Presenting a live 90-minute webinar with interactive Q&A

Executing a Flip Transaction: Bringing a Foreign

Startup Into the U.S. Investment Market

Drafting Shareholder Agreements, Transferring Contracts, IP and Tax Concerns

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

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THURSDAY, JULY 29, 2021

Presenting a live 90-minute webinar with interactive Q&A

Today’s faculty features: Sophie Alcorn, Founding Attorney, Alcorn Immigration Law, Mountain View, CA

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Formation and (Delaware) Flips:

Top Tips for Setting Up a Business in the States

SMITH SHAPOURIAN MIGNANO PC

201 Spear Street, Suite 1100

San Francisco, CA 94105

Office: (415) 228-0480

Fax: (415) 230-5310

Who We Are

●

Formation/Delaware Flip

Financing

●

Outside General Counsel

Executive

Compensation/Employment

●

Tech Transactions

●

Business Litigation/Founder Fall

Is the entrepreneur: (1) Simply accessing American

market; or (2) Raising money in the States?

● If the goal is to establish an American presence but

do not have any plans to raise money in the States

→ Subsidiary (DE C Corp)

● If the goal is to raise money (Series A) in the States

→ DE Flip (investor req.)

Option 1:

Creation of a Subsidiary

Corporation

● Name Search

● Cert. of Inc. (DE C Corp; Why DE?)

● Bylaws

● Common Stock Agreement w/Sole

Shareholder = foreign company

● Same control structure as foreign

entity? Same Officers/Directors

as foreign entity?

● Federal Tax/EIN

● In-State Registration

●

Intercompany Services

Agreement

●

IP Licensing Agreement allowing

sub to license IP from parent

● State and Federal Securities

requirements, or exemptions

● S Election (Cautionary Note on

Option 2:

Accomplishing the

Delaware Flip

● Option 1: Shareholders of the

foreign company exchange their

shares for shares of the Delaware C

Corp + cash (Note: valuation)

● Option 2: Foreign company

dissolves, assets pass to individual

shareholders, who then assign

assets to DE C Corp (Note: tax-free

transfer in US)

● Option 3: Shareholders of DE C

Corp invest funds into DE C Corp

bank account, DE C Corp purchases

shareholders’ shares of foreign

entity

● Immigration Concerns:

Preliminary

Considerations before

the DE Flip

● Necessary third-party/investor

consents to DE Flip

● Board consents for foreign entity

and DE C Corp

● Valuation of the foreign

business/IP, and international tax

issues (Need valuation

accountant)

● License or sell intellectual

Incorporate in Delaware

& Accomplish the Flip

● Name Search

● Incorporation (DE C Corp)

● Bylaws

● Share Exchange Agreement (for Option

1) or Stock Purchase Agreement

(Option 3)

● Restricted Stock Agreement (for Option

1) w/Buy-Sell provisions (if multiple

shareholders)

● NDA, Non-Competition, and

Assignment Agreement

●

● Intercompany Services Agreement

● IP Licensing/Sale Agreement

● Federal Tax EIN

● In-State Registration if not located in

Delaware

Post-Incorporation

Considerations

● Obtain States-Side Insurance:

CGL, Property, EPLI, D&O,

Data/Cybersecurity

●

Series A Raise (D&O for

VC-appointed board member)

●

When customers require it

● Contracts with American Third

Parties, Vendors, Business

Partners, Customers, etc. with DE

C Corp

● USPTO registration of

trademarks/patents under DE C

Corp; Hague Convention (if

international)

● Website and mobile app

documents – GDPR (2018); CA

Consumer Privacy Act (2020)

● Retaining and compensating

● Stock versus option grant

(valuation cost)

● Employee “CIIA” & Employee

Handbook

● Dynamex ABC Test (AB5)

●

No control

●

Separate line of

products/services

●

Separate entity/business

● “Ban the box”

● Salary History Ban

● Gender Neutral Bathrooms

● Benefits – if less than 50

employees, can opt out

● Sexual Harassment Training (SB

1343; 5 or more)

● Trade secrets theft/personal

devices of employees (wipe in;

wipe out)

● Common law protection exists,

but registration might be

required by investors

● Trademark applications

○ Both company name and

logo at minimum

○ Refusals - Descriptive or

similar

○ Intent to use or already in

use?

○ “Specimen”/proof of use

○ Filing Fees = $225/mark/class

● Patent applications: provisional

(early filing date) v. regular

Raising Money

Types

○

Family & Friends/Angel

Rounds

○

Pre-Seed ($500K)

○

Seed (or Series Seed) Round

($1-4M)

Series A ($5M+)

Sources of Funding

Individuals (Accredited

investors)

Institutional funding (VCs or

PEs)

●

Procedure and Documenting the

Rounds/Raise

○

Convertible Notes/SAFEs

Side Letters

Sophie Alcorn

Founder of the Fastest Growing

Immigration Firm in

Silicon Valley

- Board Certified Specialist in United States Immigration & Nationality Law by State Bar of California, Board of Legal Specialization

- Assisted thousands of startups & individuals with US immigration - TechCrunch Author

- Quoted in global publications including The New York Times, Bangalore Mirror, Financial Times, and The Atlantic

The Alcorn

Story

We overcome borders, expand opportunity, & connect the world by practicing

compassionate, cutting-edge, and rigorous immigration law in service of the

Immigration Status of Founders or Key Talent

Devise immigration strategies for startup founders and key talent Create company visa and green card sponsorship policy

Ongoing Compliance with Immigration Law

Form I-9 and employment records Internal audits

Common Diligence Questions

Where were they born?

What type of immigration status do they have? When did they arrive to the U.S.?

When does their stay end?

Are they maintaining their status? Is this work authorized?

Visa Green Card Citizenship

Green Card Citizenship

Visa Green Card Citizenship

Green Card Citizenship

Startup Founder

Path?

Green Card

Pathways

Family

Visa Alternatives

O-1A

Extraordinary ability TN

Canada & Mexico E-3

Australia J-1

Researchers, Interns, Trainees E-2

Investors & Employees E-1

Traders & Employees H1-B1

L-1

Transferee

Intracompany transferee Two Types

L-1A: Manager or Executive L-1B: Specialized Knowledge

O-1A & O-1B

Basics

2 Types:

O-1A Extraordinary Ability (Business/Science)

O-1B Artists

Requires Job Offer or Agent

E-1 & E-2

Trade & Invest

E-1

Treaty Trade Visa

Demonstrate substantial trade between U.S. and Certain Countries

E-2

Investor Visa

J-1

Exchange Visitors

-1Bs

No lottery required

Available anytime of year Obtain 2

H-Work with a university or nonprofit associated with a university

What is IEP?

A new immigration option for international founders from any country to build their startups in any field in the United States!

2.5 year stay for founders Option of a 2.5 year renewal

Purpose

Create Innovation Patents

Research

High growth firms Job creation

What is Parole?

Parole is not a status such as a visa or an immigrant/nonimmigrant status

Parole is permission to legally enter and remain in the U.S. for specific reasons Provides a temporary initial period of authorized stay up to 30 months

1. Is the company established in the U.S.? 2. Is the company less than 5 years old? 3. Do you have at least 10% equity?

If yes to all of the previous questions

You need one of the following:

$100k from US (local, state or federal) government grants in last 18 months

Renewal

Can seek 2.5 years additional Different eligibility criteria

Creation of 5 jobs or receipt of $500k

Go Straight for the GC

Thank you!

Keep in touch with me - [email protected] :)

[email protected] 855-546-0015 alcorn.law

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