms, representations and warranties, and closing conditions. It ensures compliance with federal securities laws, state corporate laws, and applicable tax regulations while protecting both the company's and shareholders' interests.

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What is a Equity Buyback Agreement?

An Equity Buyback Agreement is utilized when a company decides to repurchase its own shares from existing shareholders, whether for treasury stock, to increase earnings per share, or to facilitate exit of certain shareholders. This document is crucial in the United States where such transactions must comply with SEC regulations, state corporate laws, and tax requirements. The agreement typically includes specific details about share valuation, payment terms, representations and warranties, and closing conditions. It's particularly important for ensuring regulatory compliance and protecting both parties' interests in the transaction.

What sections should be included in a Equity Buyback Agreement?

1. Parties: Identification of the company and selling shareholders

2. Background: Context of the buyback and existing shareholding structure

3. Definitions: Key terms used throughout the agreement including share classes, valuation terms, and regulatory references

4. Purchase and Sale: Core terms of the buyback including price, number of shares, and payment terms

5. Closing: Timing and mechanics of the transaction including conditions precedent

6. Representations and Warranties: Statements of fact from both parties regarding authority, ownership, and compliance

7. Governing Law: Applicable jurisdiction and dispute resolution mechanisms

What sections are optional to include in a Equity Buyback Agreement?

1. Employee Matters: Provisions relating to employment relationships, equity compensation plans, and ongoing obligations when buyback involves employee shareholders

2. Regulatory Approvals: Provisions detailing required regulatory clearances and compliance obligations for larger transactions

3. Tax Matters: Specific provisions addressing tax treatment, obligations, and indemnities for complex tax scenarios

What schedules should be included in a Equity Buyback Agreement?

1. Share Details Schedule: Comprehensive details of shares being repurchased including certificate numbers and share classes

2. Calculation Schedule: Detailed methodology for determining purchase price and any adjustments

3. Required Approvals Schedule: List of necessary corporate and regulatory approvals required for completion

4. Form of Transfer Instrument: Standard form document for executing the share transfer

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents

Jurisdiction

United States

Publisher

Genie AI

Document Type

Equity Agreement

Cost

Free to use

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