Investments
Common Stock Purchase Agreement
Texas
What are the key provisions to include in a Common Stock Purchase Agreement?
I am in the process of negotiating a Common Stock Purchase Agreement with a potential investor for my startup, and I would like to understand the essential provisions that should be included in the agreement to protect both parties' interests, such as the purchase price, number of shares, representations and warranties, conditions precedent, and any restrictions on transferability or voting rights.
Answers from 1 Lawyer
Answer
Investments
Texas
Darryl S.
ContractsCounsel verified
The specific terms (such as whether to give any voting or veto rights for example) will depend on factors like your company's stage, the investor's sophistication level, and the investment amount or percentage of the company the investor is acquiring. Consider having experienced counsel review the agreement, as the long-term implications of certain provisions can significantly impact your company's future governance, ability to raise funds and options to bring on other investors or key employees. Early stage companies often have significant restrictions on transferability of the stock, a ROFR clause and claw-back options. The provisions you mention are also required as they are core to the business terms. Hope this is helpful. The classic lawyer answer is "It depends" and that is true here.
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Investments
Stock Purchase Agreement
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Stock purchase agreement and termination rights?
I am currently a shareholder in a startup company and I am looking to purchase additional stock in the company. I am concerned about the termination rights associated with the stock purchase agreement, as I want to ensure that I am protected in the event of a dispute or termination of the agreement. I am looking for advice from a lawyer to ensure that my rights and interests are protected.
Merry K.
You can submit a request for a review through ContractsCounsel and WA State attorneys will bid on your job. You can also find WA State attorneys through wsba.org. I'm not able to review this kind of agreement myself, but my words of advice are to not put all your investment eggs in one basket - diversify your investments into real estate, stable and secure stock, etc. Too many people put all their money into the company they work for, and lose everything when their company goes bankrupt.
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Connecticut
When to use a SAFE Note?
I am a small business owner looking to raise funds for my business. I have been exploring different financing options, and I have recently come across SAFE Notes. I'm not sure when to use a SAFE Note, and how it could benefit my business. I am hoping to learn more about how SAFE Notes work and when they should be used.
Thomas L.
SAFEs are used by growth capital technology startups who are planning to sell multiple rounds of preferred stock to investors. A SAFE is a stock warrant, meaning, the pre-purchase of a later issuance of stock. If you are planning to sell multiple rounds of preferred stock to investors, then a SAFE is a quick way to raise smaller amounts of capital in advance of selling a big preferred stock round.
Read 1 attorney answer>Employment
Independent Contractor Agreement
Texas
What is the difference between an independent contractor agreement and consulting agreement?
I am looking to hire someone to help my startup and am not sure which agreement I should use.
Forest H.
While the basic structure and framework of a consulting agreement and an independent contractor agreement are very similar, the primary difference is in what services the consultant provides. In a consulting agreement, the consultant is providing their advice for a fee. The guidance will be in the field of their expertise and, usually, includes evaluating an aspect of your business and making suggestions regarding what to do next. An independent contractor, on the other hand, will actually perform the work. The difference is not always a bright line and will vary depending on the circumstances. In some cases, a service provider will evaluate, recommend, and then perform. In that case, they are acting as a consultant first and then an independent contractor. It is also important to properly consider the differences between an independent contractor and an employee.
Read 1 attorney answer>Acquisitions
Asset Purchase Agreement
Texas
Who drafts the asset purchase agreement?
I have just put my business up for sale and doing some research on what legal documents will be needed in the future.
Ramsey T.
It depends. In many cases the lawyers representing the seller draft the asset purchase agreement. This is not always the case and at least forty percent (40%) of the deals I have worked on have featured the buyer drafting the asset purchase agreement. Who drafts the agreement may often depend upon who is in a stronger position and/or who has attorneys with the bandwidth to properly support the deal, as envisioned in the relevant term sheet.
Read 1 attorney answer>Acquisitions
Asset Purchase Agreement
Texas
What is the difference between an asset purchase agreement and business purchase agreement?
I am selling my e-commerce store and want to know which one of these I need.
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Just like the name suggests, an asset purchase agreement is just that – an agreement to purchase existing assets. This would be the appropriate document to use if you are buying or selling some or all of the assets of a business but not the business itself. For example, if you own a yard service company and you are interested in buying all of the mowers, trucks, and equipment of another yard service business. An asset purchase agreement would give a defined list of the equipment you are purchasing. If you were interested in buying the whole business, including existing contracts, assuming the debt, and retaining the other business’s employees and perhaps even their name, you would want a business purchase agreement.
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