Term Sheet for Company Investment
I. Overview
This Term Sheet summarizes the principal terms of the proposed investment in [Your Company Name] by [Investor's Name or Investment Firm's Name]. This document is intended to serve as a basis for further negotiation and due diligence and does not constitute a legally binding obligation until a definitive agreement has been executed by all parties.
The key objective of this Term Sheet is to outline the investment amount, company valuation, equity offered, and other rights and obligations between [Your Company Name] and [Investor's Name or Investment Firm's Name]. This Term Sheet is conditional upon the satisfactory completion of due diligence, legal review, and agreement on a final binding investment agreement.
II. Financial Terms
The financial terms of the proposed investment are as follows:
Valuation of the Company: $[Amount] pre-money valuation.
Investment Amount: $[Investment Amount].
Type of Security: [Preferred/Ordinary Shares, Convertible Notes, etc.].
Equity Stake Offered: [Percentage]% of post-money equity.
The valuation assumes the normal working condition of the business and is subject to adjustment based on the due diligence findings.
III. Rights and Responsibilities
Upon entering into the investment agreement, the investor(s) will receive certain rights including:
Board Representation: [Number of board seats] seats to be offered to representatives of the investors.
Voting Rights: Rights proportional to the equity held, concerning key decisions affecting the strategic direction of the company.
Information Rights: Regular updates and financial reports, including annual audited financial statements and quarterly performance reports.
Right of First Refusal: The option to participate pro-rata in future funding rounds to maintain their percentage of ownership.
Responsibilities of both parties, including business milestones to be achieved, use of investment funds, and operational roles and constraints will be detailed in the final agreement.
IV. Conditions Precedent
The investment is subject to the following conditions:
Due Diligence: Completion of a satisfactory due diligence process by [Investor's Name or Investment Firm's Name].
Legal Review: Formulation and approval of all legal documents by counsels of both parties.
Regulatory Approvals: Receipt of necessary governmental and regulatory approvals, if applicable.
The failure to satisfy any of these conditions can lead to a termination of this Term Sheet without any legal implications to any party unless expressly stated otherwise in a binding legal agreement.
V. Exclusivity and Confidentiality
Both parties agree to enter an exclusivity period that extends up to [number] days from the date of this Term Sheet, during which [Your Company Name] will not solicit or entertain offers from other potential investors regarding the subject of this Term Sheet.
All discussions, documents, and information exchanged between [Your Company Name] and [Investor's Name or Investment Firm's Name] during this period shall be treated as confidential and not disclosed to any third party without mutual consent. This confidentiality clause shall survive the expiry or termination of this Term Sheet.
VI. General Provisions
This Term Sheet is not a contractual offer or legally binding agreement except about confidentiality and exclusivity. The terms outlined herein are intended as a basis for further negotiation.
The preparation and negotiation of a definitive agreement will occur after the satisfaction of the conditions listed above, with the intent being to reflect the terms described herein subject to findings during the due diligence process.
VII. Miscellaneous
A. Governing Law:
This Term Sheet shall be governed by and construed by the laws of [Enter the governing jurisdiction].
B. Expenses:
Each party shall bear its expenses incurred in connection with the negotiation and execution of this Term Sheet and any subsequent agreements.
C. Amendment:
This Term Sheet may only be amended or modified in writing and signed by both parties.
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