Reservation of common stock clause: Copy, customize, and use instantly
Introduction
A reservation of common stock clause outlines the specific number of shares of common stock that a company agrees to reserve for future issuance. It ensures that sufficient shares are available for employee stock options, convertible securities, or other purposes as specified in the agreement. This clause is important for providing clarity regarding the company's ability to issue common stock in the future while maintaining the terms of the agreement.
Below are templates for reservation of common stock clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Reservation of common stock for employee stock options
This variation applies when common stock is reserved for employee stock options.
The Company agrees to reserve [insert number or percentage] of its authorized but unissued common stock for the purpose of issuing stock options to employees, consultants, or directors under the Company’s stock option plan. These shares will be issued upon the exercise of stock options granted in accordance with the plan.
Reservation of common stock for convertible securities
This variation applies when common stock is reserved for convertible securities.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon conversion of outstanding convertible securities, including convertible notes and convertible preferred stock. The reservation of these shares is necessary to fulfill the conversion rights of these securities.
Reservation of common stock for future financing
This variation applies when common stock is reserved for future financing purposes.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for future issuance in connection with financing activities, including but not limited to, equity offerings, strategic partnerships, or debt financing that may be convertible into equity.
Reservation of common stock for acquisition or merger purposes
This variation applies when common stock is reserved for acquisitions or mergers.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance as part of future acquisitions, mergers, or other strategic transactions. These shares will be issued to target company shareholders or other parties as agreed upon in the transaction.
Reservation of common stock for employee equity incentives
This variation applies when common stock is reserved for employee equity incentives.
The Company agrees to reserve [insert number or percentage] of its authorized common stock to be used for employee equity incentives, including restricted stock units (RSUs), performance shares, or other equity-based awards under the Company’s equity compensation plan.
Reservation of common stock for existing shareholders
This variation applies when common stock is reserved for existing shareholders' rights.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the purpose of honoring preemptive rights or other shareholder rights as stipulated in the Company’s Articles of Incorporation or Shareholders’ Agreement. These shares will be available for issuance to existing shareholders in the event of future equity offerings.
Reservation of common stock for warrants and options
This variation applies when common stock is reserved for warrants and options issued to investors.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the exercise of warrants and stock options granted to investors, advisors, or other stakeholders as part of this Agreement. The shares will be issued as part of the exercise of such options and warrants.
Reservation of common stock for strategic partnerships
This variation applies when common stock is reserved for strategic partnerships.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future strategic partnerships, joint ventures, or collaboration agreements. These shares will be issued based on the terms of the partnership agreements or as compensation for services rendered under such arrangements.
Reservation of common stock for debt conversion
This variation applies when common stock is reserved for debt conversion into equity.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of outstanding debt securities. These shares will be issued upon the exercise of the conversion rights as provided in the terms of the outstanding debt agreements.
Reservation of common stock for board-approved allocations
This variation applies when common stock is reserved for board-approved allocations.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for allocation as approved by the Board of Directors for various purposes, including capital raising, employee equity grants, or other corporate purposes as determined by the Board.
Reservation of common stock for dividends or distributions
This variation applies when common stock is reserved for issuing dividends or distributions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future stock dividends, stock splits, or other stock-based distributions to shareholders. These shares will be issued in accordance with the Company’s dividend or distribution policies.
Reservation of common stock for preferred stock conversion
This variation applies when common stock is reserved for conversion from preferred stock.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of outstanding preferred stock. These shares will be issued to preferred stockholders in accordance with the terms and conditions specified in the preferred stock agreement.
Reservation of common stock for future stock repurchase programs
This variation applies when common stock is reserved for future stock repurchase programs.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for future repurchase programs, including repurchase of shares in the open market or through private transactions. The shares will be available for repurchase as needed to manage capital structure.
Reservation of common stock for initial public offering (IPO)
This variation applies when common stock is reserved for the company’s IPO.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with its initial public offering (IPO). These shares will be issued to public investors as part of the IPO process, subject to market conditions and regulatory approval.
Reservation of common stock for future compensation plans
This variation applies when common stock is reserved for future compensation plans.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under future employee compensation plans, including but not limited to performance-based equity awards, employee stock purchase plans, or similar programs.
Reservation of common stock for strategic acquisitions
This variation applies when common stock is reserved for future acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future acquisitions. These shares will be issued to the shareholders or stakeholders of any companies or assets acquired by the Company.
Reservation of common stock for rights offerings
This variation applies when common stock is reserved for a rights offering to existing shareholders.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with a rights offering to existing shareholders. These shares will be made available to shareholders in proportion to their current holdings, allowing them to purchase additional shares of the Company.
Reservation of common stock for general corporate purposes
This variation applies when common stock is reserved for general corporate purposes.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for general corporate purposes, including but not limited to raising capital, financing activities, and funding acquisitions, without the need for further shareholder approval.
