SharesPost

Contract Service

This information is qualified by these Disclaimers

As a free member service, SharesPost has created stock purchase agreements for most variations of private company stock transactions. We have designed our forms to be straightforward and balanced between Buyer and Seller. When compared to hiring an attorney to argue draft after draft with an opposing counsel, we think you’ll find the SharesPost contracts system saves you considerable time, expense and headache.

When a member clicks to make a new post to buy or sell, the SharesPost system asks for their desired terms (e.g., price, number of shares, class of stock, etc.) and other questions related to their standing under the securities laws (e.g., are you an “affiliate” of the issuer).

Sellers are also asked whether their shares are subject to a stockholders’ agreement, right of first refusal, co-sale right or other transfer restriction. If they are, the seller uploads the documents containing the transfer restrictions so that prospective buyers can understand the restrictions that will be applicable to any transaction. Once the member has reviewed their post, they click “Confirm” and their post goes live on the website.

All members can then view the new post. Sample contracts are available for download in connection with each post, but note that because the SharesPost system does not yet know who the buyer is, the final form of contract may differ.

When a member clicks the “Agree to Buy” or “Agree to Sell” link next to a post, the SharesPost system asks them the same questions about their standing under the securities laws and, for sellers, if transfer restrictions apply to their shares. Based on the inputs of both buyer and seller, the SharesPost system suggests a form of agreement from its library of forms for the transaction.

The members then click to download these contracts to confirm they fit their circumstances and intent prior to executing them - obviously no form fits all members’ needs and our forms are only available on an “as-is” basis. SharesPost recommends members consult legal counsel and/or other experts prior to entering into any agreements. Note that SharesPost is not acting as legal counsel to any party and is not giving any legal advice. Members are solely responsible for their use of the SharesPost forms and should be sure to read these important Disclaimers before doing so.

Electronic Signature

We combine our contract service with a best of class electronic signature solution from EchoSign. Buyers and Sellers who find each other on SharesPost bulletin boards can instantly execute and deliver their contracts with a mouse click on the EchoSign website. This saves our members from the tedious task of copying, signing, faxing and filing multiple documents.

Contracting Process Outline

When a Seller posts a contract to sell, the following process occurs:

1. Seller inputs their desired terms (e.g., price, number of shares, etc.)
2. Seller answers questions relevant to the securities laws
3. Seller indicates which restrictions, if any, are applicable to their shares
4. Seller uploads document(s) containing any restrictions
5. Seller reviews and confirms post
6. Prospective buyers review post and transfer restrictions
7. Buyer clicks “Agree to Buy” next to seller’s post
8. Buyer answers questions relevant to the securities laws
9. SharesPost suggests a contract for transaction
10. Buyer reviews and electronically signs contract at EchoSign
11. Seller emailed link to EchoSign page where they review and counter-sign contract
12. Now binding agreement emailed to U.S. Bank for processing of transaction

When a Buyer posts a contract to buy, the following process occurs:

1. Buyer answers questions relevant to the securities laws
2. Buyer reviews and confirms post
3. Prospective sellers review post
4. Seller clicks “Agree to Sell” next to buyer’s post
5. Seller answers questions relevant to the securities laws
6. Seller indicates which transfer restrictions, if any, are applicable to their shares
7. Seller uploads document(s) containing any restrictions
8. SharesPost suggests a contract for transaction
9. Seller reviews and electronically signs contract at EchoSign
10. Buyer emailed link to EchoSign page where they review and counter-sign contract
11. Now binding agreement emailed to U.S. Bank for processing of transaction
12. Buyer inputs their desired terms (e.g., price, number of shares, etc.)

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Below are links to some of the templates we offer to our members for use on SharesPost. Feel free to review them in advance of posting a contract. Note that these forms are provided only as a convenience to members – SharesPost is neither representing or giving legal advice to anyone and members are solely responsible for their use. Users are free to contact each other directly and use alternative contracts. Before using these forms, it is important that you read these Disclaimers.

