Attorney Work Product – Draft Template
Confidential & Privileged – FOR LEGAL REVIEW ONLY
This template is provided for general informational purposes and does not constitute legal advice. Counsel must tailor all bracketed items to the facts, verify current law in the chosen jurisdiction, and confirm that the finished document satisfies client-specific objectives and regulatory obligations.
PRIVATE INVESTMENT AGREEMENT
(Comprehensive Long-Form)
[// GUIDANCE: This agreement is designed for a private investment in equity, convertible equity, or debt securities issued by a privately held entity. It assumes one investor and one issuer; expand signature blocks and defined terms if multiple investors or tranches are contemplated.]
TABLE OF CONTENTS
- Document Header
- Definitions
- Subscription & Issuance of Securities
- Consideration; Payment Mechanics
- Conditions Precedent & Subsequent
- Representations & Warranties
- Covenants & Restrictions
- Events of Default; Remedies
- Risk Allocation
- Dispute Resolution
- General Provisions
- Execution Block
- Schedules & Exhibits
[// GUIDANCE: Update cross-references if sections are added/removed.]
1. DOCUMENT HEADER
1.1 Parties; Effective Date
This Private Investment Agreement (this “Agreement”) is entered into as of [Effective Date] (the “Effective Date”) by and between:
(a) [Company Name], a [State/Country] [corporation/limited liability company/other] (“Company”); and
(b) [Investor Name], a [State/Country] [corporation/limited liability company/individual] (“Investor”).
Company and Investor are sometimes referred to herein individually as a “Party” and collectively as the “Parties.”
1.2 Recitals
A. Company desires to raise capital for general corporate purposes and has authorized the issuance of the Securities (as defined below).
B. Investor desires to purchase the Securities on the terms and subject to the conditions set forth herein.
C. The Parties enter into this Agreement to set forth their respective rights and obligations with respect to the investment.
NOW, THEREFORE, in consideration of the mutual covenants herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Parties agree as follows:
2. DEFINITIONS
Capitalized terms used but not otherwise defined herein have the meanings set forth below, listed alphabetically for ease of reference.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person.
“Agreement” has the meaning assigned in Section 1.1.
“Arbitration Rules” means the [JAMS Comprehensive Arbitration Rules & Procedures / AAA Commercial Arbitration Rules] in effect on the Effective Date.
“Business Day” means any day other than a Saturday, Sunday, or legal holiday in [Chosen Governing Law State/Country].
“Claim” means any action, suit, proceeding, arbitration, investigation, or other dispute or controversy.
“Closing” has the meaning set forth in Section 3.4.
“Company” has the meaning assigned in Section 1.1.
“Confidential Information” has the meaning set forth in Section 7.7.
“Investment Amount” means an aggregate purchase price of [USD $_].
“Investor” has the meaning assigned in Section 1.1.
“Law” means any statute, regulation, ordinance, or rule of any governmental authority having jurisdiction.
“Liability Cap” has the meaning set forth in Section 9.3.
“Securities” means [ shares of Series [] Preferred Stock / __ principal amount of Convertible Promissory Note / other] issued by Company to Investor pursuant to this Agreement.
[// GUIDANCE: Add defined terms as needed; ensure consistency.]
3. SUBSCRIPTION & ISSUANCE OF SECURITIES
3.1 Subscription. Subject to the terms and conditions herein, Investor hereby subscribes for and agrees to purchase, and Company agrees to issue and sell to Investor, the Securities for the Investment Amount.
3.2 Form of Securities. The Securities shall have the rights, preferences, privileges, and restrictions set forth in [Company’s Certificate of Incorporation / the Note attached as Exhibit A / other governing instrument].
3.3 Use of Proceeds. Company shall use the proceeds of the Investment Amount solely for [general corporate purposes / the project described in Schedule 1].
3.4 Closing.
(a) The closing of the purchase and sale of the Securities (the “Closing”) shall take place remotely via exchange of documents and signatures on [Closing Date] or such other date as the Parties may mutually agree.
(b) At Closing, (i) Investor shall pay the Investment Amount by wire transfer of immediately available funds to the account specified in Schedule 2, and (ii) Company shall deliver to Investor the certificates or instruments evidencing the Securities, duly executed by authorized officers of Company.
3.5 Default in Funding. If Investor fails to deliver the Investment Amount on the Closing Date, Company may (i) defer Closing for up to [5] Business Days to permit cure, or (ii) terminate this Agreement upon written notice, without prejudice to any other remedies.
4. CONSIDERATION; PAYMENT MECHANICS
4.1 Investment Amount; No Additional Liability. Investor’s total monetary obligation under this Agreement shall not exceed the Investment Amount, except for indemnity obligations expressly stated herein.
4.2 Taxes. Investor shall be responsible for any transfer, stamp, or similar taxes arising from the purchase of the Securities. Company shall be responsible for all income and franchise taxes imposed on Company.
4.3 Adjustments. If prior to Closing Company effects any stock split, combination, reclassification, or similar recapitalization, the number and/or class of Securities and the Investment Amount shall be adjusted proportionately.
5. CONDITIONS PRECEDENT & SUBSEQUENT
5.1 Investor Conditions Precedent. Investor’s obligation to consummate the Closing is subject to:
(a) Accuracy of Company’s representations and warranties as of Closing;
(b) Performance by Company of all covenants to be performed on or before Closing;
(c) Delivery of duly executed transaction documents, including [Amended and Restated Charter, Investor Rights Agreement, etc.]; and
(d) No Material Adverse Effect on Company since the Effective Date.
5.2 Company Conditions Precedent. Company’s obligation to consummate the Closing is subject to:
(a) Accuracy of Investor’s representations and warranties as of Closing;
(b) Receipt of the Investment Amount; and
(c) Receipt of all corporate and regulatory approvals necessary to issue the Securities.
5.3 Post-Closing Covenants. The Parties shall use commercially reasonable efforts to satisfy the covenants and conditions that by their nature survive Closing, including filings under applicable securities Laws, if any.
6. REPRESENTATIONS & WARRANTIES
6.1 By Company. Company represents and warrants to Investor, as of the Effective Date and as of Closing, that:
(a) Organization & Good Standing. Company is duly organized, validly existing, and in good standing under the Laws of its jurisdiction of formation.
(b) Authorization. Company has full corporate power and authority to execute, deliver, and perform this Agreement and to issue the Securities.
(c) Valid Issuance. Upon issuance in accordance with this Agreement, the Securities will be duly authorized, validly issued, fully paid, and non-assessable.
(d) No Conflict. The execution, delivery, and performance of this Agreement do not violate any organizational document, Law, or contractual obligation binding on Company.
(e) Financial Statements. The financial statements delivered to Investor fairly present in all material respects the financial position of Company and have been prepared in accordance with [GAAP] (except as may be indicated in the notes thereto).
(f) Absence of Litigation. There is no pending or, to Company’s knowledge, threatened Claim that would reasonably be expected to have a Material Adverse Effect.
(g) Compliance with Laws. Company is in material compliance with all applicable Laws, including securities Laws with respect to the offer and sale of the Securities.
6.2 By Investor. Investor represents and warrants to Company that:
(a) Authority. Investor has full power and authority to execute, deliver, and perform this Agreement and to purchase the Securities.
(b) Investment Intent. Investor is acquiring the Securities for investment for its own account and not with a present view toward distribution in violation of applicable securities Laws.
(c) Sophistication; Access to Information. Investor is an “accredited investor” (as defined in Regulation D under the Securities Act of 1933, as amended) and has such knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of the investment.
(d) No Conflict. The execution, delivery, and performance of this Agreement do not violate any organizational document, Law, or contractual obligation binding on Investor.
6.3 Survival. All representations and warranties shall survive the Closing for a period of [18] months, except that (i) fundamental representations (such as organization, authorization, and valid issuance) shall survive indefinitely, and (ii) any claim for intentional misrepresentation or fraud shall survive until the expiration of the applicable statute of limitations.
7. COVENANTS & RESTRICTIONS
7.1 Affirmative Covenants of Company. Until the earlier of (i) a Qualified Public Offering, or (ii) the date Investor no longer holds any Securities, Company shall:
(a) Financial Reporting. Deliver to Investor (A) quarterly unaudited financial statements within [45] days after quarter-end; and (B) annual audited financial statements within [90] days after fiscal year-end.
(b) Inspection Rights. Permit Investor, upon reasonable notice and during normal business hours, to inspect Company’s properties and books and records.
(c) Compliance. Maintain its existence and conduct its business in compliance with all material Laws.
7.2 Negative Covenants of Company. Without the prior written consent of Investor, Company shall not:
(a) Amend Charter. Amend its certificate of incorporation or other governing documents in a manner that materially and adversely affects the rights of the Securities.
