Venture Capital William B. Asher, Jr. Testa, Hurwitz & Thibeault, LLP Boston, MA 617 / 248-7000 asher@tht.com tht.com		How long should the contractual covenants in my venture financing agreements run? The quick answer: Until an IPO (Initial Public Offering) - but not any IPO. Investors want assurance that their contractual rights (financial information, approval of major transaction, board seats, etc.) will expire only if the IPO is of significant size and scope. A qualifying IPO is typically defined by its total size ($10 million plus) and price per share (200% to 500% return). Essentially, the investor is trading control for the chance of a reasonable after-market exit. You should request that covenants also expire if investors reduce their stake in the company.

Advice provided herein is presented as general information about recent legal developments. Information is edited to space and should not be construed as specific legal advice or opinion.

_{© copyright 2001-2007, Epstar, Inc.   All rights reserved.}