Glossary

A · B · C · D · E · F · G · H · I · L · M · N · O · P · Q · R · S · T · U · V · W

A

Advance subscription agreement

Money paid now for shares that the next priced round will issue and price. It carries no interest, has no repayment date and is never repaid, so it is not a loan. Solaris’s three angels paid €500,000 this way, with a €3,000,000 cap and a 20% discount. Appendix 1, para 3 · Chapter 3

Allotment and transfer

The two ways to come to hold shares. In an allotment the company creates new shares and keeps the money, while in a transfer a holder sells existing shares and the seller is paid. Every Solaris round was an allotment, and the final sale was a transfer. Clause 6 · Chapter 2

Amended and restated

An agreement rewritten as one text so that it also covers a later round. The Solaris Investment Agreement was restated at the Series B, and each addition is marked as inserted on the Restatement Date. Chapter 13

Anti-dilution

A protection for a preference class when the company later sells shares at a lower price. It lowers the class’s conversion price, so each share will convert into more ordinary shares. It issues no shares on the day. Article 7 · Chapter 13

As converted

Counting each preference share as the ordinary shares it would convert into. After the Series B, every four Series A shares counted as five, so the 2,800 Series A shares carried 3,500 votes. On that count Meridian held 9,400 of the 16,700 votes, more than half. Article 8.2 · Chapter 13

As-converted election

A preference class’s choice, on a sale, to give up its Preference Amount and share the price as if it held ordinary shares. A majority of the class decides for the whole class, and each class decides for itself. Article 5.2 · Chapter 9

B

Bad leaver

A leaver who is not a good leaver, such as one dismissed for fraud. At Solaris it also covers a founder who resigns within two years. A bad leaver must transfer every share, vested or not, at the lower of cost and current value. Schedule 6, para 3 · Chapter 5

Basket and de minimis

Two thresholds for warranty claims. A claim of €10,000 or less is ignored, and nothing is paid until the other claims pass the €75,000 basket. Then the whole amount is payable, so three claims of €30,000 each would recover €90,000. Clause 9.3 · Chapter 10

Beneficial owner

A person who owns or controls more than 25% of a regulated company. The test uses the register, not a fully diluted count. Meridian’s 30% of the register made it one at the Series A, so the Central Bank of Ireland checked its controllers. Chapter 10

Bonus issue

New shares issued to existing holders for no money, paid up from a reserve the company already has. Solaris turned €79,300 of share premium into 79,300 new shares, taking its register to 100,000. It creates no money. Deed of Exchange, resolution 2 · Chapter 15

Broad-based weighted average

The usual and mildest anti-dilution formula. It lowers the conversion price part of the way towards the new price, measured against a wide count that includes the option pool. It took the Series A conversion price from €1,000 to €800. Article 7.2 · Chapter 13

Buy-back

A company buying its own shares and cancelling them, which raises every other holder’s percentage. It needs cash and distributable profits. Solaris looked at buying back Cormac Duffy’s shares and rejected it. Chapter 5

C

Cap (warranty cap)

The most anyone can recover for untrue warranties. Solaris’s cap is the money it received in the round, €2,000,000 at the Series A and €4,000,000 at the Series B, and Elena Marsh’s is €400,000 in all. No cap applies to fraud. Clause 9.1 · Chapter 10

Cap Base

The agreed number of shares a valuation cap is divided by: 6,000, being the 4,000 shares in issue and the 2,000-share pool. The early investors’ own agreements call it the cap capitalisation. Agreeing it avoids a circular sum. Schedule 3 · Chapter 6

Cap price and discount price

The two prices at which early money can convert. The cap price is the valuation cap divided by the Cap Base, and the discount price is the round price less the discount. The lower one applies, never both. Schedule 3, para 1 · Chapter 8

Cap table

A table, usually a spreadsheet, of who holds which shares, class by class, with the percentages. It is evidence, not the legal record. The register of members decides. The Cap Table Record · Chapter 1

Capitalisation of reserves

Using a reserve the company already has, such as share premium, to pay up new shares. It moves money between two accounts and creates none. Solaris used it for the 700 extra shares on conversion and for its bonus issue. Article 3.2 · Chapter 2

