Registering common stock costs a lot of money, which includes banker underwriting fees, counsel, auditors, and many more administrative costs. The parties can negotiate who will have to pay registration expenses, and how much, if an Investor chooses to use their registration rights. Expenses include:
- Registration and filing fees;
- Attorney’s fees;
- Blue sky fees and expenses;
- Printing expenses; and
- Special audits tied to registration.
The Investors’ Rights Agreement sets a dollar cap for the amount that a Company will spend on fees and expenses for one lawyer to represent all stockholders. The stockholders must pay any stock transfer taxes, underwriting discounts, and commissions.
Term Sheet Language: The registration expenses exclusive of (excluding) stock transfer taxes, underwriting discounts and commissions will be borne by the Company. The Company will also pay the reasonable fees and expenses, not to exceed $[______] per registration, of one special counsel to represent all the participating stockholders.