by Kim Lavine
I was raising angel capital and I was working Plans A, B & C, and working all the players against each other.
I was walking away when I bumped into Corporate Money. He hadn’t gotten around to pitching the panel, and I didn’t know if he would.
He was shopping a whole new company and wanted to know how I was doing. I told him I was working with a Chinese MBA with experience working in supply-chain management for Fortune 500 companies, who was right now working to set me up with an unsecured line of credit in China to fund my overseas production.
“This will allow me to manufacture and source unlimited product at Wal-Mart costs, with a huge revolving credit line,” I explained.
In addition, as Plan B, I was working on a contact I had made on my recent trip to New York with an Israeli bank, that specialized in Purchase Order Factoring, which would basically give me the money to fund any production I needed based on the purchase orders I secured for it from the major retailers I was working with.
I could read the shock and awe in his expression. Though he had had a former career in banking on the east coast, he admitted to me that didn’t even know this resource existed.
Maybe I ddin't need VC after all. I seemed to be doing a pretty good job working every possible angle on my own, with a passion that he or anybody else could never approximate.This process would later be given an appropriate analogy by my soon-to-be New Best Friend—my new banker.
“Act like a duck,” he would urge me. “What does that mean?” I asked. “Just like a duck, on the surface of the water, all you see is a calm bird gracefully gliding away on smooth water, while underneath he’s paddling like crazy for his life.”
My impatience had reached critical mass. I had two options, both of them Angels, and I had to force both of them to show their hands.
I looked at all the entrepreneurs around me bowing and scraping for funding in a very wrapped up, stilted and formulaic environment and thought, ‘nothing is going to happen here unless I make it happen. This is obviously all-out war!
I saw it in this room today, and I saw it just weeks ago in a back room at a national consulting firm.’ I went out into the hallway and called my Chinese MBA.
The Recapitalization of a Company: A Document List
This is an itemization of every document that was included in the hundreds of pages of my deal. Each one of these documents should be reviewed in painful detail by experienced business attorneys who specialize in just this before you sign them.
- Restated Articles of Incorporation
- Amended and Restated Bylaws
- Joint Consent Resolutions of the Board and Sole Shareholder
- Articles of Organization
- Operating Agreement
- Membership Interest Transfer Restricted Agreement
- Initial Resolutions – Organizer
- Initial Resolutions – Members
- Initial Resolutions – Managers
- Subscription Agreements
- Membership Interest Transfer Log
- Form SS-4
- Term Sheet
- Note Purchase Agreement
- Promissory Notes
- Security Agreement
- UCC-1 Financing Statement
- Form D Notice and Sale/Filing Letter to the SEC and States Securities Administrators
- Employee Proprietary Information and Invention Assignment and Non-Compete Agreement
- Debt Conversion Agreement
- Stock Certificates
- Shareholders Agreement
- Indemnification Agreements
An Excerpt from MOMMY MILLIONAIRE