Description of the main clauses of the partners' agreement concluded with start-ups

Negotiating the clauses of the partners' agreement concluded with each of the start-ups (the “Pact”) is a two-stage process: the first stage occurs during the signing of the letter of intent known as “LOI” (letter of intent),where a list of the Pact's main clauses appears in a synthetic format called “TS” (term sheet) in the annex and then, in a second stage, the drafting of the Pact itself, called “long form”, is carried out and signed by all the partners of the start-up before or simultaneously with the investment (closing).

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The legal team has established a model Pact containing the following main clauses that can be adjusted according to the amount invested, the nature of the investment (either in” Lead ” because BLAST invests the largest amount or in” Follow ” if other co-investors invest a greater amount than BLAST.), opportunity considerations and negotiations with the start-up in question:

• ‍Governance : BLAST. being an investor, it is not intended to interfere in the management of the start-up, which remains in the hands of the founders. Nevertheless, BLAST wishes to have a seat (so-called ” Board seat ”) to the collegial body set up within the start-up (generally a supervisory board or a strategic committee) and within which the situation and activity of the start-up, its prospects as well as its strategy and main orientations will be discussed. This collegial body will also have to meet to make important decisions concerning start-ups, called “” Reserved Matters ” (particularly adopting or modifying a budget, subscribing financial debts, concluding regulated agreements, modifying activities or the managers' remuneration) and these decsisions can only be made by reinforced majority including the favorable vote of BLAST.
• ‍Inalienability (or” Lock-up ”) : under this clause, the founders of the start-up undertake not to transfer its shares for a certain period of time (generally 5 years, in line with the liquidity horizon described below). For the sake of balance, BLAST. already allows a breath of fresh air to this commitment of inalienability by allowing founders to transfer a very small part of their shares from year 3 (generally, start-up founders have fairly low salaries compared to the market) and may need liquidity (to make “” Cash-out ”) on a personal basis).
• ‍Right of pre-emption : in the event of the transfer of shares from the start-up, BLAST. benefits from a right of pre-emption and can thus, in priority, apprehend the shares whose transfer is envisaged, under the same conditions, including the price, thus allowing it to sign up again.
• ‍Full joint exit right (or” Tag along total ”) : in the presence of a triggering event (the transfer of more than half of the start-up's capital, the change of control of the start-up, the entry into the capital of the start-up of an industrialist not approved by BLAST., etc.), BLAST. has the possibility (and not the obligation) to have all of its shares bought back under the same conditions, including the same price.
• ‍Proportional joint exit right (or” Proportional tag along ”) : in the event of a transfer of shares in the start-up, BLAST. has the possibility (and not the obligation) to also transfer part of its shares due to the transfer of shares (for example, if a partner of the start-up transfers 10% of its shares, BLAST. may also transfer 10% of its own shares).
• ‍Joint exit obligation (or “drag along”) : in the event of an offer to acquire 95% of the shares of the start-up accepted by a certain number of partners of the start-up (including BLAST.), all the partners of the start-up are forced to sell all of their shares (we say that they are” Dredged ”), under the same conditions, including the price.
• Founders' sales promise : under this clause, the founders commit, if they cease to be operational in the start-up (we say that they are” Leavers ”), to sell their shares to BLAST, which can acquire them or replace a third party (a new investor or an operational person with the skills to replace the leaving founder). The repurchase price of the shares of the leaving founder corresponds to the market value (Market value) discounted accordingly. Discount levels vary depending on whether the departure is faulty (Bad Leaver) or not (Good Leaver). In the event of a faulty departure, the discounts are deliberately high in order to maintain the comminatory (dissuasive) nature of this commitment.
• ‍Liquidity horizon : the Pact provides for a liquidity horizon of 5 years. This means that as of this date, founders and investors will have to meet to discuss in good faith a liquidity solution that allows investors to transfer their shares and thus, achieve their liquidity; this is a so-called “appointment” clause. If, at the end of these exchanges, no satisfactory liquidity solution is offered to investors, BLAST. will have the option of appointing a merchant bank that will survey the market to find a purchaser for 100% of the start-up's shares or only for the shares held by the investors.
• Preferential liquidity : in the event of the liquidation or sale of a significant part of the start-up's shares and in the event that the valuation selected as part of the liquidation or sale is lower than the post-money valuation (i.e., the pre-money valuation increased by the investment made), BLAST. will have a right of priority in the distribution of the liquidation bonus or the selling price, thus allowing it to receive, prior to the other partners, an amount corresponding to all the amounts it will have invested in the start- Up. This clause called” Pref liquid “is intended, on the one hand, to apply in the event of an exit valuation lower than the input value so that, in the event of the start-up's performance, all partners benefit from a sharing of value according to their level of participation and is, on the other hand, called” Not participating ”, namely that BLAST. will only recover its investment in the event of an exit valuation lower than the input value (a contract with investment funds that generally foresee multiple or level of IRR (internal rate of return) reaching even more value when the start-up did not perform as announced, to the detriment of the founders).
• ‍Exclusivity, non-competition, non-solicitation and non-poaching commitments : as part of the Pact, the founders of the start-up are committed
  o to devote the exclusivity of their professional time to the activity and development of the start-up;
  o not to develop a competing business, as long as they are a partner or manager and even after that;
  o not to solicit customers or suppliers of the start-up when they are no longer a partner or manager; and
  o not to hire employees from the start-up when they are no longer a partner or manager.
• Intellectual property rights : under this clause, all intellectual property rights (brands, patents, domain names, etc.) developed by the founders as part of the start-up's activity must be the property of the start-up.
• ‍Reporting : as part of the meetings of the start-up's collegial body, BLAST. benefits from the following right to information:
  o quarterly: an activity report for the past quarter, making it possible to measure the performance of the start-up, to present the financial and non-financial achievements but also the difficulties encountered and the solutions provided as well as the objectives for the coming quarter. This report contains at least for the past quarter and in comparison to the announced forecast: the turnover achieved, the level of EBITDA, the amount of availability as well as the volume of sales and customers. Also, an updated business plan is provided in cases where turnover and/or EBITDA would be 30% lower than the business plan presented during the fundraising; and
  o annually: the estimated annual budget for the following year and the annual accounts for the past year.