Chris Fulmer

2,769 reputation

217

bio	website	fulmerlawfirm.com
	location	Raleigh, NC
	age
visits	member for	1 year, 2 months
	seen	May 14 at 18:27
stats	profile views	109

I'm an attorney who works with tech-focused startups in North Carolina, focusing on matters like:

Equity and Debt Financing
M & A
Commercial Transactions
Terms of Service/Privacy Policy
Equity/Stock Option Plans
Licensing Agreements

	2,769 reputation	bio	website	fulmerlawfirm.com	visits	member for	1 year, 2 months
217 badges		location	Raleigh, NC		seen	May 14 at 18:27

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Aug 28	comment	Working @ Startup. Need help reading their most recent SEC Filing So, the Form D isn't really where I'd look for transparency. Chris Rea has a good point -- shareholders have certain information rights. As to your question about 'convertible debt,' think of it like this: your company has a potential investor, but the potential investor isn't sure about exactly what terms. So, he says "How about if I just lend you the money, and then when you get your next investor, we use whatever you owe me then to invest on the same terms that he/she gets." That's probably where the missing $4.78M goes.
Aug 27	comment	Working @ Startup. Need help reading their most recent SEC Filing You'd need more information that what you've given. If htey sold $9.78M in securities and only have $5M in capital, then it sounds like they paid off $4.78M in debt with part of the proceeds. There is a Section in the Form D called "Use of Proceeds" that says a bit about what they do with the money. Note that the Form D is not intended to provide a lot of information to the public -- it's a private, not a public, offering.
Aug 13	comment	Compensation for software development Do you have the cash to pay him right now? If not, then he's probably taking the "two in the bush" approach. If you don't want to give him a running royalty (basically what he's requesting), then figure out some other way to pay him more later -- stock options are a common way of doing this. If you're in the US, though, be careful about issues under Section 409A of the tax code -- if this year you promise, unconditionally to pay him $X, and don't pay out until next year, there will be bad tax consequences.
Aug 10	comment	Why should I create LLC company? One note: If it's YOUR negligence, then (depending on the state), the LLC doesn't matter. Ex: If I'm driving a truck on company business and negligently run somebody over, then the victim can sue both me AND the company for his damages. However, let's say that he only sues the company, but the company doesn't pay him -- he can't then sue the company owners for the company's debts. (Well, he can always sue, but, absent special circumstances, he won't win.)
Aug 10	comment	Where to put vesting schedule for founders? I don't think so. The Shareholder's agreement is usually an agreement among shareholders and the company is often not a party to it. If the company is a party, then it's possible to put it into the shareholder's agreement, but why? -- vesting is a matter between the individual shareholder and the company; other shareholders shouldn't be involved. Best to put it into the agreement about the share issuance.
Aug 1	comment	Clawback vs. vesting Clawbacks usually happen in connection with a deal, and are voluntary of behalf of the issuer. Eg: "You'll get 100K shares in the merger, but if a lot of your accounts turn out to be uncollectable, then we can claw back up to 20K of those shares."
Jul 31	comment	Pitfalls for Licensees? Well, those are common sticking points that come up in licensing arrangements. There's just not enough information in your post to be able to tell if it covers everything -- that's why people hire lawyers. The other big thing that sometimes comes up is the scope of exclusivity -- usually, this arises in the drug industry, where the exclusivity is to treat a specific indication -- "You get exclusive use of the product to treat cancer, but we can license it to somebody else to treat heart disease," for example.
Jul 30	comment	How dividends work when you have common & preferred stockholders? Thanks -- I missed that.
Jul 26	comment	*New business. How exactly* does one raise VC capital, or any other startup capital?** (1) VCs nearly universally want C corporations. Typically, they want them organized in Delaware, but may be ok with having them organized in your home state. (Depends on the state.) (2) I don't know what state you're in; locally in North Carolina, we have several organizations that run events and provide networking opportunities. I'd start by looking at local universities to see what entrepreneurial activities they have. (3) I have no others. It's all about developing relationships.
Jul 7	comment	GPL licensing of a GPL licensed product with a commersial version You need to provide a lot more detail about how B is "based on" the community edition of Product A. Does it include source code from Product A? Is intended to use an interface exported by Product A? In what way? Also, do you really mean GPL V1? We're up to V3 now, and V1 is very uncommon. Frankly, all things you should get legal advice on from somebody who really understands software law. If you're betting your company, you want to have a solid legal opinion, not just what some guys here say.
Jun 26	comment	Turning a University project into a business I would start with asking the university -- there's a good chance that they don't have any rights anyway. Check with your university -- a lot of schools have entrepreneurship programs designed to help starting companies, and those people occasionally have "ask the lawyer" days.
Jun 26	comment	Turning a University project into a business Well, that's all good info for your lawyer. Check with the university -- if the students are undergrads, then university policy might not apply to them.
Jun 11	comment	LLC or S-corp for a 2 person California consulting company A multi-member LLC would also have to do a form K-1.
Jun 5	comment	equity investor exit strategy Is the investor doing $1000 per year for 5 years, or just $1000 total? Is this a deal that you've already set out? Chances are that the investor wants the ability to redeem his shares after 5 years, presumably with some built-in rate of interest (say 8% - 10%). Alternatively, maybe the company gets the right to force the redemption after 5 years if it wants. (Of course, if the investor holds 80%, the investor will probably be able to dictate if the company does so.)
May 27	comment	Existing startup new co-founder equity Whatever you do, make sure that his equity is subject to: (1) Vesting, (2) the company's right to buy back his vested shares if he leaves, and (3) a right of first refusal to buy them if he proposes to transfer to somebody else.
May 27	comment	Software IP Ownership Is the "company" a separate entity, or some sort of partnership? By default if it's a separate entity, the other only doesn't get rights to the IP at all -- you'd actually have to do some more work to give him rights.
May 25	comment	The startup I work for is slashing my last pay periods paycheck without notice As a general rule, they can cut your salary prospectively whenever they want. They cannot cut it retrospectively. If the company is paying other expenses, but not paying you, that's a problem. You might see about filing an involuntary bankruptcy petition to protect your priority in payment.
May 21	comment	How to align the Terms of Service with a Social Network Providers TOS? Careful there. There's a lot in the Wordpress Terms that's very specific to them. Cutting-and-pasting too much of their stuff will just give you nonsense. As to your question, it depends on what communication there is with those providers.
May 18	comment	What are going rates for finders fee? As an attorney, I advise clients to stay as far away from finders as possible -- unless they are exceptionally careful in limiting what the finder can do and how they are compensated, using a finder can destroy their securities exemption and give the investors a right to unwind the transaction. It's rarely litigated, but I'd hate to be on the company side if it was.
May 18	comment	What are going rates for finders fee? Are you associated with a registered broker-dealer? If not, how do you get around SEC restrictions on finders, in particular the statement that "a person's receipt of transaction-based compensation is a hallmark of broker-dealer activity"? (See jdsupra.com/post/… )