Venture Capital Investment Agreement

VENTURE CAPITAL INVESTMENT AGREEMENT

This Venture Capital Investment Agreement (the "Agreement") is made and entered into as of by and between Company Name: , Company Form of Entity: , with its principal place of business at (the "Company"), and Investor Name: , Investor Form of Entity: , with an address at (the "Investor"). The Company and the Investor are each a "Party" and together the "Parties."

RECITALS

WHEREAS, the Company desires to raise equity financing for the development and growth of its business and has agreed to issue and sell, and the Investor has agreed to purchase, shares of the Company's capital stock on the terms and subject to the conditions set forth in this Agreement; and

WHEREAS, the Parties intend that the shares issued to the Investor shall be of the class designated as (the "Shares"), at a purchase price of $ per Share, for aggregate proceeds to the Company of $ .

WHEREAS, the Parties desire to set forth their respective rights and obligations with respect to the issuance, transfer and governance of the Shares and related matters.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a) "Board" means the Board of Directors of the Company.

(b) "Closing" means the consummation of the purchase and sale of the Shares in accordance with Section 3.

2. PURCHASE AND SALE

2.1 Purchase. Subject to the terms and conditions of this Agreement, at the Closing the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, that number of Shares equal to Shares.

2.2 Purchase Price; Payment. The purchase price for each Share shall be $ , for an aggregate purchase price of $ payable by wire transfer or other immediately available funds in accordance with the instructions delivered by the Company at least five (5) business days prior to the Closing.

3. CLOSING; DELIVERIES

3.1 Closing Date. The Closing shall occur at such time and place as the Parties may agree, but in no event later than , unless extended by mutual written agreement.

3.2 Company Deliveries. At the Closing, the Company shall deliver stock certificates, an updated capitalization table reflecting the issuance of the Shares, certified copies of organizational documents, board resolutions authorizing the transactions contemplated by this Agreement, and the other documents reasonably required by the Investor.

3.3 Investor Deliveries. At the Closing, the Investor shall deliver the aggregate purchase price to the Company and such other documents as are reasonably required by the Company to evidence the Investor's authority to enter into this Agreement.

4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to the Investor that, as of the date hereof and as of the Closing: (a) the Company is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization; (b) the execution, delivery and performance of this Agreement by the Company have been duly authorized by all necessary corporate action; (c) the Shares, when issued and delivered in accordance with the terms of this Agreement and subject to the terms of the Company's certificate of incorporation and bylaws, will be duly authorized, validly issued, fully paid and non-assessable; and (d) there are no pending actions, suits or proceedings that, if determined adversely, would have a material adverse effect on the Company's business, operations, properties, or financial condition except as set forth in the Company's disclosure schedule attached hereto.

5. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

The Investor represents and warrants to the Company that: (a) the Investor has full power and authority to enter into this Agreement and to perform its obligations hereunder; (b) the Investor is acquiring the Shares for investment for its own account and not with a view to distribution in violation of applicable securities laws; (c) the Investor understands that the Shares are restricted securities under applicable law and under the Company's organizational documents; and (d) the Investor has had an opportunity to ask questions and receive answers of the Company's officers and advisors regarding the Company and the terms of the investment.

6. COVENANTS

6.1 Conduct of Business. From the date of this Agreement until the Closing, the Company shall operate its business in the ordinary course consistent with past practice and shall not, without the Investor's prior written consent, take any action that would materially and adversely affect the Company's business, assets or capitalization.

6.2 Access to Information. The Company shall provide the Investor and its representatives reasonable access to the Company's books, records, personnel and properties and shall furnish such financial and other information regarding the Company as the Investor may reasonably request for the purposes of confirming the representations and conditions set forth herein.

7. TRANSFER RESTRICTIONS; RIGHTS OF FIRST REFUSAL; CO-SALE

7.1 Restrictions. The Shares shall be subject to transfer restrictions, including lock-up and legend requirements, as set forth in the Company's certificate of incorporation and applicable securities laws.

7.2 Right of First Refusal and Co-Sale. The Parties agree that holders of the Company's capital stock shall be subject to customary rights of first refusal and co-sale in favor of the Company and the Investor as set forth in the applicable investor rights agreement.

8. LIQUIDATION PREFERENCE; DIVIDENDS; ANTI-DILUTION

8.1 Liquidation Preference. In the event of any liquidation, dissolution or winding up of the Company, the holders of the Shares shall be entitled to receive, prior and in preference to any distribution to holders of the Company's common stock, an amount equal to $ per Share, plus any declared but unpaid dividends.

8.2 Dividends. Except as otherwise provided in the Company's certificate of incorporation, holders of Shares shall be entitled to receive dividends, if and when declared by the Board, on a pari passu basis with other preferred shares.

8.3 Anti-Dilution. The Shares shall carry standard anti-dilution protection in the event of certain dilutive issuances, subject to customary exceptions.

9. INDEMNIFICATION

The Company and the Investor shall indemnify, defend and hold harmless the other Party and its affiliates and respective officers, directors, agents and employees from and against any losses, claims, damages, liabilities and reasonable expenses (including attorneys' fees) to the extent resulting from a breach of any representation, warranty or covenant made by the indemnifying Party in this Agreement, subject to customary limitations and procedures.

10. CONDITIONS PRECEDENT

10.1 Conditions to Investor's Obligations. The Investor's obligation to purchase the Shares is subject to the fulfillment prior to or at the Closing of the following conditions: (a) the representations and warranties of the Company shall be true and correct in all material respects as of the Closing (except to the extent qualified by materiality, in which case they shall be true and correct in all respects); (b) the Company shall have performed its covenants and complied with all agreements required by this Agreement; and (c) no statute, rule, regulation or order shall prohibit or make illegal the consummation of the transactions contemplated hereby.

10.2 Conditions to Company's Obligations. The Company's obligations at the Closing are subject to like conditions with respect to the Investor.

11. NOTICES

All notices, requests, claims, demands, and other communications hereunder shall be in writing and shall be delivered to the addresses set forth above (or to such other address as a Party may designate by written notice to the other Party).

12. AMENDMENT; WAIVER; COUNTERPARTS

This Agreement may be amended, modified or supplemented only by an instrument in writing signed by the Parties. No failure or delay by any Party in exercising any right under this Agreement shall operate as a waiver thereof, and no single or partial exercise of any right shall preclude any other or further exercise thereof. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

13. GOVERNING LAW; ENTIRE AGREEMENT; SEVERABILITY

13.1 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to principles of conflicts of law.

13.2 Entire Agreement. This Agreement, together with any schedules and agreements executed in connection herewith, constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether written or oral, of the Parties.

13.3 Severability. If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired thereby.

14. MISCELLANEOUS

14.1 Further Assurances. Each Party shall execute and deliver such further instruments and take such further actions as may be reasonably required to effectuate the purposes of this Agreement.

14.2 Survival. The representations, warranties and agreements contained in this Agreement shall survive the Closing to the extent provided herein.

Sign Now