hutchlaw.com news

One Size Does Not Fit All: The Basics of Technology Company Capitalization

Tue, 30 Mar 2010

When it comes to startups, one type of equity does not fit all. Below, I’ve outlined several common equities that startup companies issue based on an individual’s role within the company.

Founders

Often referred to as “Founders’ Stock”, founders typically purchase shares of the company’s Common Stock at the time of inception via a combination of cash (to help capitalize the company...

Annual Compensation Report of Venture-Backed North Carolina Companies

Wed, 24 Mar 2010

One of the key issues for North Carolina companies is attracting and retaining top-level executives. While a number of compensation surveys are undertaken each year, this survey is intended to specifically address the unique North Carolina market for venture-backed technology and life science companies.

Hutchison Law Group produces this report as a service to our clients and the entrepreneurial community.

Scott Merrell was recently highlighted in the Winter Edition of Duke Law Magazine. Merrell and Professor John Weisart taught a simulation-based seminar to accompany Weisart's Commercial Transaction class. The unique class structure provided valuable real world experience for Duke Law students...

Client Alert: Reporting Obligation for Exercises of Incentive Stock Options

Wed, 13 Jan 2010

Annual Reminder: Reporting Obligation for Exercises of Incentive Stock Options
Due by January 31 – IRS Issues Final Regulations

Pursuant to Section 6039(a) of the Internal Revenue Code of 1986, as amended ("Code Section 6039"), corporations are required to provide a written information statement to their employees who exercise incentive stock options. Additionally, as we have alerted you previously...

Developments in Indemnification & Advancement Rights in Delaware

Tue, 20 Oct 2009

Introduction

October 2009 marks the eight-year anniversary of the infamous Enron scandal, which sparked a transformation in the landscape of corporate America. Despite the enactment of the Sarbanes Oxley Act of 2002 and various other attempts at reform, the post-Enron era has been plagued by scandals ranging from the fall of corporate players like WorldCom and Adelphia to the recent subprime mortgage crisis, extensive government...

Internet and E-Commerce Law Update

Tue, 20 Oct 2009

United States Legal Considerations Related to Employee Stock Option Grants

Wed, 30 Sep 2009

Stock options may be a valuable component in the compensation mix for US employees in US-based operations. Extreme care must be exercised in granting stock options to ensure compliance with federal tax laws and federal and state securities laws.

Stock options grant a right to acquire shares of the issuer’s stock for a stated price upon satisfaction of stated vesting requirements. Incentive stock options (ISOs...

10 Ways to Avoid Losing Intellectual Property Assets

Tue, 2 Jun 2009

In my role as an attorney representing emerging growth technology companies, I spend a lot of time talking to and working with entrepreneurs as they prepare to start new companies. This is the last in a series of five posts that I will write exploring some of the legal and practical business issues that aspiring entrepreneurs need to understand as they begin this process.

Picking up where we left off last time, your company is...

Venture Capital Term Sheets

Mon, 1 Jun 2009

An overview of venture capital term sheets.

Protecting the Board of Directors

Fri, 3 Apr 2009

In our initial article [listed below], we discussed the potential impact of some recent Delaware court decisions that highlighted the importance of careful drafting and planning when it comes to providing for protective rights of directors of Delaware corporations. One such decision was Schoon v. Troy Corp., in which the Delaware Chancery Court held that a director’s right to indemnification or advancement of expenses provided...

The Basics of Corporate Governance

Wed, 18 Mar 2009

In my role as an attorney representing emerging growth technology companies, I spend a lot of time talking to and working with entrepreneurs as they prepare to start new companies. This is the third in a series of five posts that I will write exploring some of the legal and practical business issues that aspiring entrepreneurs need to understand as they begin this process.

Picking up where we left off last time, you have decided...

Selecting the Appropriate Legal Entity for Your Technology Startup

Wed, 11 Mar 2009

In my role as an attorney representing emerging growth technology companies, I spend a lot of time talking to and working with entrepreneurs as they prepare to start new companies. This is the second in a series of five posts that I will write exploring some of the legal and practical business issues that aspiring entrepreneurs need to understand as they begin this process. I understand that a lot of this information is dry, but there...

