Anti-Dilution Clauses

Summary

These template anti-dilution clauses are intended to offer preferred stockholders in a start-up company various protections against subsequent stock issuances that might dilute the value of their equity ownership. This template includes practical guidance, drafting notes, and alternate clauses. The template clauses below provide three types of price-based anti-dilution formulas that may be inserted as Article IV(B) Section 4(d)(i) in a certificate of incorporation such as the template Series A Amended and Restated Certificate of Incorporation (DE): • Broad-based weighted average formula • Narrow-based weighed average formula • Full ratchet formula These clauses should be read in conjunction with the practice note Venture Capital Preferred Stock Offerings: Negotiation of Terms and used in conjunction with Series A Amended and Restated Certificate of Incorporation (DE). You should be sure to conform (1) the capitalized terms in these clauses without definitions to the applicable document in which such clause will be inserted and (2) the applicable section references used in these clauses. To include a price-based anti-dilution provision in the Series A Amended and Restated Certificate of Incorporation (DE), take the following three steps: