Today I answered a Quora question about what a letter of intent is and what it should contain. The question and my answer (each edited slightly) are reproduced below.
Q. What is a letter of intent? What are the legal implications of a letter of intent? What is the purpose? Which elements minimally comprise a letter of intent?
I’m not a big fan of mandatory arbitration clauses in contracts: Although arbitration is likely to proceed more quickly than litigation (other than small-claims cases), it is not necessarily less expensive. However, I recently saw an arbitration clause that I like quite a bit.
Linden Research, Inc., developer of the Second Life multi-user online service, includes the following in its Terms of Service (emphasis added):
The CEO of a client with a half-dozen employees recently asked, “We are about to start hiring again. I would like to add language regarding a 90 day probationary period. Is this a good idea?” My answer was “No.” Here’s why.
I had prepared a form of employment offer letter and an employee handbook for the client. Both of these documents state that employment is at-will – i.e., either party may terminate the employment relationship at any time for any (non-discriminatory) reason or for no reason. As a result, at-will employment, by itself, allows a company to terminate the employment of an individual whose performance is inadequate during the first 90 days. A probationary period is not necessary.
The evening of Wednesday, October 19, the Silicon Valley Academy of Startup Entrepreneurs (SVASE) will present VCs Uncensored as part of its East Bay Series. Panel members will include:
Event description:
Hear directly from venture capitalists on what they love, hate and worry about when working with entrepreneurs. Our panel will discuss mistakes they see entrepreneurs make, pitfalls they help companies avoid, and the challenges of rapidly growing a business. They will talk about valuing companies, negotiating deal terms, raising additional rounds, replacing CEOs, and much more. This lively and candid discussion will open your eyes to the world of VCs and will help you better understand and work with them.
The event will take place at the beautiful Crow Canyon Country Club and will include a tasty buffet dinner.
Dana H. Shultz, Attorney at Law +1 510 547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
This post is based on a Quora question in which a user who already had invested money in his corporation wanted to know how he can invest an additional amount. My answer, reproduced below almost verbatim, starts by summarizing the steps for an initial equity investment.
Let’s assume you did your startup paperwork properly: The board of directors approved issuing some or all of the corporation’s authorized shares to you in exchange of payment of certain consideration; you deposited that consideration into the corporation’s bank account; the secretary recorded your share ownership on the corporation’s share transfer ledger and issued a share certificate to you.
A client had been using a form of independent contractor agreement for years and was concerned that the existing agreement did not fully meet the client’s legal needs. I said that I could adapt my form of agreement more cost-effectively than I could fix the client’s agreement. When I did so, I realized that the agreement I provided was much easier to read (aside from being legally tighter and more complete).
What makes the new agreement easier to read? First, it has about 20% fewer words, because I try to make each point once, avoiding the needlessly repetitive words and phrases that lawyers traditionally have delivered.
In an article yesterday (Can’t Afford an Office? Rent a Desk for $275), the Wall Street Journal observed that use of shared workspaces – renting a desk in an open space, rather than renting an office – is increasing throughout the United States.
Such resources have been used for many years by technology startups here in the San Francisco Bay Area. The article specifically cited Plug and Play Tech Center in Sunnyvale (which is exploring expansion to other cities).
I have been in Paris for several days, and I am surprised by many changes that have occurred in the more than ten years since I was last here. If there is a theme that ties most of those changes together, it is that the world is a much smaller place: Between the Internet and international travel, foreign influences cannot be excluded.
I am fascinated by this topic, because for many years I have been somewhat of a francophile and francophone. The great attractions – the Eiffel Tower, Arc de Triomphe, Luxembourg Garden, etc. – are as beautiful as ever and should not be missed. However, I have seen a number of changes in the city’s everyday life:
This post is based on a question that I answered on OnStartups.com. The short answer is “Yes, an undocumented immigrant can form a corporation.” The rest of this post is adapted from the full answer that I provided.
You can form a corporation – no problem. I have helped dozens of foreign clients (non-citizens, no social security number) go through that process.
Sample Share Certificate with Legend from Attorneys Corporation Service, Inc.
Last year, I wrote about the importance of placing appropriate legends on corporate share certificates (Why Do We Need a Corporate Records Book?) and limited liability company membership certificates (Should My LLC Issue Membership Certificates?). This post provides more details about why legends are required and how they can be printed on the certificates. (Although I will use corporation-specific terminology below, the considerations are similar for LLCs.)
The legend that routinely appears on my clients’ share certificates (I have the company that prints the certificates include it) is one stating that the shares have not been registered under state or federal securities laws. The reason: To put the shareholder on notice that, under applicable securities laws, the shares cannot be transferred unless certain circumstances are satisfied. Here is an example:
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.
For more information about Dana and his services, please go to the About Dana Shultz page and the Services page.
+1 510 547-0545
dana [at] danashultz [dot] com
Skype: dana.h.shultz
This blog does not constitute legal advice and does not establish an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
