# Legal Matters

### Incorporation paperwork <a href="#block-ba1446f4b519478bba8bd7fbdeed8e90" id="block-ba1446f4b519478bba8bd7fbdeed8e90"></a>

See[📄Step 3: File incorporation paperwork](https://handbook.opencoreventures.com/ocv-employees/core-vc-operations/portfolio-company-formation-process/incorporation-steps-1-8)

### Term sheet <a href="#block-8395eeb05f6e4e56b197b7dbca97fd91" id="block-8395eeb05f6e4e56b197b7dbca97fd91"></a>

For OCV company’s Seed round:

1. Options pool expectation: see
2. Board seat: see Board Composition
3. Terms not to be in conflict with OCV’s [<mark style="color:orange;">safe side letter</mark>](https://handbook.opencoreventures.com/company-formation/step-6-banking-systems-set-up/#425ed475d9304e679589d18235b6ae8e)

### Preferred financing round <a href="#block-fbc712ea23c8421eb847c3d5330f4c0f" id="block-fbc712ea23c8421eb847c3d5330f4c0f"></a>

OCV expects the following rights in our companies Seed Preferred financing round:

1. Major Investor status - impacts information, pro-rata, inspection, right of first refusal, and co-sale rights
2. Qualified Key Holder status - first common director seat and drag-along trigger are tied to the vote of a majority of Qualified Key Holders
3. Drag-along triggers are not typically exercised in practice and generally not a point of contention
4. The ability to vote for common director board seats is an important right for OCV given our ownership stake (especially common shares) in OCV companies

### Standard Equity Incentive Plan Provisions

#### **Waiver of Information Rights**

The plan includes a waiver of statutory inspection rights (Section 220 of the Delaware General Corporation Law), which limits individual stockholders' ability to demand access to company books and records.

As more employees exercise options, the stockholder base grows. Without this waiver, any stockholder (including a former employee) could formally demand to inspect company records, creating significant administrative burden. The waiver addresses this at scale but has legal limits: Delaware courts have held that it may not be enforceable if used to shield fraudulent activity.

#### Requirement to Execute Stockholder Agreements

The plan requires option holders, upon exercise, to execute the same agreements that other stockholders have signed - typically a right of first refusal and co-sale agreement, stockholders' agreement, and/or voting agreement.&#x20;

Investors at Seed and beyond require all stockholders to be bound by the same transfer restriction and voting agreements. A single unbound common stockholder can complicate or block a financing round. Including this requirement in the plan itself avoids the need to separately collect joinder agreements from each employee at exercise time, which eliminates the risk of a non-responsive former employee creating a structural gap on the cap table.<br>