DATED
20[ ]
[PARTY 1]
and
[PARTY 2]
ENTREPRENEUR FIRST ADVANCED SUBSCRIPTION TEMPLATE
[NOTE: IT IS IMPORTANT FOR BOTH PARTIES TO SEEK TAX AND LEGAL ADVICE BEFORE
SIGNING THIS DOCUMENT. FAILURE TO DO SO MAY AFFECT AN INVESTOR’S ABILITY TO
OBTAIN SEIS RELIEF.]
JAG Shaw Baker Limited
Tel: +44 203 598 3070
Fax: +44 203 598 6459
Web: www.jagshawbaker.com
Advance Subscription Agreement – SEIS Template
DATED
2016
PARTIES
(1)
[●] of [insert address] (the “Subscriber”); and
(2)
[●] Limited (company number [●]) whose registered office is at [●] (the “Company”).
INTRODUCTION
The Subscriber has agreed to make advance subscription funds available to the Company for the
purpose and on the terms more particularly described in this Agreement
IT IS AGREED AS FOLLOWS
1.
DEFINITIONS
1.1
In this Agreement:
“£”
means the lawful currency of the United Kingdom;
"Advance Subscription
Funds"
has the meaning given in clause 2.1;
"Business Day"
means a day (other than a Saturday or Sunday) on which
banks are open for business in London;
“Conversion Price”
means a price per Conversion Share equal to (a) where
conversion takes place pursuant to either clause 3.1 or
3.2, a price per Conversion Share equal to the lower of (i)
a discount of [twenty] per cent. ([20]%) of the Subscription
Price or (ii) a price per share based on a pre-money
valuation of £[3,000,000], rounded down to the nearest
whole share or (b) where conversion takes place pursuant
to clause 3.3, a price per Conversion Share based on a
pre-money valuation of £[1,250,000], rounded down to the
nearest whole share [OR [the Subscription Price]];
“Conversion Shares”
means Ordinary Shares issued and allotted in accordance
with clause 3;
“Longstop Date”
the date falling [one year] from the date of this Agreement;
“New Articles”
means the articles of association of the Company to be
adopted at the time of the next Financing Round;
"Non-Qualifying Financing
Round"
a subscription for equity in the Company by one or more
persons raising less than £[200,000];
"Qualifying Financing
Round"
a subscription for equity in the Company by one or more
persons raising at least £[200,000];
“Sale”
[refer to Articles for definition if applicable][the sale of all or
substantially all of the shares or assets of the Company];
“SEIS”
means the Seed Enterprise Investment Scheme governed
in accordance with the SEIS Provisions;
“SEIS Provisions”
means the provisions of Part 5A of the Income Tax Act
2007 and the Sections 150E-150G and Schedule 5BB to
the Taxation of Chargeable Gains Act 1992 relating to the
Seed Enterprise Investment Scheme;
Advance Subscription Agreement – SEIS Template
1.2
“Subscription Funds”
has the meaning given in clause 2.1; and
“Subscription Price”
the price per share paid for Ordinary Shares in the NonQualifying Financing Round or the Qualifying Financing
Round, as the case may be.
References
In this Agreement:
(a)
clause headings are for convenience only and will be ignored in giving this
Agreement legal effect;
(b)
references to clauses are reference to clauses of this Agreement;
(c)
the singular includes the plural and vice versa and words importing one gender will
include all other genders;
(d)
references to a party include its successors in title, transferees and assignees;
(e)
references to any statute will include any statutory modification, extension or reenactment of it or any part of it for the time being in force and will include all
instruments and regulations deriving validity from that statute; and
(f)
references to this Agreement or to any other deed, agreement or document will be to
this Agreement or, as the case may be, such other deed, agreement or document as
the same may have been or may be from time to time amended, varied, altered,
modified, supplemented or novated.
2.
ADVANCE SUBSCRIPTION
2.1
Advance Subscription
Subject to the terms of this Agreement, the Subscriber agrees on the date of this Agreement,
to make available to the Company funds in an aggregate amount of £[●] (the “Advance
Subscription Funds”). The Company may issue similar agreements with other investors for
advance subscriptions which, together with the Advance Subscription Funds, aggregate a
maximum of £150,000.
