Confidential Term Sheet

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I. Overview

This Term Sheet outlines the preliminary terms and conditions proposed for the agreement between [Your Company Name] and [Counterparty Name]. The purpose of this document is to serve as a foundational agreement for the negotiation stages preceding a formal and legally binding contract. It is intended to clarify and corner the key points of a potential partnership or investment before drafting full contractual documents. This document is non-binding except where specifically indicated and is intended primarily to facilitate further discussions and due diligence.

II. Parties Involved

The following parties are involved in this agreement:

• [Your Company Name], a company organized and existing under the laws of [Jurisdiction], with a principal place of business at [Your Company Address].

• [Counterparty Name], a company organized and existing under the laws of [Jurisdiction], with a principal place of business at [Counterparty Address].

III. Terms of Agreement

The proposed terms outlined below are designed to summarize the key components of the agreement:

1. Valuation of the business: The agreed preliminary valuation of [Your Company Name] is set to [Proposed Valuation].

2. Equity offer: [Counterparty Name] will acquire an equity stake of [Percentage Equity] percent in [Your Company Name].

3. Voting rights and decision making: Specific details on governance including decision-making frameworks, any special voting rights, and the role of board members from each party.

IV. Investor Rights

Rights and privileges of the investor(s) or counterparty including, but not limited to:

• Anti-dilution Protection: Protect the investor’s percentage of equity under certain conditions specified herein.

• Liquidation Preferences: In the event of liquidation, sale, or merger, the rights of investors to receive payments.

• Information Rights: Regular updates and financial reports about [Your Company Name] will be provided to the investor.

V. Conditions Precedent

This agreement is contingent upon the following conditions being met:

1. Completion of satisfactory due diligence by [Counterparty Name].

2. The negotiation and execution of definitive agreements reflecting the terms and conditions as outlined here.

3. Obtaining all necessary approvals from the board of directors of both [Your Company Name] and [Counterparty Name].

VI. Exclusivity

Both parties agree that for a period of [Exclusivity Period] months following the execution of this term sheet, they will not engage in negotiations or discussions with any other party concerning a similar transaction.

VII. Confidentiality

All discussions and documents relating to this term sheet and subsequent negotiations will be treated as confidential and will not be disclosed to third parties without prior consent from both parties.

VIII. Binding Provisions

The terms regarding exclusivity and confidentiality within this document are binding, and any breach of these terms may lead to legal repercussions. All other aspects of this term sheet are non-binding and are intended as a starting point for formal negotiations.

IX. Miscellaneous

A. Governing Law and Dispute Resolution

This agreement shall be governed by and construed by the laws of [Jurisdiction]. Any dispute arising out of or in connection with this agreement shall be resolved through arbitration administered by [Arbitration Institution] by its rules, and judgment on the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.

B. Expenses

Each party shall bear its expenses incurred in connection with the negotiation, preparation, and execution of this term sheet and any subsequent agreements.

C. Entire Agreement

This term sheet, along with any exhibits or attachments, constitutes the entire agreement between the parties regarding the subject matter hereof and supersedes all prior agreements, whether written or oral, relating to such subject matter.

D. Amendments

This term sheet may only be amended or modified by a written agreement signed by both parties.

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