Washington Subscription Agreement and Shareholders' Agreement

• Category: Corporations - Startup - Venture Financing Process
• State: Multi-State
• Control #: US-ENTREP-0025-1
• Format: Word; Rich Text

Description

A subscription agreement is a formal agreement between a company and an investor to buy shares of a company at an agreed-upon price. The subscription agreement contains all the required details. It is used to keep track ofoutstanding sharesand share ownership (who owns what and how much) and mitigate any potential legal disputes in the future regarding share payout. A Shareholder Agreement is a contract between the shareholders of a corporation, which defines the roles of shareholders and specifies duties the corporation has to them.

Washington Subscription Agreement is a legally binding document used by a company to sell its shares to potential investors. It serves as a contract between the company and the investor, outlining the terms and conditions of the share purchase. The agreement includes important details such as the number of shares being offered, the price per share, the payment terms, and any conditions or restrictions related to the shares. In Washington State, there are two main types of subscription agreements: the Common Stock Subscription Agreement and the Preferred Stock Subscription Agreement. The Common Stock Subscription Agreement pertains to the issuance of common stock, which represents ownership and voting rights in the company. On the other hand, the Preferred Stock Subscription Agreement deals with the issuance of preferred stock, which typically offers certain privileges and preferences over common stock, such as priority in dividends or liquidation proceeds. The subscription agreement also includes clauses related to representations and warranties, wherein both the company and the investor make certain promises about their respective abilities to enter into the agreement. It may address matters like compliance with securities laws, authorization of the shares, and the absence of undisclosed liabilities. Furthermore, the agreement may contain provisions related to transfer restrictions, outlining any limitations on the transferability of shares, such as a right of first refusal or a lock-up period. It may also address any shareholder rights or obligations, such as voting rights, information rights, or preemptive rights. The agreement may establish procedures for resolving disputes and may include provisions regarding confidentiality and non-compete agreements. In addition to the Subscription Agreement, another important document that governs the relationship between shareholders in a Washington-based company is the Shareholders' Agreement. This agreement outlines the rights and responsibilities of each shareholder and establishes guidelines for decision-making and governance within the company. There are various types of Shareholders' Agreements in Washington State, depending on the specific needs and preferences of the shareholders. Some examples include, but are not limited to: 1. Voting Agreement: This agreement outlines how shareholders will vote on important matters, such as the election of directors or significant corporate decisions. It may include provisions for super majority voting or proxy voting. 2. Buy-Sell Agreement: This agreement addresses the potential sale or transfer of shares by one shareholder to another. It establishes the process and terms for such transactions, including valuation methods and restrictions on who can buy the shares. 3. Right of First Refusal Agreement: This type of agreement grants existing shareholders the right to purchase any shares that another shareholder intends to sell before they can be sold to an outside party. 4. Drag-Along Agreement: This agreement allows a majority shareholder to require minority shareholders to sell their shares if a third party offers to buy the company. It ensures that all shareholders can participate in a sale transaction. 5. Tag-Along Agreement: This agreement protects minority shareholders by giving them the right to include their shares in a sale transaction if a majority shareholder intends to sell their shares. These agreements help to ensure smooth operations and provide protective measures for both the company and its shareholders. It is advisable to consult with legal professionals experienced in Washington State corporate law when drafting or reviewing these agreements to ensure compliance and protection for all parties involved.