Term Sheet for Potential Investment

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I. Introduction

This Term Sheet summarizes the principal terms of the proposed investment in [Your Company Name] by [Investor's Name]. This document is intended to serve as a framework for further negotiation and due diligence, culminating in a final binding agreement. Both parties agree that this Term Sheet is not legally binding except for the terms stated in the Confidentiality and Exclusivity sections until the final agreements are executed.

The purpose of this Term Sheet is to ensure that both parties agree on the fundamental structure of the investment and understand their respective basic rights and obligations. This allows for a smoother drafting and negotiation phase of the detailed definitive agreements.

II. Parties Involved

This section identifies the parties involved in the agreement. Clearly state the legal names and roles of each party. Include contact information such as addresses, phone numbers, and email addresses.

• [YOUR COMPANY NAME]: The legal entity entering into the agreement.

• [INVESTOR'S NAME]: The other party involved in the agreement.

III. Basic Transaction Terms

The basic terms of the proposed transaction outlined herein include specifics of the investment amount, valuation of [Your Company Name], and the type of security to be issued to [Investor's Name].

• Investment Amount: The total investment proposed is [Investment Amount].

• Company Valuation: [Your Company Name] is valued at [Valuation], pre-investment.

• Type of Security: [Type of Security] (e.g., common shares, preferred shares, convertible notes).

IV. Use of Proceeds

The funds from the investment will be utilized to achieve key business objectives that will propel [Your Company Name] towards accelerated growth. Detailed utilization includes, but is not limited to:

• Expansion of the product line and service offerings to meet growing market demand.

• Enhancement of current operational capacities and scaling of production facilities.

• Strategic acquisitions and partnerships.

• Research and Development for innovation of new products and services.

V. Governance

Upon completion of the investment, governance structures will be adapted to include representatives from both [Your Company Name] and [Investor's Name]. Specific governance terms include:

• Board Composition: [Details regarding the composition of the board, including any rights to appoint board members by the investor].

• Voting Rights: Detailed description of the voting rights attached to the issued securities.

• Information Rights: Rights granted to the investor related to regular financial and operational disclosures.

VI. Conditions Precedent to Funding

The commitment of [Investor's Name] to proceed with the investment is subject to certain conditions being met, which may include:

• Completion of satisfactory due diligence by [Investor's Name].

• Negotiation and execution of definitive agreements that reflect the terms outlined in this Term Sheet.

• Compliance with relevant legal and regulatory requirements.

VII. Confidentiality and Exclusivity

Both [Your Company Name] and [Investor's Name] agree to maintain confidentiality regarding the terms of this prospective transaction and acknowledge that this Term Sheet, discussions, and examinations shall be conducted in strict confidence.

In addition, [Your Company Name] agrees not to engage in negotiations with other potential investors for a period of [Exclusivity Period] from the date of this Term Sheet, to facilitate focused discussions leading to the closure of the investment.

IX. 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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