prompt.txt

This is a term sheet given by a venture capitalist. I have a few questions that protect the company's and the founders' interests. Explain. 
 - Does the liquidation preference fall under non-participating or participating and what is the multiple, or is it something else?
 - Does it have pay-to-play provision?
 - Does founder's stock have a vesting schedule with some kind of a cliff? Is the vesting monthly, quarterly or yearly?
 - Does it have anti-dilution clause? Is it full-ratchet or weighted average or is it something else? If something else, explain in detail with examples
 - Does it have a clause to include a board member or a board observer? If yes, how many?
 - Does it have some protective provisions like (explain in detail):
   - Company can't change the terms of stock owned by the VC
   - Company can't authorize the creation of more stock
   - Company can't issue stock senior or equal to the VC’s
   - Company can't buy back any common stock
   - Company can't sell the company
   - Company can't change the certificate of incorporation or bylaws
   - Company can't change the size of board of directors
   - Company can't pay or declare a dividend
   - Company can't borrow money
   - Company can't declare bankruptcy without the VC’s approval
   - Company can't license away the intellectual property of the company, effectively selling the company without the VC’s consent
   - Company can't consumate an initial coin offering or similar financings
   - Company can't create a token-based interest in the company
 - Does it have a drag along clause?
 - Does it have a conversion clause for preferred shares becoming common shares or automatic conversion clause (IPO or M&A or something else)?
 - Does it have a dividend clause?
 - Does it have a redemption clause? If yes, point it out and mention that it's terrible
 - What are the conditions precedent to financing? (Approval by investor's partnerships, Rights offering to be completed by company, employement agreements signed by founders as acceptable to investors?)
 - Does it have information rights? What if VC invests in a competitor?
 - Does it have registration rights?
 - Does it have a right of first refusal?
 - Does it have voting rights? How are they structured?
 - Does it have restriction on sales?
 - Does it have proprietary information and inventions agreement?
 - Does it have a co-sale agreement?
 - Does it have a founder's activities clause?
 - Does it have initial public offering shares purchase clause?
 - Does it have a no-shop agreement?
 - Does it have indemnification clause?
 - Does it have assignment clause?