(b) Issue Senior Securities. Authorize or issue any class or series of securities having rights senior to or on parity with the Securities with respect to liquidation or dividend preferences.
(c) Liquidate or Merge. Liquidate, dissolve, merge, or consummate a sale of all or substantially all of its assets, other than in a transaction that provides Investor a return of at least [____] × the Investment Amount or is approved by Investor.
7.3 Affirmative Covenants of Investor. Investor shall comply with applicable securities Laws and refrain from actions that would require Company to register the Securities under the Securities Act of 1933.
7.4 Confidentiality. Each Party shall keep confidential and not disclose to any third party any Confidential Information, except as required by Law, court order, or with the other Party’s prior written consent.
7.5 Notice of Material Events. Each Party shall promptly notify the other in writing upon becoming aware of any material breach of this Agreement or any event that would reasonably be expected to prevent or delay Closing.
7.6 Further Assurances. The Parties shall execute and deliver all further instruments and documents reasonably necessary to carry out the intent of this Agreement.
7.7 Remedies for Breach of Covenants. In addition to any other remedies available at Law or equity, the non-breaching Party may seek specific performance or injunctive relief to enforce the covenants contained herein.
8. EVENTS OF DEFAULT; REMEDIES
8.1 Events of Default. “Event of Default” means the occurrence of any of the following:
(a) Payment Default. Failure by Investor to fund the Investment Amount when due, subject to a [5] Business Day cure period.
(b) Breach of Covenants. Failure by either Party to perform any material covenant, obligation, or agreement herein, which breach (i) is incapable of cure, or (ii) remains uncured for [30] days after written notice.
(c) Misrepresentation. Any representation or warranty of a Party proves to have been materially incorrect when made and is not cured within [30] days after notice.
(d) Insolvency. Company (i) commences or becomes subject to any bankruptcy or insolvency proceeding, (ii) admits in writing its inability to pay debts as they become due, or (iii) makes an assignment for the benefit of creditors.
8.2 Remedies. Upon an Event of Default, the non-defaulting Party may, in its sole discretion and in addition to any other rights:
(a) Terminate this Agreement by written notice, effective immediately;
(b) Accelerate any obligations of the defaulting Party then remaining;
(c) Exercise any rights under applicable Law, including the right to specific performance, injunctive relief, and, in the case of Investor, rescission or damages.
8.3 Costs and Fees. The prevailing Party in any action or proceeding arising out of or relating to this Agreement shall be entitled to recover its reasonable attorneys’ fees, costs, and expenses.
9. RISK ALLOCATION
9.1 Mutual Indemnification.
(a) Company Indemnity. Company shall indemnify, defend, and hold harmless Investor and its Affiliates, and their respective directors, officers, employees, and agents (collectively, “Investor Indemnitees”) from and against any and all losses, damages, liabilities, and expenses (“Losses”) arising out of or resulting from: (i) any breach by Company of its representations, warranties, or covenants; or (ii) any Claim alleging Company’s violation of applicable Laws or the rights of third parties.
(b) Investor Indemnity. Investor shall indemnify, defend, and hold harmless Company and its Affiliates, and their respective directors, officers, employees, and agents (collectively, “Company Indemnitees”) from and against any and all Losses arising out of or resulting from: (i) any breach by Investor of its representations, warranties, or covenants; or (ii) any Claim alleging Investor’s violation of applicable Laws or the rights of third parties.
9.2 Procedure. The indemnified Party shall promptly notify the indemnifying Party of any Claim, cooperate in the defense, and permit the indemnifying Party to control the defense and settlement, subject to reasonable safeguards.
9.3 Limitation of Liability. EXCEPT FOR (i) A PARTY’S FRAUD, WILLFUL MISCONDUCT, OR GROSS NEGLIGENCE; (ii) BREACH OF CONFIDENTIALITY; OR (iii) INDEMNITY OBLIGATIONS, THE AGGREGATE LIABILITY OF EITHER PARTY TO THE OTHER UNDER THIS AGREEMENT SHALL NOT EXCEED THE INVESTMENT AMOUNT (the “Liability Cap”).
9.4 Insurance. Company shall maintain commercially reasonable directors’ and officers’ liability insurance and general liability insurance for so long as Investor holds any Securities.
9.5 Force Majeure. Neither Party shall be liable for any failure or delay in performance (other than payment obligations) caused by acts beyond its reasonable control, including acts of God, war, terrorism, labor disputes, or governmental action, provided that the affected Party gives prompt notice and resumes performance as soon as practicable.
