For Law Nerds
As we mentioned in our previous post, most of the edits to Version 3.0 of Series Seed are formatting related. This section of the blog will break down most of our edits, and for those of you not ready to take the plunge into GitHub, we have included Word documents and redlines against Version 2.0.
First and foremost, the largest formatting change is the merging of the previous Investors’ Rights Agreement and Stock Purchase Agreement into one new document called the Stock Investment Agreement, which covers all of the provisions of the previous two documents. Second, we have moved all of the variable definitions in the Stock Investment Agreement up to the front of the document, which allows for easier editing of the “fill in the blank” definitions that previously appeared throughout the documents. Third, we have updated references to written signatures and communication to allow for electronic methods like email. If you look at the redlines, you’ll see a lot of red ink, but these formatting changes account for 99% of it.
Substantively, the largest change is that we have added five standard carve outs based on the NVCA model documents to the drag along provisions in Section 5.4 of the Stock Investment Agreement. These are standard provisions that many parties were modifying the previous versions of the documents to include, so we added them.
We also removed the contribution to escrow provision that previously existed in Section 1.3.2 of the Restated Certificate of Incorporation. This was one of those provisions that caused some friction between Investors and the Company. My view is that if the provision is silent, then the liquidation preference must be fully satisfied prior to including any preferred funds in escrow, but remaining silent leaves this in doubt. For any brave souls taking another view (and giving an opinion on the same!), it also kicks the issue down the road until the Series A round when it makes sense to negotiate a nuanced issue like this.
The rest of the changes tend to be smaller updates, like changing the dollar threshold for disclosure of agreements from $25,000 to $50,000 or for disclosure of liabilities from $5,000 to $25,000 individually and $25,000 to $100,000 in aggregate. These and the other edits were in response to how we found that people were actually using the documents in practice. As always we’d love to get your feedback but you’re going to need to use GitHub!
For Real Nerds
Even though I was a double major in History and Latin, GitHub has become a part of my everyday conversation. It seems like these days engineers don’t have resumes, just GitHub accounts. You can read more about this amazing company here. This section attempts to give a brief overview of GitHub and how to contribute to a project like Series Seed even if you are a simple country lawyer.
To contribute, there are really only two core concepts that you need to know: 1) how to submit a request to change a document, called a pull request and 2) how to leave a more general comment, called opening an issue. We’re only going to cover the most basic functionality possible here, but we would encourage you to continue learning about how to use GitHub’s more advanced features here. Before doing any of this though, you’ll need to create an account on GitHub and be logged in.
A pull request is simply a requested change to a document. If there is a specific change to the text of a document that you have in mind, you should submit a pull request. If your comment is more general in nature, you should open an issue instead, which is described in the next section.
You can submit a pull request using GitHub’s new online editing functionality by first navigating to a project page and clicking on the particular document for which you want to submit your change. The project page for Series Seed is at https://github.com/seriesseed/equity.
You will see a list of documents so select the document you wish to edit, for example, if you click on the “Stock Investment Agreement” in the main body of the page you will be taken to the page for that particular document. On that page you will see buttons at the upper right hand corner of the document that looks like this:
If you click “Edit” GitHub will open a new editing pane, where you can select “Soft wrap” from the drop down menu in the upper right, it will make the edits easier to see. The dropdown menu looks like this:
Once you’ve clicked “Soft wrap” to change to the easier editing view, you can scroll through the document to make your changes. When you are done, try to describe what you’ve done in the boxes below your edits and hit the “Propose File Change” button at the bottom of the screen.
When you hit the “Propose File Change” button you’ll begin the process of submitting a pull request to the Series Seed team. You’ll be able to preview your request on this page:
You can insert a description of the change you are requesting plus any additional color. Once you click “Send pull request,” that’s it! You’ll have submitted your pull request for review. GitHub will automatically take you to the discussion page for the pull request that you opened, which will look like this:
You don’t need to do anything on this page, unless you would like to add some more comments to your pull request. The Series Seed team will try to leave some feedback on all pull requests. Congrats on submitting your first pull request!
You can always come back to check the discussion and status of your pull request by navigating to the “Pull requests” tab at the top of the project page that looks like this:
There you will see a summary of all the open pull requests and, by clicking on an individual pull request, you can enter the discussion area to see if there have been any comments or discussion on your suggestion.
If you have a more general comment or discussion item that doesn’t translate to a specific edit, you should open an issue rather than a pull request. On the project page, right next to the pull requests link, is a link to the “Issues” page. If you click on that link you will be taken to the issues page for that project. It should look something like this:
Before submitting an issue, you should use the search bar to look to see if anyone has already brought up your point. If not, just click the “New Issue” button and describe the issue you have in mind. The page will look like this:
Try to be as descriptive as possible. When you are done, click “Submit new issue” and you will be taken to the page for your submitted issue.
You don’t need to do anything on this page unless you want to leave another comment on the issue. You can come back at any time to check the status of your issue by clicking on the “Issues” tab at the top of the screen. If your issue gets resolved, it will be marked as closed and moved to the closed issues tab. You can also browse around these tabs and comment on issues that other people have opened.
For more help, please refer to the GitHub help pages.