Uncategorized

Businesses are often formed as limited liability companies for the tax benefits of pass-through tax treatment, which eliminates double taxation, and enables capital-contributing members to offset passive losses allocated to them, against other passive income or gains.  Limited liability companies often desire to convert into a C corporation for various reasons, including, better access to …

Mitigating Tax Implications of Converting an LLC to a Corporation Read More »

Holding patents, trademarks, source code, trade secrets and other intellectual property in a separate holding company, can be a powerful asset protection strategy and have other ancillary benefits.  If properly set up, a holding company can protect IP from liabilities that arise in your operating business.  It can also make it easier to license or …

Using Holding Companies to Protect Intellectual Property Read More »

Preemptive rights provide investors with a right to maintain their proportional ownership in a company by participating in future offerings.  They typically require the company to deliver preemptive right holders a notice of financing, within a specified period of time prior to commencing a new financing round during which period the investors can exercise their …

Preemptive Rights – Risks and Mitigation Strategies Read More »

This blog post discusses some simple concepts that are often overlooked by entrepreneurs when structuring a corporation.  Addressing such concepts upon incorporation can eliminate problems in the future.     1. Stockholder Agreements:  Stockholder Agreements set forth the rights, obligations, and restrictions of founders.  A well-drafted Stockholder Agreement can help founders maintain control over the ownership and …

Commonly Overlooked Corporate Formation Considerations Read More »

Corporate and LLC statutes in many states include so-called “dissenter’s rights” provisions, which give equity holders a right to be cashed out of their equity position, if they object to a merger, acquisition, or certain other major corporate actions, such as conversions.  A company’s failure to follow or “opt out” of these procedures, could be …

Basics of Dissenter’s Rights in M&A Transactions Read More »

Force Majeure provisions are an integral part of contract law that provides protection against unforeseen events that may disrupt the performance of contractual obligations, such as natural disasters, pandemics, and acts of war.  I often minimized the importance of Force Majeure provisions, because of the small likelihood of the occurrence of a war, pandemic, or …

The Importance of Force Majeure Clauses: A Personal Experience Read More »

Preferred stock financing is a type of equity investment that is commonly used by startups to raise capital. The key provisions in a typically preferred stock financing are set forth below: In conclusion, these are the key provisions in typically preferred stock financing. Understanding these provisions is important for the company, as they can impact …

Understanding the Key Provisions of Preferred Stock Financings Read More »

When it comes to signing a software-as-a-service (SaaS) agreement, there are several key issues that should be considered to ensure a successful outcome. These include understanding the pricing structure, service level agreements (SLAs), data security, ownership of intellectual property, and the termination process. The information contained in this article is strictly for educational purposes and …

Key Considerations in Entering into SAAS Agreements Read More »

Companies should look for and consider the following issues when negotiating a commercial lease. • Assignment and Subleasing. Assignment and sublease restrictions are commonly included in leases so the landlord can ensure that an assignee or sublessee, has the sufficient financial wherewithal and is otherwise a suitable tenant. The landlord, however, often has the right …

Pitfalls to Avoid in Commercial Leases Read More »

Anti-dilution provisions are an important aspect of venture capital financing. Anti-dilution provisions protect the interests of investors by ensuring that their ownership stake in a company is not diluted in the event of subsequent equity offerings. This is important because dilution can reduce the value of an investor’s holdings, leading to a decrease in the …

Anti-Dilution Provisions Read More »