subject: General Terms of Share Purchase Agreement (Part 8) [print this page] General Terms of Share Purchase Agreement (Part 8)
Share Purchase Agreement
Please be aware that the information below is not legal advice and is provided only for informational and educational purposes . If you need legal advice about drafting, reviewing, interpreting or resolving disputes concerning a share purchase agreement, you should definitely seek professional assistance (e.g. make a post on Dynamic Lawyers). They have Toronto, Ottawa, Hamilton, Mississauga, Brampton, and other Ontario business lawyers registered on the website who can answer your questions or help you with your share purchase agreement and about other legal matters,as a matter of fact.
This is the eighth blog (of many) dealing with a typical share purchase agreement. In his first blog,Michael tackled the idea about about when share purchase agreements are used, an outline of a typical share purchase agreement, and talked about the introductory clause. In his second blog, Michael discussed the background section of a share purchase agreement, as well as the meaning and interpretation. In his third blog, he talked about the terms of the actual purchase and sale of the shares (e.g. price, closing costs, tax matters, etc.). In his fourth blog, he discussed the representations and warranties given by the parties. In his fifth blog he talked about COVENANTS, which are conditions which the parties must do or avoid doing during the time after the signing of the Share Purchase Agreement and leading up to and including the Closing Date. In his sixth blog,he discussed how the deal closes (closing conditions, closing place and deliveries). In his seventh blog, this blog, he talked about a really contentious matter in share purchase agreements: indemnification provisions. In this blog, Michael will be reviewing some of the general clauses you find near the end of the agreement.
General Terms
At the end of a typical Share Purchase Agreement, you usually find the following specifications:
Agreement and Counterparts
This section mentions how the parties can enter into this agreement (e.g. by fax, email, etc.). The parties can send each other copies of the agreement and all of the copies together shall form the same agreement. This is particularly helpful when you've got a lot of parties signing the agreement. This section will also state that schedules, appendices, etc. are included into the agreement.
Entire Agreement
This section will mention that there is nothing beyond the four corners of the Agreement itself that will rule the subject matter of the agreement (i.e. the share purchase). If you want to have a different confidentiality, non-compete, or non-solicitation agreement as part of this agreement, you want to make reference to it in this section.
Further Assurances
This section basically says that the parties shall promptly do what they have to do in order to make this deal happen. This may include, for example, getting consents and approvals (from within and externally). It may also include paying off liabilities, liens, and other debts.
Governing Law
Which law will rule arguments concerning the interpretation or enforcement of the share purchase agreement? Usually, parties would wantt to have their own local laws rule because it will be most convenient and cost-effective for them. But each jurisdiction has its own laws and parties should be careful of which legal jurisdictions are better and advantageous for them (i.e. as Vendor or Purchaser) based on judicial precedent.
Notice
Notice can be made: By fax, email, postage pre-paid, personal service, etc.? You also need to include the contact information for each party.
Survival
Usually, you see a specification saying that, if onespecification of the agreement is struck down by a court of competent jurisdiction, then the rest of the agreement will nevertheless remain complete,unchanged and valid.
Waiver
In order for a waiver of a right to be valid, the party entitled to benefit from it must expressly (not completely) give that waiver and that acquiescence or silence won't count. A party that gives one waiver doesn't mean it gives other waivers.
Survival
Will some terms survive the Closing Date? For instance, will the Vendor have given certain representations, warranties, and covenants that are to remain valid a few years after closing? If they are violated, will the Vendor have to pay (i.e. indemnify) the Purchaser?
Keep in mind: if you'd like to buy a text link on this blog post to your website, you can contact Michael Carabash. Also, if you're looking for a Toronto Share Purchase Agreement lawyer, you can contact him to get a quote.
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