Reservation of common stock for capital raising efforts
This variation applies when common stock is reserved for future capital raising efforts.
The Company agrees to reserve [insert number or percentage] of its authorized common stock to be issued as part of future capital raising efforts, including public or private equity offerings, debt conversion, or other financing activities as required by the business.
Reservation of common stock for future stock issuance under convertible securities
This variation applies when common stock is reserved for future issuance due to the conversion of securities.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for future issuance upon the conversion of outstanding convertible securities, including convertible bonds and convertible preferred stock. These shares will be made available for conversion in accordance with the terms of the securities.
Reservation of common stock for equity grants to key employees
This variation applies when common stock is reserved for grants to key employees.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the purpose of issuing equity grants to key employees, directors, or consultants under the Company’s incentive compensation plan. These shares will be used to fulfill the Company’s obligations under the plan.
Reservation of common stock for restricted stock units (RSUs)
This variation applies when common stock is reserved for restricted stock units (RSUs) granted to employees.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the issuance of restricted stock units (RSUs) as part of the Company’s equity compensation program. These shares will be issued upon vesting of the RSUs in accordance with the terms of the RSU grant.
Reservation of common stock for issuance in connection with mergers or acquisitions
This variation applies when common stock is reserved for issuance during mergers or acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future mergers, acquisitions, or strategic transactions. These shares will be issued as part of the consideration in any such transactions.
Reservation of common stock for debt-to-equity conversions
This variation applies when common stock is reserved for conversion of debt into equity.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of outstanding debt instruments into equity. The Company will use these reserved shares to satisfy conversion requests from holders of convertible debt.
Reservation of common stock for employee stock purchase plan (ESPP)
This variation applies when common stock is reserved for an employee stock purchase plan.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the issuance under its Employee Stock Purchase Plan (ESPP). These shares will be made available to employees for purchase in accordance with the terms of the plan.
Reservation of common stock for future convertible equity offerings
This variation applies when common stock is reserved for future equity offerings that are convertible into common stock.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of securities issued in future equity offerings, including convertible notes or preferred stock, as part of its capital raising efforts.
Reservation of common stock for potential dividend issuance
This variation applies when common stock is reserved for issuing dividends.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the purpose of issuing dividends in the form of common stock to shareholders. These shares will be issued in accordance with the Company’s dividend policy.
Reservation of common stock for rights offering to existing shareholders
This variation applies when common stock is reserved for a rights offering to existing shareholders.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with a rights offering to its existing shareholders. These shares will be made available for purchase by shareholders in proportion to their current holdings.
Reservation of common stock for issuance under stock option plans
This variation applies when common stock is reserved for the exercise of stock options.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the purpose of issuing shares upon the exercise of stock options granted under the Company’s stock option plan. These shares will be issued to employees, directors, or consultants in accordance with the plan’s terms.
Reservation of common stock for conversion of equity-linked securities
This variation applies when common stock is reserved for the conversion of equity-linked securities.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for future issuance upon the conversion of any equity-linked securities, including warrants, options, or convertible securities. These shares will be issued in accordance with the conversion terms of the equity-linked securities.
Reservation of common stock for future corporate transactions
This variation applies when common stock is reserved for use in future corporate transactions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for future corporate transactions, including acquisitions, mergers, or other corporate restructuring activities. These shares will be issued in connection with such transactions, as determined by the Company.
Reservation of common stock for employee benefit plans
This variation applies when common stock is reserved for employee benefit plans.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under the Company’s employee benefit plans, including pension plans, profit-sharing plans, or other retirement plans. These shares will be issued as required under the terms of the plans.
Reservation of common stock for issuance in connection with private equity investments
This variation applies when common stock is reserved for private equity investments.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to investors in connection with future private equity investments or venture capital funding rounds. These shares will be issued as part of the investment transaction in accordance with the terms of the agreement.
Reservation of common stock for additional shareholder considerations
This variation applies when common stock is reserved for other shareholder considerations.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with additional shareholder considerations, including stock splits, stock dividends, or other corporate actions that may require the issuance of shares to shareholders.
Reservation of common stock for preferred stock conversions
This variation applies when common stock is reserved for the conversion of preferred stock into common stock.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of outstanding preferred stock into common stock, in accordance with the terms and conditions of the preferred stock agreement.
Reservation of common stock for strategic equity partnerships
This variation applies when common stock is reserved for strategic equity partnerships.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future strategic equity partnerships or joint ventures. These shares will be issued to strategic partners or other third parties as part of such partnerships.
Reservation of common stock for future public offering
This variation applies when common stock is reserved for future public offerings.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with a future public offering, including an initial public offering (IPO) or a follow-on offering. These shares will be available for sale to the public in accordance with applicable securities regulations.
