Startup Investment Syndicate Contract
Startup Investment Syndicate Contract
This Startup Investment Syndicate Contract (the "Contract") is made as of [Insert Date], by and among [Your Company Name], a [Insert Legal Structure] with its principal place of business located at [Your Company Address] (hereinafter referred to as the "Company"), [Lead Investor Name], serving as the Lead Investor (hereinafter referred to as the "Lead Investor"), and the undersigned investors (each, a "Syndicate Member" and collectively, the "Syndicate Members").
WHEREAS, the Company is engaged in [Brief Description of Business Activity], and seeks investment to fuel its growth and development;
WHEREAS, the Syndicate Members, coordinated by the Lead Investor, have agreed to provide a collective investment to the Company, pooling their resources to achieve mutual benefit;
WHEREAS, the Lead Investor has been appointed to act on behalf of the Syndicate Members in dealings with the Company, providing oversight and making decisions in accordance with the terms set forth herein;
WHEREAS, the parties wish to document the terms of their agreement, the responsibilities of the Syndicate Members and the Lead Investor, and the conditions under which the investment will be made and managed;
NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1: Syndicate Formation
1.1 Purpose of the Syndicate: The Syndicate is formed for the purpose of collectively investing in the Company, leveraging the combined resources and expertise of the Syndicate Members to support the growth and development of the Company.
1.2 Role of the Lead Investor: The Lead Investor shall coordinate the Syndicate, act as the primary point of contact between the Syndicate Members and the Company, oversee the due diligence process, and negotiate the terms of the investment. The Lead Investor is also responsible for monitoring the Company's performance and enforcing the Syndicate's rights under this Contract.
1.3 Membership: Syndicate Membership is open to investors who commit to investing a minimum of $[Minimum Investment Amount] in the Company and who agree to abide by the terms and conditions of this Contract. Membership obligations include participating in Syndicate decisions in accordance with the governance structure outlined herein and contributing the agreed-upon investment amount.
1.4 Governance: Decisions regarding additional investments, the sale of equity, or other significant actions affecting the Syndicate's interest in the Company shall be made collectively by the Syndicate Members, with the Lead Investor coordinating the decision-making process. Each Syndicate Member's vote shall be proportional to their investment contribution, with the Lead Investor having the authority to cast a deciding vote in the event of a tie.
Section 2: Investment Terms
2.1 Total Investment Amount: The Syndicate agrees to invest a total of $[Total Investment Amount] in the Company, subject to the terms and conditions set forth in this Contract.
2.2 Individual Contributions: Each Syndicate Member's contribution shall be as agreed upon and documented in the Syndicate's records. The Lead Investor shall contribute $[Lead Investor Contribution Amount], with the remaining amount to be contributed by the other Syndicate Members in accordance with their individual agreements.
2.3 Equity Distribution: In exchange for the Syndicate's investment, the Company agrees to issue equity to the Syndicate Members, collectively, amounting to [Percentage]% of the Company's total outstanding shares on a fully-diluted basis, immediately following the investment.
2.4 Disbursement Schedule: The investment will be disbursed to the Company in [Number of Tranches] tranches, with the first tranche of $[First Tranche Amount] to be disbursed upon the execution of this Contract. Subsequent tranches will be disbursed based on the achievement of mutually agreed-upon milestones, as detailed in an annex to this Contract.
2.5 Valuation: The investment terms are based on a pre-money valuation of the Company of $[Pre-money Valuation], as agreed upon by the parties.
2.6 Conditions Precedent to Funding: The disbursement of each investment tranche is subject to the Company meeting specific conditions precedent, including but not limited to the achievement of certain business milestones, maintenance of key personnel, and compliance with applicable laws and regulations.
Section 3: Governance and Decision Making
3.1 Decision Making Authority: The Lead Investor shall have the authority to make day-to-day decisions regarding the Syndicate's investment in the Company, within the scope of authority granted by this Contract. Major decisions, including those related to additional funding rounds, exit strategies, and significant changes to the terms of the investment, require the approval of Syndicate Members holding a majority of the Syndicate's investment in the Company.
3.2 Voting Rights: Each Syndicate Member's voting rights are proportional to their investment contribution. Decisions requiring Syndicate approval shall be made based on a majority vote of the Syndicate Members, unless otherwise specified in this Contract.
3.3 Conflict Resolution: In the event of a dispute among Syndicate Members or between the Syndicate Members and the Lead Investor, the parties agree to seek resolution through mediation before resorting to arbitration or litigation. The Lead Investor is responsible for coordinating the resolution process.
