Equity Term Sheet
I. Introduction
This Term Sheet outlines the terms by which [Your Company Name] and [Partner Company Name] (hereinafter referred to as "the Parties") intend to enter into a strategic partnership involving an equity investment or ownership stake. The terms outlined in this document do not constitute a legally binding agreement but serve as a framework for further negotiations.
The objective of this Term Sheet is to delineate the key financial, structural, and legal terms for the proposed partnership. This document is intended to be replaced by more detailed agreements that will be drawn up upon satisfactory completion of due diligence and mutual agreement on the terms outlined herein.
II. The Parties
This agreement involves the following parties:
III. Equity Investment Details
The following are the proposed terms relating to the equity exchange:
Term | Description |
|---|
Valuation of [Your Company Name] | To be determined by a mutually agreed-upon third-party valuation firm. |
Valuation of [Partner Company Name] | To be determined during the due diligence phase. |
Equity Stake Offered | [Specify Percentage]% of equity in [Your Company Name] in exchange for a corresponding stake in [Partner Company Name]. |
Conditions Precedent | Satisfactory completion of due diligence, regulatory approvals, and signing of definitive agreement. |
IV. Governance and Management
The governance structure agreed upon will involve the following roles and responsibilities:
Establishment of a joint Steering Committee consisting of an equal number of representatives from both [Your Company Name] and [Partner Company Name].
The Steering Committee will oversee the strategic direction of the partnership and make decisions related to joint initiatives.
Management of day-to-day operations will be delineated in the definitive agreements to ensure aligned interests and equal participation from both companies.
V. Confidentiality and Non-Disclosure
Both parties agree to keep all negotiations and documents related to this term sheet confidential. Disclosure to third parties will be made only with written consent from both [Your Company Name] and [Partner Company Name], except as required by law.
A Non-Disclosure Agreement (NDA) will be executed parallelly to protect both parties' proprietary information during and after the period of this negotiation.
VI. Legal and Regulatory Compliance
All terms and actions taken under this term sheet will comply with the applicable laws and regulations including but not limited to securities, trade, and corporate governance in the jurisdictions of both parties.
The final agreement will be subjected to and conditioned upon the necessary regulatory approvals and/or exemptions as required.
VII. Term and Termination
This Term Sheet is valid for a period of [Specify Number] days from the date it is signed by both parties unless extended mutually in writing. Negotiations may be terminated by either party at any time, which shall result in no liability except as related to sections covering confidentiality and non-disclosure.
Towards the conclusion or termination of this Term Sheet, both parties agree to either destroy or return all received confidential materials that belong to the respective party unless stated otherwise in the definitive agreement.
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