Reservation of common stock for private placements
This variation applies when common stock is reserved for private placements.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future private placements. These shares will be made available to qualified investors in private transactions in accordance with the terms of the private placement.
Reservation of common stock for future stock split
This variation applies when common stock is reserved for a potential stock split.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in the event of a future stock split. These shares will be issued to shareholders in accordance with the terms and conditions of the stock split.
Reservation of common stock for convertible securities
This variation applies when common stock is reserved for issuance upon the conversion of convertible securities.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of any outstanding convertible securities, including bonds or preferred stock. These shares will be issued to holders of convertible securities in accordance with their conversion rights.
Reservation of common stock for future mergers or acquisitions
This variation applies when common stock is reserved for mergers or acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future mergers, acquisitions, or strategic alliances. These shares will be issued as part of the transaction terms, subject to the conditions of the merger or acquisition agreement.
Reservation of common stock for future financing rounds
This variation applies when common stock is reserved for future financing rounds, such as a Series A or Series B.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future financing rounds, including Series A, Series B, or other equity-based capital raising activities. These shares will be available for sale to investors in such financing rounds.
Reservation of common stock for tax-qualified employee stock purchase plan
This variation applies when common stock is reserved for a tax-qualified employee stock purchase plan (ESPP).
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under the Company’s tax-qualified employee stock purchase plan (ESPP). These shares will be issued to employees in accordance with the terms and conditions of the ESPP.
Reservation of common stock for employee restricted stock awards
This variation applies when common stock is reserved for restricted stock awards given to employees.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance as restricted stock awards under the Company’s equity incentive plan. These shares will be issued to employees upon the vesting of their restricted stock awards.
Reservation of common stock for rights offering to shareholders
This variation applies when common stock is reserved for a rights offering to existing shareholders.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with a rights offering to its existing shareholders. These shares will be available for purchase by shareholders in proportion to their existing holdings in the Company.
Reservation of common stock for issuance under stock option plans
This variation applies when common stock is reserved for issuance under employee stock option plans.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the issuance of shares upon the exercise of stock options granted under the Company’s stock option plan. These shares will be available for employees, directors, and consultants who participate in the plan.
Reservation of common stock for payment of dividends in kind
This variation applies when common stock is reserved for the payment of dividends in kind.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for the issuance of dividends in the form of common stock to shareholders, as part of the Company’s dividend policy. These shares will be issued as stock dividends based on the terms determined by the Board of Directors.
Reservation of common stock for issuance in strategic joint ventures
This variation applies when common stock is reserved for issuance in strategic joint ventures.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with strategic joint ventures or partnerships. These shares will be issued to third parties involved in the joint venture or partnership as part of the agreed-upon terms.
Reservation of common stock for financing through debt-to-equity swaps
This variation applies when common stock is reserved for debt-to-equity swaps.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of outstanding debt into equity, in the event of a debt-to-equity swap. These shares will be issued to the creditors as part of the debt restructuring process.
Reservation of common stock for issuance to consultants and advisors
This variation applies when common stock is reserved for issuance to consultants or advisors.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to consultants and advisors under the Company’s advisory agreements. These shares will be issued in exchange for services rendered, as specified in the advisory agreements.
Reservation of common stock for employee performance-based grants
This variation applies when common stock is reserved for performance-based grants to employees.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to employees as part of performance-based equity grants. These shares will be granted upon the achievement of performance milestones set forth in the Company’s equity compensation plan.
Reservation of common stock for issuance in connection with debt financing
This variation applies when common stock is reserved for issuance in connection with debt financing.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with debt financing arrangements, where the debt may be convertible into equity or secured by the issuance of common stock.
Reservation of common stock for stock-based acquisitions
This variation applies when common stock is reserved for stock-based acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with acquisitions of other companies or assets. These shares will be issued as part of the consideration for the acquisition.
Reservation of common stock for stock-for-stock exchange
This variation applies when common stock is reserved for stock-for-stock exchanges.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with a stock-for-stock exchange. These shares will be issued to shareholders of another company as part of the exchange agreement.
Reservation of common stock for exercise of equity-linked securities
This variation applies when common stock is reserved for the exercise of equity-linked securities.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the exercise of any equity-linked securities, such as warrants, options, or other convertible securities, in accordance with the terms of the respective agreements.
Reservation of common stock for use in employee retention plans
This variation applies when common stock is reserved for use in employee retention plans.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under the Company’s employee retention plan. These shares will be granted to key employees as part of a retention strategy designed to incentivize long-term employment.
Reservation of common stock for the issuance in the event of future equity offerings
This variation applies when common stock is reserved for potential future equity offerings.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future equity offerings, including follow-on offerings, secondary offerings, or other public or private placements of common stock.