Change of control

A buyer gaining more than half the votes, or the business being sold. Before conversion, Solaris’s notes became repayable at twice the money lent on a change of control. A customer contract may define it differently, so check each one. Chapter 4

Class consent

A class’s agreement to a change in its rights, such as a new class ranking ahead of it. At Solaris it needs holders of 75% of the class by nominal value, or a special resolution at a class meeting. Article 9.1 · Chapter 9

Cliff

A first period, usually a year, in which nothing vests, followed by a quarter vesting at once. It exists because a founder who leaves within a year has usually built little that lasts. Cormac Duffy left the day before his cliff, so on the company’s case nothing had vested. Schedule 6, para 1 · Chapter 5

Completion

The day the money moves and the shares are issued. It comes after signing, once the conditions are met. Nobody is a shareholder until entered in the register of members. Clause 6 · Chapter 10

Completion bible

The indexed set of every signed document, minute, resolution and filing from a round. The junior builds it, and years later it answers most due diligence questions. Chapter 10

Composite transaction

Several steps treated as one deal, each given in return for the others. If one step fails, none takes effect. The Deed of Exchange was one, so it is measured from its first step to its last. Deed of Exchange, clause 1 · Chapter 15

Compulsory transfer

An article that makes a leaver transfer shares, and lets a director sign the transfer for one who refuses. Without it, a vesting promise binds the founder only as a contract and cannot move the register. Solaris adopted article 16 at the Series A, five weeks after Duffy left. Article 16 · Chapter 5

Condition

Something that must happen before the parties must complete. At Solaris the regulator’s check of the new controller was a condition, and no party could waive it. Clause 5.1 · Chapter 6

Consent matters

The things the company may do only with the investors’ agreement, such as issuing shares or signing a large contract. Solaris has twenty-two, in Schedule 5, and article 20 writes the same list into the constitution. Schedule 5 · Clause 14.2 · Chapter 11

Consolidation

Combining several shares into fewer shares of a larger nominal value, for example ten €1 shares into one €10 share. A company may do it before a bonus issue to reach a round number of shares. Solaris needed none, because its shares had been €1 each since incorporation. Article 3.1 · Chapter 15

Constitution

The company’s articles, which bind the company and every present and future shareholder. A right that must work against the company or a later holder, such as a preference or a drag-along, must be written here as well as in the agreement. Schedule 8 · Chapter 9

Conversion

Turning early money, or a preference share, into a fixed number of shares of a fixed class. At the Series A it happened automatically, just before the new money, and produced 2,000 shares. Clause 4 · Chapter 8

Conversion price

The price at which a preference share converts into ordinary shares. Dividing the Original Issue Price by it gives the number of ordinary shares. Anti-dilution can lower it. Article 6.2 · Chapter 9

Convertible loan note

A loan meant to turn into shares at the next round, usually at a discount. If no round comes, it must be repaid on its maturity date. Solaris issued €800,000 of notes at 8% simple interest under one note instrument. Appendix 2 · Chapter 4

D

Deed of adherence

A deed by which a new shareholder joins the existing shareholders’ agreement in a stated role. At Solaris no transfer to a newcomer is registered until the deed is delivered. Appendix 5 · Chapter 14

Dilution

The fall in a holder’s percentage when new shares are issued. By itself it is not a loss of value, because the holder keeps a smaller share of a bigger company. Chapter 7

Disclosure letter

A letter from the warrantors listing the facts that qualify the warranties. A matter counts only if the letter describes it and names the warranty it qualifies. Attaching a document is not enough. Clause 8.3 · Chapter 10

Discount

A reduction on the round price for money that came in early. Both Solaris instruments had 20%, so their discount price at the Series A was €800. It set the noteholders’ price, while the angels’ cap set theirs. Definition of Discount · Chapter 3

Down round

A round priced below the last one. Solaris’s Series B priced shares at €500, half the Series A price, and clauses from earlier rounds then acted by themselves. Chapter 13

