Once the framework of the Series A offering is memorialized through a highly negotiated Indication of Interest or Term Sheet, the parties will then turn to the lawyers to draft a basket of documents, beginning with (i) an Amended and Restated Articles (or Certificate) of Incorporation, (ii) Series A Stock Purchase Agreement and (iii) a number of related contracts.
- Amended & Restated Certificate of Incorporation | The Amended and Restated Certificate of Incorporation is designed to memorialize the Series A Preferred Stock and its treatment of dividends and liquidation preference ahead of common stock.
- Series A Stock Purchase Agreement | The Series A Preferred Stock Purchase Agreement is designed to memorialize venture money to the company. The Stock Purchase Agreement and related contracts will typically be governed by the same state law, including agreed dispute resolution provisions.
- Indemnification Agreement | The Indemnification Agreement can be used for both officers and directors of the company. In some cases, a director will serve as a nominee of one or a group of investors (e.g., an individual venture capitalist serving as a nominee of a venture capital fund). Because venture capital funds with director nominees may be named as parties or otherwise incur expenses in connection with litigation against their director nominees, some venture capital funds will request that the fund, and not just their director representative, be covered by the Indemnification agreement.
- Investors’ Rights Agreement | An Investors’ Rights Agreement can cover many different subjects. The most common are information rights, registration rights, contractual “rights of first offer” or “preemptive” rights” (i.e., the right to purchase securities in subsequent equity financings conducted by the company) and various post-closing covenants of the company.
- Management Rights Letter | A Management Rights Letter will grant the prospective investor with the right to examine the books and records of the company and inspect its facilities during normal business hours and request information at reasonable times and intervals concerning the general status of the company’s financial condition and operations.
- Right of First Refusal Agreement | Rights of first refusal to new or pre-existing shareholders to purchase additional securities of the company.
- Voting Agreement | The Voting Agreement sets forth board composition requirements and defines drag along and tag along rights, among other rights.