Basics of Warrant Coverage Terms

In order to induce “investment” of valuable dollars or services, ranging from cash investment under a Regulation D Private Placement Offering, or on the flipside, the efforts of a trusted advisor/accelerator/incubator, so-called “warrant coverage” is often part of the deal. “Warrant Coverage” is designed to further persuade an investor or service provider to participate in an investment opportunity by providing the investor or service provider additional opportunity to leverage the company upside, as it grows in value. While less commonly used than a variety of other deal “sweeteners”, they are a significant feature in the investment landscape. The following provides a high-level summary of the typical negotiated deal points for warrants. read more

Corporate Structuring and Fundraising for Single Purpose Vehicles

What do securities syndications and fundraising for real estate, restaurant ventures, film ventures, theme parks and a variety other project finance opportunities have in common? The answer is simply the often overlooked and misunderstood “SPV.” Essentially, the SPV or “Single Purpose Vehicle” is an entity that is structured to take in investor monies towards funding a singular dedicated project or opportunity. Indeed, a great majority of real estate finance projects, and a variety of other project finance opportunities essential to the U.S. economy, are at least partly funded by SPVs. Furthermore, with the advent of crowdfunding and “general solicitation” under the JOBS Act, the SPV’s role in financing a variety of projects and operating companies cannot be overstated. read more

Questionnaire: Key Considerations for Private Placements

In order to properly inform investors and provide disclosures where necessary, either through a Private Placement Memorandum, or other disclosure materials, a robust understanding of the venture’s overall purpose and goals is useful. This questionnaire asks several key questions of a company seeking to raise funds, with an eye towards drafting the various documents that may be required for a private placement, including but not limited to the Private Placement Memorandum, Subscription Agreement, Convertible Note or other debt instrument, Amended Certificate of Incorporation, and Investor Rights Agreement. read more

New Protections Created for New York City Freelance Workers

On November 16, 2016, New York City Mayor Bill de Blasio signed into law the Freelance Isn’t Free Act (the “Act”), which creates new protections for freelance workers residing in New York City beginning on May 15, 2017. Freelancers often do not have the resources or clout to protect their interests prior to entering into a relationship with a client or to collect on unpaid invoices. The Act creates several obligations for clients and remedies for freelancers in an effort to help reduce the disparities between them. While the Act will only apply to contracts entered into on or after May 15, 2017, businesses that engage freelance service providers residing in New York City should begin reviewing their template contractor agreements now to ensure they are in compliance with the Act. Additional steps businesses should begin taking now include establishing organized contractor payment processes to avoid potential penalties and complaints as a result of late payment and, if they do not have a template agreement to provide to freelance workers, engaging an attorney to draft one that is compliant with the Act. read more

When is Information “Material”?: Tesla Motors and the Autopilot Crash Disclosure Dilemma

Securities laws and regulations require that reporting companies periodically publicly disclose certain information, as well as any information that is “material” to investors. This summer, the Wall Street Journal reported that the Securities and Exchange Commission was engaging in a preliminary investigation that Tesla failed to timely disclose to investors material information. The WSJ's report raises interesting questions about what constitutes material information when it comes to companies developing new technologies. read more