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El Investment Process - The LegalElement

v

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

--1"---"

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