Palmdale Contract Attorneys & Lawyers

Start-up companies often hope to attract employees and investors by offering them shares of stock in the company.  There are several different types of stock, but the two most important are preferred stock and common stock.  Founders and employees typically receive common stock. Investors usually receive preferred stock.

Companies may receive tax benefits if they issue both common and preferred stock.

What is Common Stock?

As the name suggests, common stock is the most common type of stock.  When people think of "stocks," they are usually thinking of common stocks. Owners of common stock --

• May be paid dividends, but that is not guaranteed

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Convertible Debt: What Is It?

Convertible debt is a loan or debt obligation from an investor that is paid with equity or stocks in a company. Convertible debt is also known as convertible loans or convertible notes.

When a company borrows money from investors and plans to convert it to equity or ownership in the company at a later time, that's convertible debt. The borrower and lender decide the type of equity and a set time when the loan converts based on the company's value when the loan begins.

What Is a Convertible Bond?

A convertible bond, or CV, is a type of debt secu

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Updated October 12,2020:

What are Stock Appreciation Rights?

Stock appreciation rights are a type of incentive plan based on your stock's value. Employees receive a bonus in cash or equivalent number of shares based on how much the stock value increases over a set period of time - usually from the date of granting the right up until the right is exercised. People familiar with phantom stock will recognize the basic similarities between the two. It is important to note that unlike stock options, employees also do not have to pay the exercise price to receive the bonus in stock or cash.

Holding stock appreciation rights is not the same as holding shares of stock. Employees do not receive a share of equity when you awa

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Updated June 19, 2020:

What Are SAFE Notes?

SAFE (simple agreement for future equity) notes are a simpler alternative to convertible notes. They were created in 2013 by Y Combinator, a Silicon Valley accelerator, and allow startups to structure seed investments without interest rates or maturity dates. SAFEs are short five-page documents. The valuation caps are the only negotiable detail.

A SAFE note is a convertible security that, like an option or warrant, allows the investor to buy shares in a future priced round. It addresses many of the drawbacks and challenges posed by convertible notes and can be an equitable option for investors and founders. Startups may prefer SAFE notes because, unlike convertible notes, they are not debt and therefore do not accrue inte

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What Is a Contract Checklist?

A contract checklist is a step-by-step list that helps you organize a contract's key parts before finalizing it. This helps reduce miscommunication, set expectations, and make sure both parties are on the same page.

Why Is a Contract Checklist Important?

Contract disputes are common issues that require legal action to resolve. If one party doesn't hold up its end of a bargain, it might face a breach of contract lawsuit. A contract checklist tries to reduce the chance of this happening. It covers every aspect of the contract to make sure it's airtight. It removes vagueness and focuses on concrete terms that describe every aspect of the contract. Without a contract checklist, contracts might become problematic for one or both parties.

Because the

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