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Stock Subscription Agreement Template for United States

A Stock Subscription Agreement is a legal contract used in the United States that documents the sale and purchase of shares between a company and an investor. It outlines the terms and conditions of the stock purchase, including the number of shares, purchase price, and representations and warranties of both parties. The agreement ensures compliance with U.S. federal and state securities laws, including applicable SEC regulations and Blue Sky laws.

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What is a Stock Subscription Agreement?

The Stock Subscription Agreement is a crucial document used when a company seeks to issue new shares to investors in the United States. It serves as the primary instrument for documenting share purchases, whether in the context of private placements, seed rounds, or subsequent funding rounds. The agreement details the rights and obligations of both the issuing company and the subscriber, ensuring compliance with SEC regulations, state securities laws, and other applicable federal statutes. It typically includes specific provisions about share price, payment terms, closing conditions, and various representations and warranties designed to protect both parties.

What sections should be included in a Stock Subscription Agreement?

1. Parties: Identification of the company issuing shares and the subscriber(s)

2. Background: Context of the subscription, including company details and authorization for share issuance

3. Definitions: Key terms used throughout the agreement

4. Subscription for Shares: Details of shares being subscribed for, including number, class, and price

5. Payment Terms: Method and timing of payment for subscribed shares

6. Representations and Warranties of the Company: Company's statements about its legal status, authority, and share issuance

7. Representations and Warranties of the Subscriber: Subscriber's statements about capacity, understanding of risks, and investor status

8. Closing Conditions: Conditions that must be met before share issuance

9. Governing Law: Jurisdiction governing the agreement

What sections are optional to include in a Stock Subscription Agreement?

1. Registration Rights: Rights to register shares for public trading - include when subscribers request ability to sell shares publicly in future

2. Tag-Along Rights: Right to participate in sale of shares by other shareholders - include when protecting minority shareholders

3. Pre-emptive Rights: Right to maintain ownership percentage in future offerings - include when subscribers want anti-dilution protection

4. Board Representation: Right to appoint board members - include for significant investors or strategic partners

What schedules should be included in a Stock Subscription Agreement?

1. Schedule A - Share Details: Detailed description of shares being issued, including rights and restrictions

2. Schedule B - Disclosure Schedule: Company disclosures relating to representations and warranties

3. Schedule C - Accredited Investor Questionnaire: Form to verify accredited investor status

4. Schedule D - Risk Factors: Detailed description of investment risks

5. Appendix A - Form of Share Certificate: Template of share certificate to be issued

6. Appendix B - Corporate Resolutions: Copies of relevant corporate 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

Jurisdiction

United States

Publisher

Genie AI

Cost

Free to use

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