Tag: Simple Asset Purchase Agreement

Stock Transfer Agreement: Everything You Need To Know About It

On June 4, 2020, in Corporate, by John A. Weber IV, ESQ.

Alternatively known as a share purchase agreement or a stock purchase agreement, a stock transfer agreement lays down the terms and conditions of the sale and purchase of the shares of a company. This agreement transfers all the rights in the shares from one person to another.  This agreement differs from an “asset purchase agreement” and hiring the right attorney who knows the differences could very well mean the difference between success and failure of your new business. 

Key Clauses of Stock Transfer Agreement

Here is a list of the key clauses of a stock transfer agreement:

  1. Transfer of shares
  2. Transfer of price
  3. Cost of transfer
  4. Mode of payment
  5. Transfer completion
  6. Representations and warranties of the transferor
  7. Representations and warranties of the transferee
  8. Conditions precedent
  9. Conditions subsequent
  10.  Execution and delivery
  11.  Modification of the agreement
  12.  Termination of the agreement
  13.  Governing law and jurisdiction
  14.  Arbitration
  15.  Notices

The agreement should state every detail clearly. Whenever a company or a person invests in shares of another company or purchases shares from an individual, it creates the need for a corporate stock transfer agreement.

Benefits of a Stock Transfer Agreement

There are a few benefits of a stock transfer agreement:

  1. A stock transfer agreement puts all the terms and conditions in writing and gets both parties on the same page. This prevents any misunderstandings from cropping up.
  2. This agreement shows that the transferor is the owner of the stock.
  3. It leads to the creation of a binding transfer.
  4. Representations and warranties of the transferor, as well as the transferee, are mentioned in the stock transfer agreement. This leaves no room for misrepresentations of either party.

Violation of a Stock Transfer Agreement

A stock transfer agreement has a clause that mentions the actions that can be taken in case any party violates it. Most of the agreements contain an arbitration clause, which states that in case a clause is violated, the matter will be resolved by arbitration. Alternatively, other forms of dispute resolution may be mentioned.

The Law Firm of Vaughn, Weber & Prakope, PLLC has rich expertise in dealing with the formation of a stock transfer agreement. Seek help now!

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Asset Purchase Agreements: Errors You Cannot Afford To Commit

On March 16, 2020, in Corporate, by John A. Weber IV, ESQ.

Commercial transactions often involve an asset purchase agreement (“APA”) that is vital to business activity. But there can be a few conditions that make things go wrong.

Drafting of a simple asset purchase agreement is essential for the successful execution of the deal.

Below are the errors to avoid or else they can cost you dearly:

  • Essential Parties are Excluded from APA

There may be a case when a buyer signs an APA with company X, while the actual owner is company Y or a shareholder in company X. The same can happen with the seller also. To avoid this, make sure that only the essential and real parties are a part of the deal.

  • Failure to Address the Pre-conditions to the Deal

Failing to make sure pre-conditions are resolved before the completion of the transaction can increase the complexity of the deal. These conditions are clearance of the seller’s debts, third party consents, transfer of key employees, banking approvals, and approvals from other authorities.

  • What are “The Assets” that you are purchasing?

IYou want to make sure that you identify each and every asset that you are purchasing.  Some assets can be tangible (e.g., refrigerators, soda machines, furnishings) or intangible (e.g., business name, lease).  You should determine which assets are owned or leased.  You should inspect the tangible assets to make sure that they are in working order.  For the assets that you are purchasing, you want to make sure that the seller actually has ownership of them and has the right to transfer them to you.  With the leased equipment, you need to decide if you want to (and can) assume the lease and, if so, what are the terms of the lease.

  • No Specifications about Closing Requirements

All actions to be taken, and all documents to be provided at closing, should be clearly identified by the standard asset purchase agreement. Failure to specify such conditions makes it difficult for both parties in the long run.

  • Failure to Change Signatories

Generally, buyers don’t feel the need to change the signatories to banking and other business accounts. But it is essential to keep third parties informed at the right time about such changes.

With the Law Firm of Vaughn, Weber & Prakope, PLLC, you will always be able to make the right legal decisions when it comes to the formation of LLC asset purchase agreements. Contact us to get the most appropriate legal guidance from lawyers with extensive knowledge gained over years of experience.

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The Role of the Contract in Simple Asset Transfer Agreement

On November 12, 2019, in Corporate, by John A. Weber IV, ESQ.

Buying and selling a business requires the handling of several legalities. Simple Asset Transfer Agreement signing is one of those key legalities. Both buyer and seller sign this agreement for the following purposes:

  • Transaction completion
  • For transferring the ownership of an organization’s business operations into the buyer’s name.
  • To help sellers transfer the ownership of a company’s assets into the buyer’s name.
  • To ensure payment and security of the same for seller.

To get to closing, it is necessary to have knowledge about the structure of a Simple Asset Transfer Agreement including various things such as:

  • The types of assets and liabilities involved in the sale.
  • The payment structure for the sale.
  • The ancillary documents required to be filed (i.e. deeds, lease extensions, tax forms, etc.).

The objective of this post is to explain to you the role of the Contract in a Simple Asset Transfer Agreement.

Contracts:

Contract creation is important for selling even a portion of your company’s assets. The creation of a contract, outlining all the details related to the agreement, is recommended. This contract sets the terms for the buyer and seller and delegates their respective rights and obligations relating to the impending transaction.

Remember, preparing and signing a contract is a complex process. This process should only be performed by an experienced lawyer for a simple asset transfer agreement. We at the Law Firm of Vaughn, Weber & Prakope, PLLC can make the difference. Our team of experienced lawyers can make it easy for you to prepare a legally correct Simple Asset Transfer Agreement. Contact us at (516) 858-2620 to discuss what we can do for you.

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