Reservation of common stock for future use in financing arrangements
This variation applies when common stock is reserved for future use in financing arrangements.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with future financing arrangements, including equity offerings or the conversion of debt into equity, as determined by the Company’s financing needs.
Reservation of common stock for strategic compensation programs
This variation applies when common stock is reserved for use in strategic compensation programs.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for use in the Company’s strategic compensation programs. These shares will be issued as part of the overall compensation strategy to attract and retain key talent.
Reservation of common stock for future stock-based compensation awards
This variation applies when common stock is reserved for future stock-based compensation.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under future stock-based compensation awards, including options, restricted stock, or other equity awards to employees, directors, and consultants under the Company’s equity incentive plan.
Reservation of common stock for issuance under convertible equity financing
This variation applies when common stock is reserved for issuance in connection with convertible equity financing.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with any future convertible equity financing, including convertible preferred stock, convertible bonds, or any other equity-linked securities.
Reservation of common stock for conversion of outstanding warrants
This variation applies when common stock is reserved for conversion of outstanding warrants.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the exercise of any outstanding warrants. These shares will be issued in accordance with the terms of the warrant agreement.
Reservation of common stock for stock-based bonuses
This variation applies when common stock is reserved for issuance as stock-based bonuses.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance as stock-based bonuses to employees, officers, or directors. These shares will be granted in accordance with the Company’s bonus plan.
Reservation of common stock for joint venture partners
This variation applies when common stock is reserved for joint venture partners.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to joint venture partners as part of any strategic joint venture, partnership agreement, or other collaborative business arrangement.
Reservation of common stock for future initial public offering (IPO)
This variation applies when common stock is reserved for a future IPO.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with the Company’s future initial public offering (IPO). These shares will be available for sale to the public upon the completion of the IPO.
Reservation of common stock for future convertible debt financing
This variation applies when common stock is reserved for future convertible debt.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon conversion of future convertible debt. These shares will be issued upon the conversion of convertible debt instruments into common stock in accordance with the terms of the debt agreement.
Reservation of common stock for acquisitions in the future
This variation applies when common stock is reserved for future acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with any future acquisitions. These shares will be issued as part of the consideration in any such acquisition transactions.
Reservation of common stock for preferred stock conversion rights
This variation applies when common stock is reserved for the conversion of preferred stock.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance upon the conversion of preferred stock. These shares will be issued to preferred stockholders upon the exercise of their conversion rights as per the preferred stock agreement.
Reservation of common stock for employee stock purchase plan (ESPP)
This variation applies when common stock is reserved for an employee stock purchase plan (ESPP).
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under the Company’s employee stock purchase plan (ESPP). These shares will be available to employees for purchase at a discounted price in accordance with the terms of the plan.
Reservation of common stock for payment of debt obligations
This variation applies when common stock is reserved for the payment of debt obligations.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in the event that the Company needs to pay its outstanding debt obligations through a debt-to-equity conversion. These shares will be used to satisfy the conversion terms of outstanding debt.
Reservation of common stock for bonus equity awards to executives
This variation applies when common stock is reserved for executive bonus equity awards.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to executives as part of their annual performance bonus in the form of equity. These shares will be awarded based on the executive's individual performance and the Company's overall performance.
Reservation of common stock for stock-for-stock exchange in mergers
This variation applies when common stock is reserved for a stock-for-stock exchange in a merger.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance as part of a stock-for-stock exchange in the event of a merger or consolidation with another company. These shares will be issued to shareholders of the other company as part of the merger consideration.
Reservation of common stock for strategic partnerships
This variation applies when common stock is reserved for strategic partnerships.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance to strategic partners as part of the Company’s strategic partnerships. These shares will be issued in accordance with the terms of the partnership agreement.
Reservation of common stock for stock-based awards in employee retention programs
This variation applies when common stock is reserved for employee retention programs.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance under employee retention programs. These shares will be granted to employees to encourage long-term employment and retention.
Reservation of common stock for issuance in connection with equity-based financing
This variation applies when common stock is reserved for equity-based financing.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with any future equity-based financing activities, including public offerings, private placements, or other capital raising efforts.
Reservation of common stock for use in company stock buybacks
This variation applies when common stock is reserved for use in buyback programs.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for use in future stock buyback programs. These shares will be repurchased by the Company as part of its strategy to manage the capital structure.
Reservation of common stock for issuance in connection with franchise agreements
This variation applies when common stock is reserved for franchise agreements.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for issuance in connection with the terms of any future franchise agreements. These shares will be issued to franchisees as part of their franchise consideration.
Reservation of common stock for financing strategic acquisitions
This variation applies when common stock is reserved for financing acquisitions.
The Company agrees to reserve [insert number or percentage] of its authorized common stock for use in financing strategic acquisitions. These shares will be issued to the sellers of businesses or assets acquired by the Company.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.