Guide to term sheets - BVCA admin

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VI Example of a Term Sheet for a Series A round continued Appendix 3 Rights attaching to Ordinary Shares held by the Founders [and employees] 1. * Subject to paragraph 3 below, the Ordinary Shares held by the Founders will vest equally on a [quarterly/monthly] basis over a • year period. (See paragraph 9, Section IV above.) 2. * If a Founder ceases to be an employee of the Company those Ordinary Shares which have not vested will convert into deferred shares in the Company (the "Deferred Shares"). The Deferred Shares will have no right to receive a dividend, minimal rights to capital and will be non-voting. The Company will have the right to purchase back the Deferred Shares for an aggregate purchase price of £• at any time. 3. * [If there is a Corporate Transaction at a time when any of the Ordinary Shares held by the Founders remain un-vested, the consideration may be structured in such a way that it defers realisation of the value attached to the un-vested shares until such time as they would have been vested.] 4. * [If a Founder ceases to be an employee of the Company as a result of death, permanent incapacity or wrongful dismissal, all of his Ordinary Shares will become vested shares.] 44 * Only to be used where Founders are to hold vested shares. 5. [In the event of an employee shareholder [(other than a Founder)] ceasing to be an employee of the Company within a period of [•] years starting on the date of commencement of his employment with the Company, all of his shares [(other than those held following the exercise of share options)] must be offered for sale: (a) where the relevant employee shareholder is a Bad Leaver, at the lower of market value and the nominal value of the shares; and (b) where the relevant employee shareholder is a Good Leaver, at the market value of the shares.] The shares must be offered for sale in the following priority: (a) to new employee(s) nominated by the Investors; (b) to any existing employee(s); (c) to participants in or trustees of the Company's employee share option scheme; (d) to any other person approved by the Investor Directors and the Board; (e) to the Company.
6. [Unless otherwise determined by the Board,] "Good Leaver" means any employee shareholder [(other than a Founder)] who ceases to be employed [after • years from the start of his employment or] as a result of death or permanent incapacity, summary dismissal when the dismissal is found to have been wrongful or constructive, or whose contract of employment is terminated in circumstances where he is not in breach of his contract. "Bad Leaver" means any employee shareholder [(other than a Founder)] who is not a Good Leaver. 45
Page 1: A Guide to Venture Capital Term She
Page 4 and 5: I Introduction The BVCA - The Briti
Page 6 and 7: II What is a Term Sheet? A Term She
Page 8 and 9: III The investment process In order
Page 10 and 11: IV What terms may be included in a
Page 26 and 27: V Venture capital glossary of terms
Page 38 and 39: VI Example of a Term Sheet for a Se
Page 55 and 56: Original cover concept and guidelin

Guide to term sheets - BVCA admin

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