Drag-along

A right for the holders of a large majority to make the rest sell to a buyer on the same terms. Solaris’s article first allowed only an outside buyer, so it was amended before Meridian could drag the last two holders. Article 15.1 · Article 15.2 · the amendment · Chapter 14

E

Employee Trust

A trust that holds shares to satisfy staff options. Its shares count inside the option pool, and it does not vote them or take dividends. Solaris’s trust bought 800 of Duffy’s shares for €800 when he left, and passed them to employees who exercised options at the Exchange. Article 17 · Chapter 12

Entrenchment

Writing a protection into the constitution as well as the agreement. A breach of the agreement gives only damages, but a breach of the constitution may be an act the directors had no power to do. Article 20 · Chapter 11

ESOP

Short for employee share option plan, the name most often heard in conversation and in American documents. Solaris’s documents call it the Option Plan. Under it the board granted options over 4,800 shares to the staff, which could be exercised only on an exit. Appendix 4 · Chapter 12

Exclusivity

A promise not to talk to other investors for a fixed period, also called a lock-out agreement. A court will enforce it if the period has an end date, unlike a bare promise to negotiate in good faith. Solaris gave Meridian eight weeks, the time the regulator needed. Chapter 6

Exercise price

The fixed price an option holder pays for each share. It may not be below the €1 nominal value. Solaris granted options at €400 after the Series A and at €200 after the Series B. Option Plan, rule 4 · Chapter 12

Exit

The sale or listing that finally pays the investors. A fund is paid only on an exit, so venture documents look ahead to it from the first round. Clause 20 · Chapter 1

Exit-only

An option that can be exercised only on an exit, and only as far as it has vested. It keeps the register clean until the sale, and any option not exercised then lapses. Clause 7.4 · Chapter 12

F

Fair Value

The price a Valuer sets when a seller and the company do not agree a price for shares offered to the other holders. The Valuer values the company as a going concern, with no discount for a small holding and no premium for control, and allows for the preference shares. Article 13.2 · Chapter 14

Fitness and probity

The regulator’s check that the people who own or run a regulated firm are suitable. At both rounds, completion waited for the Central Bank of Ireland to assess Meridian’s controllers and its director on the board. Clause 21 · Chapter 10

Founders' agreement

The founders’ first contract, setting out their shares, roles and promises. Solaris’s made Elena Marsh chief executive, promised reverse vesting and assigned the founders’ intellectual property. Its vesting promise failed because the constitution did not carry it. Appendix 3 · Chapter 2

Full ratchet

The harshest anti-dilution formula, which cuts the conversion price all the way to the new price. At Solaris it would have turned the 2,800 Series A shares into 5,600 ordinary shares, not 3,500. The founders, the staff and the pool would have paid for every extra share. Chapter 13

Fully diluted

A count that adds shares not yet issued, such as the option pool, to those on the register. It measures what money bought, not votes. After the Series A, Solaris had 10,000 shares fully diluted and 8,000 on the register. Definition of Fully Diluted · Chapter 7

G

Good leaver

A leaver who goes through death, ill health, agreed retirement, redundancy or dismissal that is not for cause. A good leaver keeps vested shares and transfers unvested ones at €1 each. The board may, with Investor Consent, treat other leavers as good. Schedule 6, para 2 · Chapter 5

H

Heads of terms

The name for a term sheet on the sale of a company. It sets out the main terms before anyone drafts, and most of it does not bind. Chapter 6

I

Information rights

The investors’ right to regular reports, such as monthly management accounts, the board pack and audited accounts. At Solaris they go to each Investor Director and each investor holding at least 5% of the register. A fund needs them to report to its own investors. Schedule 7 · Clause 15.2 · Chapter 11

Investor Director

A director appointed by the investors. He owes his duties to the company, not to the fund that appointed him. At Solaris the board cannot act in writing, or at a first meeting, without one. Clause 13.2 · Article 18 · Chapter 11

Investor Majority

The holders of more than half of the Series A and Series B shares together, counted on the register. Their consent is needed for most consent matters. After the Series A, Meridian was the Investor Majority on its own. Definition of Investor Majority · Chapter 11