Section 4: Funding Process
4.1 Initial Disbursement: Upon execution of this Contract and satisfaction of all conditions precedent as outlined in Section 2: Investment Terms, the initial tranche of the investment will be disbursed to the Company.
4.2 Milestone-Based Funding: Subsequent tranches of funding will be released based on the Company's achievement of specific, pre-defined milestones agreed upon by the Syndicate and the Company. These milestones and the corresponding tranche amounts are detailed in an annex to this Contract.
4.3 Additional Funding Rounds: The Syndicate reserves the right to participate in future funding rounds to maintain or increase its equity position in the Company, subject to the terms of this Contract and mutual agreement at the time of each funding round.
Section 5: Representations and Warranties
5.1 By the Company: The Company represents and warrants that it is duly organized, validly existing, and in good standing under the laws of its jurisdiction; that entering into this Contract does not violate any agreement to which the Company is a party; and that all financial information provided to the Syndicate is true, complete, and accurate in all material respects.
5.2 By the Syndicate Members: Each Syndicate Member represents and warrants that they have the authority and capacity to invest in the Company as specified in this Contract; that their investment does not violate any applicable laws or agreements; and that they will abide by the terms and conditions of this Contract.
Section 6: Confidentiality
6.1 Obligation of Confidentiality: All parties agree to maintain the confidentiality of the terms of this Contract, as well as any proprietary or confidential information exchanged during the course of the investment relationship. This obligation extends to all documents, data, and communications related to the Company's business operations, financial status, and technological developments.
6.2 Exceptions: The obligation of confidentiality does not apply to information that (a) becomes publicly known through no fault of the receiving party; (b) is received from a third party without breach of any obligation of confidentiality; or (c) is required to be disclosed by law or regulatory authority.
6.3 Survival: The confidentiality obligations set forth in this section shall survive the termination of this Contract for a period of [Number of Years] years.
Section 7: Exit Strategy
7.1 Exit Opportunities: The Syndicate and the Company agree to cooperate in pursuing exit opportunities that provide a return on investment for the Syndicate Members, such as an acquisition, merger, initial public offering (IPO), or sale of the Company's shares.
7.2 Distribution of Proceeds: In the event of an exit, proceeds shall be distributed to the Syndicate Members in proportion to their equity holdings in the Company, after satisfying any outstanding debts or obligations of the Company.
7.3 Right of First Refusal: The Syndicate Members shall have a right of first refusal to purchase the Company's shares if the Company seeks to sell its shares to a third party, subject to the terms and conditions agreed upon in this Contract.
Section 8: Term and Termination
8.1 Effective Date and Duration: This Contract shall become effective as of the date of the last signature hereto and shall continue in effect until the earlier of the completion of the exit strategy outlined in Section 7 or the mutual agreement of all parties to terminate.
8.2 Termination for Cause: Any party may terminate this Contract for cause if another party materially breaches any of its obligations under this Contract and fails to cure such breach within [Number of Days] days after written notice of the breach.
8.3 Effects of Termination: Upon termination, all rights and obligations of the parties under this Contract cease, except for any rights and obligations that by their nature are intended to survive termination, including confidentiality and dispute resolution provisions.
Section 9: Dispute Resolution
9.1 Mediation: The parties agree to first attempt to resolve any disputes arising under this Contract through mediation, facilitated by a neutral third-party mediator agreed upon by all parties.
9.2 Arbitration: If mediation fails to resolve the dispute within [Number of Days] days, the dispute shall be resolved by binding arbitration in accordance with the rules of [Arbitration Body], and the decision of the arbitrator(s) shall be final.
9.3 Governing Law: This Contract and any dispute arising from its interpretation or enforcement shall be governed by the laws of [Jurisdiction].
Section 10: Miscellaneous Provisions
10.1 Assignment: No party may assign its rights or obligations under this Contract without the prior written consent of the other parties, except in the case of an exit strategy as outlined in Section 7.
10.2 Amendments: Any amendments to this Contract must be made in writing and signed by all parties.
10.3 Notices: All notices under this Contract must be in writing and delivered by email, postal mail, or courier to the addresses specified herein.
10.4 Entire Agreement: This Contract constitutes the entire agreement between the parties and supersedes all prior agreements and understandings, whether oral or written.
Section 11: Signatures
This Contract is executed by the duly authorized representatives of the Syndicate Members, the Lead Investor, and the Company as of the date first above written, signifying their agreement to the terms and conditions set forth herein.
FOR THE COMPANY
[Signature]
[Name]
[Title]
[Date]
FOR THE LEAD INVESTOR
[Signature]
[Name]
[Title]
[Date]
FOR THE SYNDICATE MEMBERS
[Signature]
[Name]
[Title]
[Date]
