The Advisory Shares Agreement is a crucial document for companies in Nigeria seeking to attract and retain experienced advisors by offering equity compensation instead of or in addition to cash payments. This agreement type is particularly valuable for startups and growing companies that want to conserve cash while benefiting from expert guidance. The document must comply with Nigerian corporate law, particularly CAMA 2020, and typically includes detailed provisions about the advisory services, share vesting schedule, confidentiality requirements, and termination conditions. It's essential for companies to carefully structure these agreements to ensure proper alignment with their corporate objectives while maintaining compliance with relevant securities regulations and tax implications.
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1. Parties: Identifies the company and the advisor, including their full legal names and addresses
2. Background: Explains the context of the agreement, including the company's desire to engage the advisor and the advisor's qualifications
3. Definitions: Defines key terms used throughout the agreement
4. Appointment and Term: Details the advisor's appointment, role, and duration of the advisory relationship
5. Advisory Services: Specifies the scope of services to be provided by the advisor
6. Share Compensation: Details the number of shares, vesting schedule, and terms of share issuance
7. Vesting Terms: Specifies the vesting schedule, cliff period, and acceleration provisions
8. Advisor's Obligations: Outlines the advisor's duties, commitments, and performance expectations
9. Company's Obligations: Details the company's responsibilities and commitments
10. Representations and Warranties: Contains statements of fact and promises by both parties
11. Confidentiality: Establishes confidentiality obligations and protection of proprietary information
12. Intellectual Property: Addresses ownership and rights to intellectual property created during the advisory relationship
13. Termination: Specifies conditions and procedures for ending the agreement
14. General Provisions: Includes standard legal provisions such as governing law, notices, and amendment procedures
1. Non-Competition: Restricts advisor from competing with the company - include when advisor has access to sensitive competitive information
2. Non-Solicitation: Prevents advisor from soliciting company employees or customers - include for senior advisors
3. Share Transfer Restrictions: Additional restrictions on transfer of shares - include for early-stage companies
4. Tag-Along Rights: Gives advisor right to join in sale of shares by major shareholders - include for significant advisory roles
5. Drag-Along Rights: Requires advisor to join in sale of company - include when company anticipates future sale
6. Board Observer Rights: Grants advisor right to attend board meetings - include for strategic advisors
7. Dispute Resolution: Specifies arbitration or mediation procedures - include when parties prefer alternative dispute resolution
8. Insurance: Requirements for professional liability insurance - include for high-risk advisory roles
1. Schedule A - Services Description: Detailed description of advisory services to be provided
2. Schedule B - Share Vesting Schedule: Detailed timeline and conditions for share vesting
3. Schedule C - Company Information: Details of company's share capital and existing shareholders
4. Schedule D - Share Rights and Restrictions: Detailed terms of the shares being issued
5. Appendix 1 - Share Certificate: Pro forma share certificate to be issued
6. Appendix 2 - Board Resolution: Copy of board resolution approving the advisory appointment and share issuance
7. Appendix 3 - Deed of Adherence: Form of deed to be signed by advisor agreeing to company's shareholders agreement
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