[Participant Name]
Dear [<<>>],
It is with great pleasure that we, HAX™ (on behalf of SOSventures LLC), submit
this binding Letter of Intent (the “LOI”) to you (the “Participant”) to extend an offer for
your participation in the HAX™ Accelerator 2015 program in Shenzhen, CHINA. (the
“Program”).
The following items must be agreed to and completed as described below to our
satisfaction no later than 4PM GMT on [DATE] for this offer to remain in effect. If you
need an extension, please ask and provide a reason.
1. Statement of Capitalization. We require a simple statement of the capitalization of
the Participant’s company listing all shareholders and their respective ownership
interests by percentage. All such shareholders must sign this LOI. We also require
disclosure of any outstanding debts, loans, warrants, option issuances, revenue-share
agreements, or any other potentially dilutive agreement of any sort.
2. Due Diligence and Discovery. The Participants agree that the information
provided in their application to the Program and any additional information provided in
relation to their application, whether given verbally or in writing, is true and correct to the
best of their knowledge. The Participants also agree to provide Incorporation documents
relating to the formation of the company, shareholder agreements, and any other similar
agreements. If the company is not yet incorporated then HAX™ will assist in
incorporation to occur before the commencement of the program.
3. Relocation to the Shenzhen area is expected. Participants agree to relocate to
(or stay located in) the Shenzhen area from the 22nd July 2015 to the 30th October 2015
and to use Shenzhen as their base of operations during the term of the Program.
HAX™
4. Commitment to participate in the Program. The participants agree that they
intend to fully participate in the Program as described at www.hax.co. The Participants
agree that 100% of their “work effort” will go towards the general concepts described
within their Program application, and that they will leave any other employment prior to
the term of the Program.
5. Equity Funding. The Program intends to provide cash funding to the Participants
(or their company) in the amount of USD$25,000 upon execution of the stock purchase
agreement (the “SPA”) which will be provided upon the signing of this letter of intent.
The Program will also provide full access to mentors, facilities, expertise of fellow
participants and all other benefits accruing as part of the HAX™ program. This benefit
forms a significant further investment in the amount of USD$60,000 in the Participants
and their company.
In total, this USD$85,000 equity investment is being provided in exchange for a 6%
common equity interest in the participants company as detailed in the definitive contract,
which will be provided.
6.
Convertible Loan Note Funding. SOSventures has also arranged to provide the
company $75,000 Loan Note funding. This funding is optional for the company and is
provided subject to the commercial terms of a $2.5m cap, 20% discount and 1% interest
as detailed in the definitive legal documentation, which will be provided. 7.
Undertakings of the Participant. The Program reserves the right, without notice
and in its sole discretion, to remove from the Program any Participant or its Company
that breaches any of the following warranties and representations:
a.
Incorporation. The Participant shall establish an entity as required by
SOSventures LLC before the commencement of the program.
b.
Transfer of Intellectual Property. The Participant shall transfer all
Intellectual Property (as defined below) to its company if such Participant has already
incorporated or shall transfer to any such company to be established as required by
Paragraph 7(a) without further consideration and without further action on the part of
any Participant. Each Participant hereby agrees to take all such action as may be
necessary or appropriate to satisfy the purposes and intent of the foregoing. Participant
agrees to not establish any other company that includes or will include any of the
Intellectual Property, unless otherwise agreed by SOSventures LLC.
For purposes of this LOI, “Intellectual Property” means any and all proprietary rights,
concepts, ideas, plans or interests (including any patents, trademarks, service marks,
trade names, registered design rights, copyrights, trade secrets, licenses or information)
identified in the Program application and/or developed by the Participant(s) over the
course of the Program.
c.
Conduct. The Participant hereby undertakes to commit 100% of their
working time to the Program for the entire duration thereof. The Participant will engage
HAX™
with the Program in a collegiate spirit and will at all times act in a professional and
courteous manner towards the Program brand, mentors and fellow participants. The
Participant is expected to engage fully with all group sessions for the mutual benefit of
the Program and other participants. Attendance at the Program’s office during program
hours is a mandatory requirement of the Program unless Duncan Turner grants prior,
written consent for any absences.
