A Share Purchase Agreement (SPA) is executed between the sellers of shares and their purchasers or incoming investors. This legally binding contract is common across various types of businesses and is typically executed when a new shareholder intends to invest capital in a company or when an existing shareholder wishes to sell shares to a third party. The SPA is finalized before closing an investment deal. Below is an example of a Share Purchase Agreement to help you understand the key elements of such a document. The parties involved in a Share Purchase Agreement usually agree to the following terms:

1. **Terms and Conditions**: Under the terms and conditions set forth in the SPA, and in consideration of mutual understanding between the parties, the purchasers agree to buy, and the sellers agree to transfer and deliver, the purchase shares. These shares are to be free and clear of all encumbrances and with all attached and accrued rights. The purchasers will pay the purchase price, which is determined in advance, as full and final payment for the shares. The transferred shares will rank equally with other equity shares of the company in all respects, including entitlement to dividends and other distributions declared or to be declared in respect of the company’s equity capital.

2. **Covenants and Undertakings**: The sellers and the company agree and undertake not to enter into any commitment or transaction that could adversely impact the share transfer. They also agree not to do or permit anything that would constitute a breach of any terms of the SPA. Additionally, the company confirms that it is not involved in, nor has it been threatened with, any significant litigation.

3. **Exercise of Voting Rights**: The sellers agree to exercise their voting rights in shareholder meetings and ensure that the directors nominated by them on the company’s board vote in a manner that gives full legal effect to the SPA’s terms. This may include amending the company’s charter documents if necessary to incorporate the agreement’s terms.

4. **Governing Law and Dispute Resolution**: The governing law, dispute resolution mechanisms, and jurisdiction are decided and included in the agreement.

The above provides an example of what is typically included in a Share Purchase Agreement. Essentially, such an agreement outlines a comprehensive understanding between the sellers and purchasers of shares regarding the transaction. For a detailed understanding and legal advice on a Share Purchase Agreement, including the laws governing such agreements, you can contact Evaluer, which provides top-tier business agreement services. Attorneys at Evaluer specialize in drafting commercial contracts.