While a terms sheet only contains indicative guidelines based on which the fund is willing to complete an investment, a series of legal documents is normally needed to close the fundraise.
Here are the main documents that you will need:
Stock Purchase Agreement (SPA)
The main document in the fundraise, outlining the terms related to the deal. This contains important details such as the purchase price, the number of shares being sold, representations and warranties, indeminification provisions and other key terms.
Disclosure schedule
A list of disclosures made against warranties and made in relation to the warranties, or containing specific information that is required by certain warranties.
Voting agreement
An agreement outlining how shareholders will vote. It might contain instances such as "drag along right", which can force minority shareholders to follow the majority shareholders on certain votes.
Investor Rights Agreement
Listing the privileges and rights of investors, such as information rights (access to a company's information) or rights of first refusal (allowing investors to accept or refuse new shares in the company before third parties are able to invest).
Certificate of Incorporation
Outlining the rights of the share class acquired by a new investor (typically preferred shares).
While an Ithaca expert might be able to support with the commercial elements, you should make sure you have a legal advisor to support the drafting of these documents (we have group of excellent fundraising lawyers in our network!).
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