By and between
[=Investor address line 1]
[=Investor address line 2]
The Term Sheet sets forth the intended key terms with respect to a contemplated equity investment by the Investor in the Company, by form of a subscription of new shares in a share capital increase (the «Investment»).
This Term Sheet does not constitute any legally binding obligations for Parties, save for the section «Binding Terms» below.
The size of contemplated Investment is [to be negotiated/ NOK [?]/ in the range of NOK [?] – [?]].
The equity value of the Company before the Investment is [set to NOK [?]/ in the range of [NOK [?]].
5 OPTION FOR SUBSEQUENT INVESTMENT
[Investor is open to add an option for a subsequent investment of [ NOK ]]
[Company can call for the investment at any time during [year]]
[Investor can elect to put the investment at the end of [year]]
[The investment will be made at a pre-money valuation of 10 x ARR][a]
6 OPTION POOL
An option pool should be established after the transaction to enable incentives for future employees. The number of options should equal [X%, often 10%] of the number of issued shares in the Company. The Investor shall not be protected by any anti-dilution provisions with respect to such plan.
7 EMPLOYEE OWNERSHIP
Investor would prefer a pre-investment redistribution of some of the founder shares to other employees through a sale of shares to allow for a broader ownership among employees.[b]
The Parties shall negotiate a new shareholders’ agreement to replace the existing shareholders’ agreement, and to be entered into at the time of the Investment. The shareholders’ agreement shall either:
A: Be the shareholder agreement as set forth in [LINK to Entrepedia shareholder agreement]
B: The shareholders’ agreement shall contain customary rights and obligations for the Parties, as follows:
The negotiations based on these key terms shall be completed and the Investment and shareholders’ agreement contemplated in this Term Sheet executed by [date] unless agreed otherwise by all Parties. In absence of such agreement on continuation, the Term Sheet shall then expire save for the Binding Terms which shall remain valid and binding.
[During the negotiation period, the Investor shall have the exclusive right to discuss and negotiate the Investment described in this Term Sheet, and the Company and the Founders shall be obligated not to initiate such discussions or negotiations with other than the Investor.]
This Agreement is signed in duplicate, with one for each Party.
Term Sheet, Rev 1.0
[a]In some cases it can make sense to add some mechanism for multiple investments / tranches. This is not common among angle investors, but some later stage investors do this.
[b]This is a request that some early stage investors may come with, if the current ownership is very concentrated towards one or a few employees / founders.
It is possible to redistribute early on, but more difficult later.
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