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El Investment Process - The LegalElement
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Transforming lrish Indunry 2008-201 0
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e,llffillJ'"MENTEGORIES OF INVEST
EI Only InvestmentsNo Company ValuationStandard El AgreementMatching Funding Requirement
Co-lnvestmentsValuation set by Professional Investor
- Generally Co-lnvestors Agreement used El seeksimilar terms
- Co-lnvestors fulfil Matching Funding RequirementTransforming lrish Industry 2008-2010
ENTERPRISEIRELAND
LY INVESTMENTS IN- Cumulative Convertible Redeemable Preference
Shares"ccRP"Cumulative - Dividends accumulate year on year(reduced to 3o/o on validation of expenditure)Convertible - Capable of conversion into a classRedeemable - Re-purchase by the company outreserves or the proceeds of a fresh issue after 5
at rate of 8o/o
of ordinary shareof distributableyears
Preference - Priority Rights in relation to dividends, repayment orcapital and redemptionNon Voting - No right to vote at meetings of the Company
Transforming lrish Industry 2008-201 0
ENTERPRISEIRELAND
for sharesshares to
- the pricebe issued
E SUBSCRIPTION ANDHAREHOLDERS AGREEMENTProvides for subscriptionand number and class ofGoverns the relationship between the partiesgoing forward
The following areSubscription and
the core terms in the El ShareShareholders Ag reement
Transformin.J lrish l.rdustry 2008-201 0
ENTERPRISEIRELAND
RMATION RIGHTSAnnual Audited and Quarterly Management AccountsInfo on Sales, Exports and EmploymentAny info required to validate expenditurei.e. Subscription Monies used to implement Business Plan.Once expenditure has been validated the coupon will bereduced from 8% to 3ohReasonable Access Rights to validate expenditure
Tra nsfolming lrish lndustry 2008-2010
ENTERPRISEIRELAND
SACTIONS- Contains 13 Restricted Transactions
mainly covering:Eligible ActivityFurther issue of SharesChanges to M&A'sCharge over Assets including lPChange Rights attaching Shares
Transformino lrish Industry 2008-2010
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ENTERPRISEIRELAND
ION BREACHRight of El to seek 8% coupon and earlyredemption in the event that a company breachany of 3 specific Restricted Transactions- Cease to carry on Eligble Activity- lssue further Shares
Change Memorandum& Articles21 day Cure Period to a
breachlow company to rectify
Tr.rnsforminq lrish IncJustrv 2008-201 0
ENTERPRISEIRELAND
REHOLDER DISPOS" El's Consent Right over the transfer of
shares by the Shareholders- Justification - investing in team as well as
company- Inform El at an early stage of any potential
consent matters to allow time to reviewdocumentation. El team are committed tomeeting clients' deadlines.
Transformino lrish Industrv 2008-2010
ENTERPRISEIRELAND
RANTIES- Statement of Fact at the time of completion of the
investment- Statements set out in Agreement and relate mainly to title
and capacity to the shares, any ongoing litigation,Business Plan honestly and diligently prepared etc.Any exceptions to these statements can be highlighted ina Disclosure Letter which will then be submitted to Elalongside the Warranties and together they will representthe true position of the company at the date of completion
- Warrantors - Company not individuals as with many VCAgreements therefore not personally liable.
Transforminq irish Industrv 2008-2010
ENTERPRISEIRELAND
- Convertible on the occurrence of a funding roundby financial or trade investor that at least matchesthe size of El's investment
- Convertible into the New Shares being issued atthat round
- Convertible at discount to the price of the NewShares that increases from 15o/o after year 1 to55% in year 5
' Second Conversion Option at 4 years 1 1 months,,,jn[q"9;d[n9ry.,$hUares at a 55% discount to Fair
VERSION
Value
ENTERPRISEIRELAND
PLETION PROCESS' 8 week target turnaround time- Draft Shareholders Agreement issued to
company and advisers- Negotiations - largely non-negotiable, limited
amendments made to provide for companyspecific issues
- Pre-Completion Requirements met andCompletion Documentation furnished
' Cheque and Executed Agreement released tor*'GOf,HpOilV"o 2oo8-zo1 o
COMP ENTERPRISEIRELAND
Share Subscription and Shareholders Agreementexecuted by all parties theretoArticles of Association - Gonstitution of theCompany, amended to provide for the rights attachingto the CCRP'sTax Clearance GertificateShare Capital CertificateSol icitors GertificateShare GertificateGonfirmation of Matching Funding and any otherconditions imposed by the Investment Committee.
Transforminq l! ' ish lnclustrv 2008-201 0
e/fl[IlTiJ'"- Valuation set by professional Investor
- Generally Go-lnvestors Agreement used El seeksimilar terms
Co-lnvestors fulfil Matching Funding Requirement
Transforming trish In6ig511y 200g-2010