Issued register

The shares actually issued and entered in the register of members. Votes, control and regulatory thresholds are counted on it, not on a fully diluted basis. After the Series A, Solaris’s register held 8,000 shares, while the fully diluted count was 10,000 because of the unissued pool. Clause 7.2 · Chapter 1

L

Leakage

On a sale, value passing from the company to its seller before completion, such as a dividend or a management charge. The sale agreement forbids it, except for named Permitted Leakage. The Uplift is not Leakage, because no group company pays it. Chapter 15

Leaver

Anyone holding shares or options who stops working for a group company. The documents then sort the leaver as good or bad, which decides what the leaver keeps. Definition of Leaver · Chapter 5

Liquidation event

A return of capital to the members, real or deemed. Solaris’s constitution deems a sale of more than half the votes, or of the whole business, to be one, so the preference applies on a sale. Article 5.3 · Definition of Liquidation Event · Chapter 9

Liquidation preference

The right of a preference share to be paid back first when the company is sold or wound up. Solaris’s preferences are one times the money paid, and non-participating. A preference decides everything at a low sale price and nothing at a high one, when every class converts. Article 5 · Chapter 9

Longstop date

A last date after which a fallback applies. If no round had come by 11 March 2023, the angels’ money would have converted at the cap price. Under the Investment Agreement, any investor could walk away if the conditions were not met within eight weeks of the term sheet. Clause 5.4 · Chapter 3 · Chapter 6

M

Management services agreement

A separate contract under which Meridian charges Solaris a monthly fee for board-level support, €25,000 a month after the Series B. The Investment Agreement only consented to it, so the fee survived when that agreement ended. Clause 16 · Chapter 12

Maturity and redemption

The maturity date is when a note must be repaid if it has not converted, and redemption is that repayment. Solaris’s notes fell due two years after issue, with interest. The Series A came first, so they were never repaid. Appendix 2 · Chapter 4

Most-favoured terms

A promise that early money gets the best terms a later investor wins, so that no holder sets its own terms. Solaris’s early investors had none. Instead, the company could not vary one angel’s agreement to favour its holder without the consent of each of the other angels. Chapter 3 · Chapter 8

N

Negative control

A veto that can stop things but cannot make them happen. Meridian’s 30% of the register let it block any special resolution, which needs 75%, and its four in five of the Series A shares let it block a change to that class. Article 9.1 · Chapter 11

Nominal value

The fixed amount set for each share when the class is created, €1 at Solaris. It is the lowest price at which a share may be issued, not what the share is worth. Article 1.3 · Chapter 2

Nominee

A person registered as the holder of a share that belongs to someone else, under a declaration of trust. Duffy held one share in the Warsaw subsidiary as nominee, and nobody moved it when he left. Chapter 2

Non-participating and participating

A non-participating preference takes its money back or shares as if converted, never both. A participating one takes its money back and then shares the rest as well. Solaris’s preferences are non-participating, the usual European position. Article 5.2 · Chapter 9

O

Option

A right to buy a stated number of shares later at a fixed price. It carries no vote or dividend, and its holder becomes a shareholder only when entered in the register. Appendix 4 · Chapter 12

Option pool

Shares set aside for staff options. Unissued pool shares carry no vote but count in a fully diluted figure, and existing holders pay for a pool counted before the new money. Solaris’s pool grew to 4,800 shares, including the Employee Trust’s 800. Clause 7 · Chapter 7

Option sweep

Exercising every option and closing the plan before a sale, so that nobody keeps a right to a share. At Solaris vesting was brought forward, and all 4,800 options were exercised with money Meridian lent. Clause 7.4 · Deed of Exchange, clause 2 · Chapter 15

Original Issue Price

The price at which a class was first issued: €500 for the Seed and Series B shares and €1,000 for the Series A. It sets how many ordinary shares a share converts into, but it is not the Preference Amount. Definition of Original Issue Price · Chapter 8

Own funds

The capital a regulated crypto-asset firm must hold against its fixed overheads. A bonus issue does not help, because it only moves a sum between two lines of the balance sheet. Chapter 15