Buyer Posting To Purchase Stock

• Purchase Agreement
• Escrow Agreement
• Indemnification Agreement
• Buyer's Investment Representation Agreement

Seller Posting To Sell Stock With No Transfer Restrictions

• Purchase Agreement
• Escrow Agreement
• Indemnification Agreement
• Buyer's Investment Representation Agreement

Seller Posting to Sell Stock Subject to Right of First Refusal

• Purchase Agreement
• Escrow Agreement
• Indemnification Agreement
• Buyer's Investment Representation Agreement

Seller Posting to Sell Stock Subject to a Right of Co-Sale

• Purchase Agreement
• Escrow Agreement
• Indemnification Agreement
• Buyer's Investment Representation Agreement

Seller Posting to Sell Stock with Right of First Refusal and Right of Co-Sale Provisions

• Purchase Agreement
• Escrow Agreement
• Indemnification Agreement
• Buyer's Investment Representation Agreement

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Buyer and Seller Compliance

This information is qualified by these Disclaimers

Though each participant in a SharesPost facilitated contract is solely responsible for making their own legal determination about the availability of an exemption from the securities laws, we believe we have constructed the SharesPost process such that Buyer and Seller can generally make use of a Section 4(1) exemption, and in some cases, Rule 144. Supporting such an exemption is the fact that only SharesPost members with a password protected account are able to participate in postings, only accredited investors can be SharesPost Buyers, and only sellers holding their shares for at least a year can be SharesPost Sellers.

SharesPost’s Compliance

SharesPost is a “passive bulletin board” that enables its members to post and manage information about potential sales and provides sample forms of contracts that members may use to transact should they choose to do so. SharesPost members can review these posted sample forms of contracts and, if they meet certain legal and financial criteria, use a third party service to electronically execute them off of the SharesPost website. Any resulting transaction is managed by a licensed, third party escrow company. SharesPost takes no commission or success-based compensation in connection with such transaction, nor does SharesPost handle the securities or sales proceeds at anytime. SharesPost does not purchase or hold any shares of companies listed on the site. SharesPost does not give any investment advice or opinion as to the value of any shares. Accordingly, SharesPost has not registered with the SEC or any government authority as a broker dealer or an exchange at this time.

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Company Information

SharesPost is not an investment advisor and does not give any investment advice. SharesPost neither holds nor gives any opinion about the value of any shares or companies or the advisability of any particular transaction for any party. Accordingly, SharesPost is not registered with the SEC or any governmental authority as an investment advisor. Your review of all posts and content on the SharesPost site is subject to these Disclaimers.

Information about companies presented on the SharesPost site is gathered from many third party sources, including user submitted comments and documents. SharesPost makes no effort to verify the accuracy of any of this information and expresses no opinion and gives no warranty of any kind regarding its truthfulness or completeness. Any person contemplating a stock purchase should make their own independent investigation into the issuer’s facts and circumstances.

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Escrow Companies

SharesPost is only a bulletin board and as such does not process any transactions. Once purchase and other agreements are executed by both buyer and seller, the agreements are forwarded to U.S. Bank. Once buyer and seller execute U.S. Bank’s form of Escrow Services Agreement and deliver appropriate documentation to confirm identity, U.S. Bank opens accounts for each of buyer and seller and begins the process described below. U.S. Bank charges buyer and seller a flat fee of $1,500 each for their services.

We believe that buyers and sellers alike can benefit substantially by using an escrow provider instead of leaving it to their respective attorneys to negotiate an agreement and process a transaction. In addition to appreciating the collaborative framework for getting to a closed transaction, the parties generally find their transaction costs are much lower and the closing happens sooner.

Escrow Process

We have designed the process set forth in the form of SharesPost Stock Purchase Agreement and Escrow Services Agreement to balance the parties desire to have a flexible, simple agreement with the desire to have an agreement that gives them a reasonable degree of legal protection. To accomplish this, we have buyer and seller take turns moving the transaction forward – this way each party can see the other party perform prior to having to take the next step.

For example, the following five-step process is the high level sequence of buyer and seller obligations in cases where the seller has no transfer restrictions (e.g., right of first refusal) on their shares.

1. Seller delivers copies to the escrow provider indicating ownership of the shares (e.g., stock certificate or the purchase agreement that resulted in their owning the shares)
2. Buyer wires the purchase price to U.S. Bank
3. Seller delivers the original stock certificate with instruments of transfer to U.S. Bank
4. U.S. Bank works with company to transfer the shares from seller to buyer and get a new stock certificate in buyer’s name issued
5. U.S. Bank simultaneously delivers purchase price to seller and the new stock certificate to buyer

The Escrow Services Agreement provides each party with clear deadlines for their performance of each of their obligations. If the other party doesn’t perform within these deadlines or, under certain circumstances, the transaction just takes too long to close, you can unilaterally terminate the purchase agreement and the escrow.

Handling Transfer Restrictions

Many private company shares are subject to various restrictions on their transfer. These restrictions generally give the company or others the right to purchase shares in lieu of a third party purchaser or entitle certain third parties to participate in a seller’s transaction. The SharesPost contracts and escrow process are designed to address these restrictions so that the seller can meet all of their pre-existing contractual obligations. When a seller Posts to Sell or Agrees to Sell, they are asked about restrictions on their shares and the contract used for their transaction is automatically selected based on their responses. So, for example, where a seller’s shares are subject to a form of right of first refusal (“ROFR”), the contract will provide that the seller’s obligation to the buyer are qualified by the ROFR. Thus if the company should exercise their right and purchase some of the shares proposed for sale, then the SharesPost buyer is only entitled to purchase the remaining shares. Prior to using any SharesPost forms it is important that you review these Disclaimers.

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Though we have tried to make the SharesPost contract forms fit as many users facts and circumstances as possible, some parties of course will have situations that are not well served by our forms. Prior to executing any SharesPost contract we strongly recommend that you review your contract with an attorney to make sure it is right for you.

Though SharesPost is making certain forms available to its members, SharesPost is not representing any member or any party to any transaction in a legal or any other capacity. SharesPost is not rendering legal, investment or any other kind of advice to any person. SharesPost makes no representation or warranty about any of its forms or their suitability for any particular person or purpose. Accordingly, SharesPost shall not be liable for claims arising in connection with any person’s use of any SharesPost form.

By accessing to the SharesPost website, you are acknowledging that you have read, understood and agree to be legally bound by the terms of the following general disclaimer.

Stock trading is inherently risky and you agree to assume complete and full responsibility for the outcomes of all trading decisions that you make, including but not limited to loss of capital. None of the materials on the SharesPost Web Site should be construed as a binding offer to buy or sell securities; rather, they are indications of interest that require independent confirmation and execution by the parties off the SharesPost website. WE WILL NOT PURCHASE SECURITIES FROM YOU NOR WILL WE SELL SECURITIES TO YOU. Under no circumstances should any person at this web site make trading decisions based solely on the information discussed herein. We are not a qualified financial advisor and you should not construe any information discussed herein to constitute investment advice. It is informational in nature.

You, and not SharesPost, assume the entire cost and risk of any buying or selling of shares featured on the bulletin board. You are solely responsible for making your own investment decisions. If you choose to engage in such transactions with or without seeking advice from a licensed and qualified financial and/or legal advisor, then such decision and any consequences flowing there from are your sole responsibility.

You should consult a qualified broker or other financial advisor prior to making any actual investment or trading decisions. You agree to not make actual stock trades absent such advice unless you are competent to analyze the risks of such investment or decisions yourself.

SharesPost has taken due care and caution in compiling transaction materials available on its web site. The SharesPost Web Site contains material in the form of inputs submitted by its users and SharesPost accepts no responsibility for the content or accuracy of such content nor does SharesPost make any representations by virtue of the contents of the SharesPost Web Site in respect of the existence or availability of any shares featured on the bulletin board. Information shared between and among users does not constitute any advice from or endorsement by SharesPost. SharesPost advises its users to check with certified experts before taking any investment decision. SharesPost does not guarantee, correct, accuracy, adequacy or completeness or up to date of any information with respect to any information provided by its users and is not responsible whatsoever for any errors or omissions. SharesPost especially states that it has no financial liability whatsoever to any user on account of the use of information provided by other SharesPost users.

SharesPost is not responsible for any errors, omissions or representations on any of our web pages or on any links thereon. Part of the SharesPost Web Site contains other material submitted to us by third parties. Kindly note that advertisers are responsible for ensuring that the materials submitted comply with all legal requirements.

The information on the SharesPost Web Site is updated from time to time. SharesPost however disclaims any warranties (whether expressed or implied), as to the quality, accuracy, efficacy, completeness, performance, fitness or any of the contents of the SharesPost Web Site, including (but not limited) to any comments, feedback and advertisements contained within the site.

SharesPost makes no warranty that the contents of the Shares Web Site are free from infection by viruses or anything else which has contaminating or destructive properties and shall have no liability in respect thereof.

The corporations whose shares are included in the SharesPost bulletin boards are privately-held companies whose shares currently do not trade on any national securities exchange, and there is no guarantee that the shares of these companies will ever be traded on any national securities exchange.

Members are not permitted to post an indication of interest to both buy and sell shares of the same corporation at the same time.

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