Deal desks and corporate development

Keeping what is signed to what was negotiated.

The term sheet was agreed in May and the side letter arrived the week of closing. Every closing produces documents that claim to reflect what was agreed. Leela reads each one against the document that controls it, quotes both sides, and keeps every draft, side letter and turn on the round in one matter, so what is signed is what was negotiated and settled points stay settled through the closing checklist.

Leela Received. I am reviewing both documents against the executed term sheet. 9:16 AM

Reviewed against the term sheet: 5 provisions beyond it, 2 inconsistent between the documents

Dear Charisma

Five provisions go beyond the term sheet and two are inconsistent between the SPA and the IRA.

The SPA at 3.4 contains a full-ratchet anti-dilution provision; term sheet section 5 provides broad-based weighted average. The IRA at 2.1 grants a board seat to the lead investor and an observer to each investor above $500,000; the term sheet provides one seat and one observer in total. The IRA at 4.3 grants pre-emptive rights at 125 percent of pro rata; the term sheet says pro rata. The SPA at 7.2 adds a founder non-compete of 3 years, which the term sheet does not contain. The IRA at 6.1 sets the reserved-matter threshold at a majority of preferred holders, against the term sheet's 60 percent.

The inconsistencies: the SPA defines Qualified IPO at $150,000,000 and the IRA at $200,000,000, and the drag-along threshold is 55 percent in the IRA and 60 percent in the SPA's cross-reference. Each is redlined to the term sheet with the section quoted, and the two definitions are conformed to the term sheet figure. The founder non-compete is open for you, since it is a new ask rather than drafting.

Leela

W Orchard round - term sheet conformance memo.docx72 KBW Orchard SPA - redline.docx611 KBW Orchard IRA - redline.docx352 KB

The document that controls

A side letter against the term sheet. The SPA and the IRA against the term sheet and against each other. Every provision stated as agreed, narrower, or never agreed, with the controlling text quoted.

The diligence bundle

Ten documents in, one memo per document and one consolidated report. The PIIA signed late, the contractor agreement with no IP assignment, found and cited.

Settled points stay settled

Every draft, side letter and turn on the round in one matter. The closing checklist runs from the issues list, and a change that is not marked is reported with the text quoted.

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