10. DISPUTE RESOLUTION
10.1 Governing Law. This Agreement and any dispute arising out of or relating hereto shall be governed by and construed in accordance with the Laws of [Chosen Governing Law State/Country], without regard to its conflict of laws rules.
10.2 Arbitration. Any Claim not resolved by negotiation within [30] days shall be finally settled by binding arbitration administered by [JAMS/AAA] in accordance with the Arbitration Rules, and judgment on the award may be entered by any court having jurisdiction. The place of arbitration shall be [City, State]. The arbitral tribunal shall consist of a single neutral arbitrator with experience in complex commercial transactions. The language of the arbitration shall be English. The costs of arbitration shall be borne as determined by the arbitrator.
[// GUIDANCE: Because arbitration is mandated, the Federal Arbitration Act (9 U.S.C. §§ 1–16) will apply by operation of law in the United States. No separate citation is required.]
10.3 Exclusive Jurisdiction for Injunctive Relief. Notwithstanding Section 10.2, either Party may seek temporary, preliminary, or permanent injunctive relief or specific performance in the state or federal courts located in [Exclusive Jurisdiction City/County, State], and the Parties hereby submit to the exclusive jurisdiction of such courts for such limited purposes.
10.4 Jury Trial Waiver. TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY COURT PROCEEDING RELATING TO THE NARROW EXCEPTIONS SET FORTH IN SECTION 10.3.
11. GENERAL PROVISIONS
11.1 Amendments; Waivers. This Agreement may be amended or modified only by a writing signed by Company and Investor. Any waiver of rights must be in writing and shall not constitute a waiver of any subsequent breach.
11.2 Assignment. Neither Party may assign or delegate this Agreement or any rights or obligations hereunder without the prior written consent of the other Party, except that Investor may assign this Agreement and the Securities to any Affiliate or successor-in-interest without Company consent, provided that the assignee agrees in writing to be bound by this Agreement.
11.3 Successors & Assigns. Subject to Section 11.2, this Agreement shall be binding upon and inure to the benefit of the Parties and their respective permitted successors and assigns.
11.4 Severability. If any provision of this Agreement is held invalid or unenforceable, the remaining provisions shall remain in full force, and the invalid provision shall be reformed to the minimum extent necessary to make it enforceable.
11.5 Entire Agreement. This Agreement (including all Schedules and Exhibits) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior or contemporaneous understandings.
11.6 Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which is deemed an original, and all of which together constitute one instrument. Execution and delivery via electronic means (e.g., PDF or DocuSign) shall be deemed effective and legally binding.
11.7 Notices. All notices required or permitted hereunder shall be in writing and delivered by (i) personal delivery, (ii) certified mail (return receipt requested), (iii) recognized overnight courier, or (iv) email with confirmation of receipt, to the addresses set forth below (or such other address as a Party may designate by notice). Notice is effective upon receipt or refusal of delivery.
11.8 No Third-Party Beneficiaries. Except as expressly provided in the indemnification provisions (which benefit the Indemnitees), this Agreement is for the sole benefit of the Parties and their permitted successors and assigns and does not confer any rights on any third party.
11.9 Publicity. Neither Party shall issue any press release or make any public statement regarding the transactions contemplated herein without the prior written consent of the other Party, except as required by Law.
11.10 Interpretation. Headings are for convenience only and do not affect interpretation. The term “including” means “including without limitation.” The Parties acknowledge that each has participated in drafting, and no presumption shall arise favoring or disfavoring either Party by virtue of authorship.
12. EXECUTION BLOCK
IN WITNESS WHEREOF, the Parties hereto have executed this Private Investment Agreement as of the Effective Date.
COMPANY:
[Company Name]
By: ____
Name: ____
Title: ______
INVESTOR:
[Investor Name]
By: ____
Name: ____
Title: ______
[// GUIDANCE: If notarization or witness signatures are required under local Law or Company’s charter, insert appropriate blocks here.]
13. SCHEDULES & EXHIBITS
Schedule 1 – Use of Proceeds
Schedule 2 – Wire Instructions
Exhibit A – Form of [Certificate of Designation / Convertible Note]
Exhibit B – Investor Rights Agreement (if applicable)
Exhibit C – Disclosure Schedule (if applicable)
[// GUIDANCE: Attach or draft ancillary documents (e.g., Board consents, charter amendments) to ensure corporate formalities are satisfied.]
End of Document