Preliminary Restructuring Term Sheet

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I. Introduction

This Term Sheet outlines the preliminary terms under which [Your Company Name] and [Counterparty Company Name] propose to negotiate a restructuring arrangement. This document serves as a foundation for the restructuring agreement aimed at re-aligning financial and organizational structures to ensure long-term sustainability and growth. The provisions included here are intended for discussions and are not legally binding except where explicitly stated.

The objectives of this Term Sheet include setting clear expectations, defining the scope of the restructuring, and establishing key milestones in the negotiation process. It aims to facilitate a smoother transition to the detailed negotiations and eventual final agreement.

II. Parties Involved

The primary parties involved in this restructuring agreement are [Your Company Name], a corporation organized and existing under the laws of [Your Country], with its principal office located at [Your Company Address], and [Counterparty Company Name], a corporation organized under the laws of [Counterparty Country], with its principal office located at [Counterparty Address].

Each party represents that it has the power and authority to enter into the restructuring negotiations and that this Term Sheet has been duly authorized by necessary corporate action.

III. Principal Terms of Restructuring

• [Effective Date] of restructuring to commence upon agreement of both parties.

• Assets and Liabilities: Reassessment and reallocation of assets and liabilities to be conducted, focusing on:

  1. Valuation of existing assets

  2. Redefinition of liability terms

  3. Prioritization of key creditors

• Equity Interests: Adjustment of existing equity interests, incorporating:

  1. New equity issuance

  2. Dilution of shares for existing shareholders as necessary

  3. Options for buy-back schemes

• Funding Requirements, addressing the need for new capital injections or financing arrangements.

• Governance and Control Changes to reflect new organizational structure.

• Timeline and Milestones for completion of the restructuring process, are crucial for monitoring progress.

IV. Exclusive Negotiation Rights

An exclusivity clause will be active during the negotiation period, wherein both [Your Company Name] and [Counterparty Company Name] agree not to engage in similar discussions or activities with other external entities for a period of [Negotiation Period Duration]. This ensures dedicated efforts towards completing the restructuring in a timely and effective manner.

Such exclusivity will be subject to termination upon written notice by either party if certain predefined conditions are met or breached during the negotiation timeline.

V. Conditions Precedent

The obligations of each party under this Term Sheet are subject to the fulfillment of certain conditions before any restructuring is finalized. These conditions include but are not limited to, due diligence findings, approval from shareholders of both companies, and obtaining any necessary regulatory approvals.

Failure to meet these conditions could result in renegotiation of terms or possible termination of the proposed restructuring plan.

VI. Confidentiality Agreement

All negotiations and documents related to the restructuring terms will be kept confidential and only disclosed to relevant stakeholders as necessary. A confidentiality agreement will be part of the final restructuring agreement to ensure both parties safeguard sensitive information.

Infringement of the confidentiality agreement may lead to legal actions and termination of the negotiations and any binding effect of this Term Sheet.

VII. Legal and Binding Effect

Except for sections specifically relating to exclusivity, confidentiality, and legal obligations, this Term Sheet is intended solely as a basis for further negotiation and is not intended to be legally binding. However, it is expected that the terms outlined in this document will form the basis of the final restructuring agreement.

Furthermore, this Term Sheet does not create any binding offer or commitment by either party to proceed with the transaction until a definitive agreement is signed by both parties.

VIII. Miscellaneous

1. Amendment: This agreement may only be amended by written consent of both parties.

2. Governing Law: This agreement shall be governed by and construed by the laws of [Jurisdiction].

3. Entire Agreement: This Term Sheet constitutes the entire agreement between the parties concerning the subject matter herein and supersedes all prior agreements and understandings, whether written or oral.

4. Counterparts: This Term Sheet may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute the same instrument.

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