2.2
Purpose
The Company will apply the Advance Subscription Funds towards its general working capital
purposes, and in particular to provide cashflow for its trading activities, and for such other
purposes as the Company and Subscriber may from time to time agree in writing. Without
limiting the obligations of the Company in any way, the Subscriber is not bound to monitor or
verify the application of any of the Advance Subscription Funds.
2.3
SEIS
The Company is seeking advance assurance from HM Revenue & Customs that the
Company will be SEIS qualifying.
2.4
Payment
The Advance Subscription Funds shall be paid to the Company by the Subscriber to such
bank account of the Company as set out below:
Name of Bank:
Address of Bank:
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Advance Subscription Agreement – SEIS Template
Bank Account Name:
Sort Code:
Swift (BIC) Code:
Account Number:
IBAN Number:
3.
CONVERSION
3.1
The Advance Subscription Funds shall automatically convert into Conversion Shares at the
Conversion Price on the closing of a Qualifying Financing Round.
3.2
The Subscriber shall have the option to convert into the Conversion Shares at the Conversion
Price on the closing of a Non-Qualifying Financing Round.
3.3
If not earlier converted, the Advance Subscription Funds shall automatically convert into
Conversion Shares at the Conversion Price on the Longstop Date or on a Sale.
3.4
Conversion Shares allotted and issued hereunder shall be in full satisfaction and discharge of
all obligations of the Company under this Agreement to the Subscriber and this Agreement
shall terminate automatically on completion of such conversion.
3.5
The Company will notify the Subscriber within five days of the anticipated closing of either a
Non-Qualifying Financing Round, a Qualifying Financing Round or Sale and the Subscriber
agrees to execute any documents being executed by other subscribers in such NonQualifying Financing Round or Qualifying Financing Round or by shareholders of the
Company in connection with the Sale.
3.6
If requested by the Company, the Subscriber agrees to direct that the Conversion Shares to
be issued to the Subscriber hereunder be held by a nominee to be identified by the Company,
which nominee shall hold legal title to the Conversion Shares on behalf of the Subscriber.
4.
COMMUNICATIONS
4.1
In writing
Unless otherwise expressly stated herein, all communications under this Agreement will be in
writing and may be made by letter or facsimile or email.
4.2
Address
Any communication by letter to be made or delivered by one party to the other(s) will be made
or delivered to that other party at the address shown next to its name on the first page of this
Agreement or to such other address as may from time to time be notified by one party to the
other(s) in accordance with this clause and any communication by facsimile or email to be
made by one party to the other(s) will be made to that other party at the facsimile number or
email address as may from time to time be notified by one party to the other(s) in accordance
with this clause.
4.3
Delivery
Any communication made or delivered under this Agreement will be deemed made or
delivered
(a)
when received, in the case of a facsimile or an email;
(b)
when left at the relevant address, in the case of a personally delivered letter; or
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Advance Subscription Agreement – SEIS Template
(c)
two Business Days after dispatch, in the case of a letter sent by prepaid first class
post in an envelope addressed to the relevant address.
5.
GENERAL
5.1
Status of funds
For the avoidance of doubt, no interest is payable on the Advance Subscription Funds in any
circumstance, and no amount of the Advance Subscription Funds is repayable by the
Company in any circumstance but such amount may be converted into shares in the
Company as set out in clause 3.
5.2
Termination
This Agreement shall automatically terminate in accordance with clause 3
5.3
The Subscriber and the Company each agree to keep secret and confidential and not to use
disclose or divulge to any third party or to enable or cause any person to become aware of
this Agreement or any of its contents.
5.4
Counterparts
This Agreement may be executed in counterpart, and this has the same effect as if the
signatures on the counterparts were on a single copy of this Agreement.
6.
LAW
This Agreement will be governed by and construed in accordance with English law and the
English courts shall have exclusive jurisdiction.
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Advance Subscription Agreement – SEIS Template
This Agreement has been entered into on the date stated at the beginning of this Agreement.
Executed by [SUBSCRIBER]
……………………………………………………
Executed by [●]
for and on behalf of
[●] LIMITED
Signature page to the [
……………………………………………………
] Limited Advance Subscription Agreement