This undertaking, with respect to the behavior in relation to other Program participants
and mentors, as well as the Program brand, extends to conduct outside of office hours
and also to any functions, social or otherwise, regardless of whether it is organized or
funded in any way by the Program.
8. Confidentiality. The Program is still in the process of notifying finalists and nonfinalists regarding their status. The Participant agrees that this offer, the terms
contained herein, and any associated contracts, including but not limited to the SPA, are
confidential and proprietary. The Participant agrees to not disclose or communicate any
of this information, or any future information that may be received, publicly until such
time as the Program authorizes such disclosure. The Program’s intent is to work with
the Participants, our mentors, and our PR firm to develop a plan that is in the best
interests of both parties.
9. Contacts. The contact at the Program responsible for this potential transaction is
Duncan Turner and for the Participant is [team founder].
10. Contracts & Timing. Upon execution of this LOI, we will provide the SPA for your
review. The SPA must be executed and returned to us before the start of the program. If
you need an extension, please ask and provide a reason.
The Equity SPA details the terms and conditions of our investment, including but not
limited to the following:
a. Funding and Equity details: the investment offer for the Program is $85,000 in
aggregate, distributed as a combination of funds and the value of the Program for
6% equity.
b. Employee Stock Option Scheme: as part of this investment you are obligated to
allocate 10% equity towards an employee stock option scheme to enable future
growth and the ability to attract staff.
c. Anti-dilution: in order to ensure value creation and access to genuine financing
the SPA includes a qualified financing level of $300,000 to be reached prior to
any dilution of SOSventures equity stake.
d. Pro-Rata right: At SOSventures we believe in our accelerator graduates and we
reserve the right to retain our pro rata equity stake in future financing rounds.
e. First Financing: As a result of this Program SOSventures would like the
opportunity to participate in your first equity financing round subsequent to the
HAX™ program up to and including 20% or $200,000 of the total value of the
financing.
f. Liquidation Preference: In order to recover costs we include a standard 1x
liquidation preference in our share purchase documents.
HAX™
g. Information Rights: SOSventures will be entitled to information rights as provided
to any “major investors” subsequent to any future funding rounds.
The Convertible Loan Note (CLN) details the terms and conditions of our investment,
including but not limited to the following:
a. Funding and Convertible Loan details: the convertible loan note investment offer
for the Program is $75,000 in aggregate.
b. Capped Value: The CLN has a price cap of $2.5m.
c. Qualified Financing: A qualified financing level of $300,000.00 will apply to the
CLN.
d. Discounted Price Percentage Rate: In the event that the CLN converts in a
qualified financing using the discounted price percentage then a discount of 20%
will apply.
e. Pro-Rata right: At SOSventures we believe in our accelerator graduates and we
reserve the right to retain our pro rata equity stake in future financing rounds.
f. Interest Rate: An interest rate of 1% will apply to the CLN.
g. Maturity: There is a twelve (12) month maturity that will apply to the CLN, if a
Qualified Financing has not occurred with this period then the holder can avail of
an optional conversion right.
h. Sale of the Company: If in the event of a sale of the Company whilst the CLN is
outstanding then the holder will be entitled to the higher of two times the original
loan amount or the amount due if the note had been converted into common
stock.
In the event of a conflict between the terms of this LOI and the terms of the SPA & CLN,
the terms of the SPA & CLN will control.
We look forward to working with you and are excited to see you in Shenzhen.
Yours sincerely,
Cyril Ebersweiler
Managing Director
HAX™
Duncan Turner
Program Director
HAX™
Accepted by the Participants:
X __________________________________________________
Print Name: _________________________________________
Date:
_______________________________________________
HAX™
X __________________________________________________
Print Name: _________________________________________
Date:
_______________________________________________
Accepted by the Participants:
X __________________________________________________
Print Name: _________________________________________
Date:
_______________________________________________
HAX™