Are there private company stock & options forms on the web I can print?
A friend is pressuring me to buy into her company which she started a year ago and now she needs US $15K dollars. She is willing to sell me 1 percent for $15K dollars but she has no formal stock option form for that.
I've never done anything like this in my life.
Is there a standard private company stock sale form on the web which I can look at to give me ideas. Is there a web site that gives advice to novice investors who want to have the right forms for this standard transaction?
Like, how long is the typical options last? How do you price them when the company hasn't sold anything yet?
Can you help advise me on what forms to use for private stock & options?
If your alleged friend has an alleged company that's worth an alleged 1.5 million dollars how come she's got to borrow 15K from you? Why doesn't she get a bank loan secured by her corporate assets? My guess: she has no personal credit and the company's worthless.
For your 15K, how come you only get an option to buy 1 percent? Why doesn't she sell you actual shares? My guess: she's not incorporated and there were never any shares issued.
How come your alleged friend with the alleged company worth an alleged 1.5 million doesn't have a lawyer to do mundane corporate tasks? Why does she expect you to lend her money _and_ locate the documents necessary to formalize the arrangement? My guess: your friend's a noodlehead whose her company consists of a half assed idea and a fax machine in her spare bedroom; she has no lawyer, no accountant, no financing, no assets, and no customers; she's got letterhead stationary, some business cards, a mountain of debt, and you, the gullible friend. Another guess: your the "friend" who drives her to the airport, collects her mail when she goes on vacation with her real friends, and picks up the check when you eat out.
What should you do with your 15K before you give it to your friend? My guess: kiss it goodbye.
Buying stock is not the same thing as buying a stock option. A stock option is the right to buy some stock in the future. I am guessing that you mis-used the term and what you intend to do is buy stock. There are three documents involved. One is a stock certificate. If your friend's company is a corporation (you didn't say), she can get a board of directors resolution to issue the stock, fill out the stock certificate, sign it and hand it to you in exchange for money and the deal is done.
The second document is a stock sale contract. The third document is an investment letter. Those documents are available on the internet, I'm sure, but you shouldn't bother to look. Those documents are optional and are for the benefit of the company, not the buyer. If she wants you to sign a stock sale contract and/or an investment letter, take them to a business transaction attorney for review. I won't help you find them because that idea feels kind of like helping a suicidal friend find a gun shop.
Now for the advice you didn't ask for. One thing you don't want to become in this life is a minority stockholder in a corporation that is not publicly traded. Your rights in that circumstances are so tiny as to be comical. Zero return is a common result.
Lending the money to the friend would be better unless you see this company as the next Microsoft. Get a promissory note, long version, with an attorney's fees clause. Get it secured by all of the assets of the company and make sure it contains your friend's signature as personal guarantor. Ooooo, here's another idea - make it a convertible note. The clause would say that if the money is not paid on time, the lender has the option to exchange the note for a stock certificate representing 51% of the company. Get a business transaction attorney to draft it.
If your friend is pressuring you, I suppose she needs a favor. So you can do the favor if you don't mind saying goodbye to the money. But when she stops being your friend and offers you 1% (as close to zero as she could get) for $15K, that is no longer a favor, that's taking advantage off . . . well, you fill in the blank.
This answer must not be relied on as legal advice for the reasons posted here:
In addition to all the other very good advice you've received, please advise your "friend" that SHE should see a lawyer...FAST!
You, the potential investor, could lose your investment (plus time, inconvenience, embarrassment, etc.)
Your friend, the potential seller of securities, could spend time in jail. The federal securities laws are so strict that even unintentional offerings of unregistered securities can carry severe penalties. I've never been an attorney, but I've watched several clients as they dealt with these complex rules.
I'm not accusing your friend of any wrongdoing or bad motives. Many (most?) small companies are started in much this way, and some become successful. Many of us can point to investments that we wish we had made when we had the opportunity. But many of us also are very happy that we dodged the snares that were in our path. And YOU used the phrase "pressuring me". That does not sound good at all.
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