Equity Repurchase Agreement for the United States

Equity Repurchase Agreement Template for United States

An Equity Repurchase Agreement is a legal document used in the United States that governs the terms and conditions under which a company buys back its own shares from existing shareholders. The agreement details the purchase price, number of shares, closing conditions, and representations and warranties from both parties. It must comply with federal securities laws, state corporate laws, and applicable stock exchange rules, while addressing tax implications and existing shareholder rights.

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What is a Equity Repurchase Agreement?

The Equity Repurchase Agreement is commonly used when a company decides to reduce its outstanding shares, manage its capital structure, or provide an exit mechanism for shareholders. This document is particularly important in the United States where stock repurchases are subject to strict securities regulations and corporate governance requirements. The agreement typically includes specific provisions about valuation, payment terms, regulatory compliance, and timing of the transaction. It's essential for both private and public companies engaging in share buybacks, whether as part of a broader corporate strategy or in response to specific circumstances such as employee departures or shareholder exits.

What sections should be included in a Equity Repurchase Agreement?

1. Parties: Identification of the company and selling stockholder(s)

2. Background: Context of the repurchase and current shareholding structure

3. Definitions: Key terms used throughout the agreement

4. Purchase and Sale: Core transaction terms including number of shares and price

5. Closing: Timing and mechanics of the transaction

6. Representations and Warranties: Standard declarations by both parties regarding authority, ownership, and compliance

7. Covenants: Ongoing obligations of the parties before and after closing

8. Conditions to Closing: Prerequisites that must be satisfied before the transaction can close

9. Termination: Circumstances under which the agreement may be terminated

10. Miscellaneous: Standard boilerplate provisions including governing law, notices, and amendments

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

1. Right of First Refusal: Provisions regarding pre-emptive rights of other shareholders, included when required by existing shareholder agreements

2. Employee-Specific Provisions: Special terms applicable when repurchasing shares from current or former employees

3. Tax Matters: Specific provisions regarding tax treatment and obligations, included when special tax considerations apply

4. Regulatory Compliance: Special provisions for compliance with specific regulations, included when the transaction triggers regulatory requirements

What schedules should be included in a Equity Repurchase Agreement?

1. Schedule A - Share Certificate Details: Detailed information about the share certificates being transferred

2. Schedule B - Calculation of Purchase Price: Formula or methodology for determining the purchase price, if applicable

3. Schedule C - Required Approvals: List of all necessary corporate and regulatory approvals

4. Schedule D - Disclosure Schedule: Exceptions to representations and warranties made by the parties

5. Appendix 1 - Form of Stock Transfer: Standard form for executing the transfer of shares

6. Appendix 2 - Board Resolutions: Required corporate authorizations and approvals

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 | Serial Founder & Legal AI Author

Jurisdiction

United States

Publisher

Genie AI

Document Type

Security Agreement

Cost

Free to use
Industries

Federal Securities Laws: Key regulations including Securities Act of 1933, Securities Exchange Act of 1934, SEC Rules and Regulations, and Rule 10b-18 (safe harbor provisions for stock repurchases)

Corporate Law: State-specific corporate laws (particularly Delaware General Corporation Law) and requirements relating to corporate charter and bylaws

Tax Considerations: Internal Revenue Code provisions, tax implications of stock repurchases, and treatment of transactions as dividend vs. capital gains

Stock Exchange Rules: NYSE or NASDAQ requirements, disclosure requirements, and trading restrictions applicable to listed companies

Employment Laws: ERISA considerations and employment agreement implications when repurchasing stock from employees

Contractual Obligations: Existing shareholder agreements, loan covenants that might restrict repurchases, and right of first refusal provisions

State Securities Laws: Blue Sky Laws and state-specific registration requirements for securities transactions

Antitrust Laws: Clayton Act and Hart-Scott-Rodino Act considerations, particularly for large transactions

Sarbanes-Oxley Act: Internal control requirements and disclosure obligations for public companies

Dodd-Frank Act: Corporate governance requirements and executive compensation considerations affecting stock repurchases

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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