P

Pari passu

Latin for on an equal footing. Unsecured notes rank pari passu with the company’s other unsecured creditors. Classes in one tier of the stack share pari passu, in proportion to what each is owed. Chapter 4 · Chapter 9

Pay-to-play

A rule that a preference holder who does not buy its share of a new round loses its preference. Under Solaris’s article 7.5, Rowan Hill’s Series A shares became ordinary shares just before the Series B. Clause 18 · Chapter 13

Permitted transfer

A transfer that needs no offer to the other holders, such as to a spouse, a family trust or a fund with the same manager. If the relationship ends, the shares must come back. Article 12 · Chapter 14

Pool shuffle

Counting a new option pool inside the pre-money valuation, so the existing holders pay for it rather than the new investors. At the Series A the founders’ block bore about two-thirds of the cost. Chapter 7

Power of attorney

Authority to sign in someone else’s name. Solaris’s drag article makes any director the attorney of a holder who refuses to sign, so the transfer goes through without that holder. At the Exchange a director signed the transfers of the two holders who refused. Article 15.5 · Deed of Exchange, clause 8 · Chapter 14

Pre-emption on issue

Each shareholder’s right to be offered new shares, in proportion to its holding, before anyone else. Each preference share counts as the ordinary shares it would convert into. Pool and conversion shares are not offered, and the right can be switched off for one issue. Clause 17 · Article 10 · Chapter 11

Pre-emption on transfer

The other holders’ right to buy shares that a holder wants to sell, at the same price, before an outsider can. If the price is not agreed, a Valuer sets the Fair Value. Article 13 · Chapter 14

Preference Amount

The sum a preference share is paid first: the money actually paid or lent for it, not the shares times the issue price. After the Series B the Series A class carried €2,600,000. Definition of Preference Amount · Chapter 9

Preference shares

Shares paid before the ordinary shares when capital is returned or the company is sold. Solaris ended with three classes: Seed, Series A and Series B. Article 1 · Chapter 9

Pre-money and post-money valuation

The pre-money valuation is the company’s value just before the new money, and the post-money valuation adds the new money. At the Series A they were €8,000,000 and €10,000,000, so €2,000,000 bought a fifth of the company. Schedule 2, Part B · Chapter 7

Q

Qualifying Financing

A round large enough to convert the early money automatically. At Solaris it meant raising at least €2,000,000 of new cash, not counting converting money. The Series A raised exactly that. Definition of Qualifying Financing · Chapter 4

Quorum

The smallest attendance at which a board meeting can decide anything. Solaris’s quorum is two directors, one of them an Investor Director, but an adjourned meeting can go ahead with any two. Article 19 · Chapter 11

R

Ranking and seniority

The order in which classes are paid. A senior class is paid first, and classes that rank pari passu share a tier. The Series B ranks ahead of the Series A and Seed, which share the tier below. Article 5 · Chapter 9

Redesignation

Renaming shares of one class as shares of another, without issuing or cancelling any. Before the bonus issue, Solaris’s sole shareholder cancelled its three empty preference classes. It redesignated nothing, because every preference share had already converted into an ordinary share. Deed of Exchange, resolution 1 · Chapter 15

Register of members

The company’s own record of who holds which shares. It alone decides who is a shareholder. Cap tables and share certificates are only evidence of it. Cap Table Record · Chapter 2

Repetition of the warranties

Giving the warranties again on a later day, about the facts on that day. At the Series B they were repeated against a new disclosure letter, with a fresh 24-month time limit. Old disclosures do not carry over, so anything still relevant had to be disclosed again. Clause 10 · Chapter 10

Re-trades

Asking for a lower price after a term sheet is signed. A re-trade based on something new found in due diligence is fair, but one based on second thoughts is not. Chapter 6

Reverse vesting

A founder owns every share from the start but earns the right to keep them over time. If the founder leaves early, unvested shares can be taken back at what was paid. It works only if the constitution carries it. Clause 12 · Chapter 5