Client Alert: Temporary COBRA Premium Subsidy

Mon, 9 Mar 2009

The American Recovery and Reinvestment Act, signed into law on February 17, 2009, includes a temporary government subsidy for the cost of COBRA continued healthcare coverage. Currently, under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employers who sponsor group health insurance plans are required to allow certain employees and dependents the option to continue their health, dental and vision insurance under those plans following...

Tech Startups: Key Legal Issues to Consider Before Leaving Your Job

Sat, 28 Feb 2009

In my role as an attorney representing emerging growth technology companies, I spend a lot of time talking to and working with entrepreneurs as they prepare to start new companies. This is the first in a series of five posts that I will write exploring some of the legal and practical business issues that aspiring entrepreneurs need to understand as they begin this process.

This first post will deal with issues that you...

Client Alert: Private Placement Update

Wed, 18 Feb 2009

Many companies rely on Regulation D, an exemption from registration under the Securities Act of 1933, in conducting private placement offerings of their securities. When a company sells its securities in reliance on Regulation D, it normally files a Form D, within 15 days after the initial sale of securities in the offering, with the SEC and, as applicable, the state securities authorities in those states in which the securities are being offered...

Client Alert: Reporting Obligation for Exercises of Incentive Stock Options

Thu, 1 Jan 2009

As we have alerted you previously, the Tax Relief and Health Care Act of 2006 amended the information reporting requirements of Code Section 6039 by imposing an additional reporting requirement. The law requires...

Client Alert: 409A Compliance Deadline

Sun, 1 Jun 2008

The deadline for full compliance with Section 409A of the Internal Revenue Code relating to the deferral of compensation for employees and other service providers is December 31, 2008. We do not believe that the IRS will extend this compliance deadline. Therefore, it is crucial for those companies who have delayed reviewing their compensation-related arrangements to do so promptly in order to meet the deadline.

Why is the deadline...

Formation of Corporations and LLCs

Tue, 8 Jan 2008

General Corporate Matters
Formation
In order to form a corporation, a Certificate of Incorporation or Articles of Incorporation must be filed with the Secretary of State of the state in which the company will be incorporated. The certificate or articles are usually signed by a sole incorporator, whose only function is to create the company. This organizational document generally states the name of the corporation...

Tax Implications: LLC Versus S Corporations

Tue, 8 Jan 2008

For tax purposes, business entities come in two major flavors. There are “C corporations,” which are corporations that are subject to “double taxation” in that the companyÊ¼s income is subject to tax, and its owners are subject to tax a second time on any distributions from the company to them. Many business owners choose not to use a C corporation because of this double level of tax.

Instead, they opt for a &...

Key Legal Issues in Selling a Business

Tue, 1 Jan 2008

You have been successful. You started that business you always dreamed of, and you now have grown it into a very successful business. Now is the time to cash in and get some well-earned rest and enjoy life with your family. So, what do you need to know in order to successfully sell your business? You have never done this before and this is all new territory for you.

Set forth below are some key legal issues that you need to consider...

Do I Need to Care that the Invention My Company is Licensing was Funded by the Government?

Tue, 16 Oct 2007

Congratulations. You’ve identified a new chemical compound that when combined with your current technology shows powerful results in early laboratory tests. The invention is protected by patents owned by a university and none of your competitors have claims on the intellectual property because it was funded with federal grants.
Your conversations with the technology transfer office at the university have been promising – they...

Section 409A: Deferred Compensation Creates an Immediate Headache

Mon, 27 Aug 2007

Well-paid employees have historically tried to defer parts of their compensation into later years, expecting that overall they will benefit, either by growing their funds tax-free until retirement, or by accessing the funds in later years when they expect to be subject to tax at a lower rate. Deferring some compensation to save for retirement is considered a good thing, and hence we have tax-favored “qualified” plans and arrangements...