Roll and cash elections

The two choices at the Exchange. The roll election swapped Solaris shares for Meridian shares valued at €2,000 each, and the cash election paid €1,000 a share. The four holders who rolled became shareholders of the later seller. Deed of Exchange, clause 4 · Chapter 15

Runway

How many months a company’s cash will last at its current rate of spending. A company near the end of its runway has little time to find an investor. Solaris’s monthly management accounts report cash, runway and spending against budget to the investors. Chapter 11

S

Set-off

Settling two debts against each other so that only the balance is paid. Meridian lent option holders their exercise price and recovered it by set-off against the price it owed them for their shares. Deed of Exchange, clause 2.2 · Chapter 12

Shadow class

A class into which some articles move a holder that skips a new round. It keeps the preference but loses the other rights. Solaris chose plain conversion instead. Chapter 13

Share premium

Everything paid for a share above its nominal value. It is held in the share premium account, a reserve that is not profit and cannot be paid out as an ordinary dividend. Chapter 2

Share recycling

Reusing a leaver’s shares for staff options. Shares passed to the Employee Trust fill the option pool without enlarging it. Chapter 12

Simple agreement for future equity

The standard US form for paying now for shares later, often called a SAFE. Modern versions use a post-money cap, which fixes the investor’s percentage, while the English form’s pre-money cap fixes only the price. The English and Irish equivalent is the advance subscription agreement. Chapter 3

Stack

All the preference classes and what each must be paid first. After the Series B, Solaris’s stack was €7,100,000. Chapter 9

Subject to contract

Words marking a paper as not binding until the long documents are signed. They belong at the top of every term sheet. Chapter 6

T

Tag-along

A minority holder’s right to sell alongside a holder who sells control, at the same price and on the same terms. Preference shares count as the ordinary shares they would convert into. Article 14.2 · Chapter 14

Term sheet

A short summary of a round, signed before anyone drafts. At Solaris only exclusivity, costs and confidentiality bound, so the Cap Base it fixed was agreed again in the Investment Agreement. Recital (E) · Chapter 6

Transfer Notice

The notice a holder serves to sell shares, stating how many, at what price and to whom. It starts the offer to the other holders. If the company does not accept the price within ten business days, a Valuer sets the Fair Value. Article 13 · Chapter 14

U

Uplift

Extra money Meridian promised the holders who took cash or were dragged at the Exchange, if it resold Solaris within 24 months above set values. The €42,000,000 sale cleared both steps, so it pays €1,000 more a share. Deed of Exchange, clause 5 · Chapter 15

V

Valuation cap

A ceiling on the company value used to convert early money, not a price. Divided by the agreed share count, it gives the cap price. The angels’ €3,000,000 cap gave €500 a share at the Series A. Definition of Cap · Chapter 3

Venture capital

Money that funds invest in young companies in return for new shares. Most of those companies fail, so a fund needs one or two to pay for the whole fund, and it is paid only on an exit. Chapter 1

Vesting

Earning a right to shares over time. At Solaris nothing vests in the first year, a quarter vests at the one-year cliff and the rest vests month by month over three more years. Founders vest shares they already own, while option holders earn the right to buy. Schedule 6 · Chapter 5

Vesting commencement date

The day the vesting clock starts, often not the date of the document that sets it. Solaris’s founders vested from 1 April 2021, so their cliff fell on 1 April 2022. Definition of Vesting Commencement Date · Chapter 5

Virtual asset service provider

A crypto business registered with a regulator. Solaris was registered with the Central Bank of Ireland as one, so a new holder of more than 25% of its register needed the regulator’s check before a round could complete. In March 2025 it was authorised as a crypto-asset service provider instead. Chapter 10

W

Warrantors

The people who give the warranties. On the Series A they were the company and Elena Marsh. Cormac Duffy gave nothing, because he had left. Definition of Warrantors · Chapter 10

Warranty

A statement of fact in the agreement, with a claim for damages if it is untrue. On a round the warranties work more as a checklist than as insurance. Schedule 4 · Chapter 10

Waterfall

Running a sale price down the stack, senior class first, until the money runs out. Run it at the offered price before a sale is agreed, so the founders know their figure. Article 5 · Chapter 9