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INDICATIVE HEADS OF TERMS: EQUITY INVESTMENT
Strictly private and confidential
Not to be disclosed or distributed to third parties
1. The provisions of this term sheet assume that the Investors:
(a) will be issued ordinary shares in the Company and not a separate class of shares;
(b) where there is more than one Investor they are proposing to invest on materially
the same terms and be parties to the same term sheet.
Non-legally binding: This term sheet is indicative only, not exhaustive and not legally
binding unless specifically stated within a certain paragraph. It sets out the
proposed key terms and conditions upon which the Investors are willing to invest in the
XXXX ltd(the Company).
Investor 1(Lead Investor)
the Company and
1. Co-founder 1- [Equity stake = % pre-investment]
2. Co-founder 2- [Equity position = % pre-investment]
3. Early investor 1
4. The CoFounders:
Abdullah Al-YYYY and JoseXXXX
The investment is intended to be closed by Mid-Nov 2013.
6. Amount of the
USD [XXX] [Investor 1]
USD[ XXX] [Investor 2]
Target: USD XXX,XXX
capital of the
[Co-founder 1] [XX]%
[Co-Founder 2] [XX]%
[Early investor 1] [XX]%
[Investor 1] [XX]%
[Investor 2] [XX]%
The Company shall carry out (or procure the carrying out)
certain key governance matters, including those set out in Part 1
of the Schedule.
Investor Consent shall be capable of being granted by Investors
holding more than 50% of the aggregate number of ordinary
shares held by all Investors.
The Company shall not carry out certain key operational
andconstitutional matters, including those set out in Part 2 of
the Schedule without Investor Consent. The Investors shall not
withhold consent unreasonably.
11. The Board:
After Completion, the Board will consist of one Director, XX
board members and YYObservers:
Directors- (write the name of director)
Board member - (write the names of board members)
Observers – (write the name of board observers, can be one or
two or more)
The Board Observer’s consent is needed for certain material
business decisions, including:
(a) Incur capital expenditure exceeding US$30,000;
(b) Appoint an employee or consultant or vary terms where
emoluments and/or commissions or bonuses are likely to
(c) Agree any borrowings, loans, advances or credit outside
the ordinary course of business; and
(d) Enter into or vary any unusual or onerous agreement or
any material or major or long-term contract.
rights: (New Share
Any issue of new shares in the Company shall first be issued to
allholders of shares pro-rata (according to the number of shares
held by each of the legal and beneficial holders). Any such offer
shall remain open for at least 14 days (the Pre-Emption Period).
To the extent that any holder does not wish to subscribe for his
pro-rata amount, then the remaining new shares shall be issued
to any other holders wishing to subscribe for additional shares.
To the extent that any remaining new shares are not taken up by
the existing holders, then the Company shall be free to issue all
or some of these shares to any other person at any time during
the period of one month after the end of the Pre-Emption
14. Tag Along
(Right of Minority
Sell with Majority
In the event of a proposed sale of 50% or more of the shares of
theCompany by any shareholders, the selling shareholders shall
be required to procure that the purchaser also makes an offer
for all of the remaining shares at the same price and on the
same terms as the selling shareholders shares are being
15. Drag Along
(Right of Majority
In the event of a proposed sale of 70% or more of the shares of
theCompany by any shareholder(s), the selling shareholder(s)
shall be entitled to require all of the remaining minority
shareholders (and option holders) to sell their shares to the third
party at the same price and on the same terms as the selling
shareholder(s) shares are being purchased.
The Founder(s) shares shall vest as follows:
50% in equal quarterly installments over the following twelve
months after closing. If any percentage of the shares held by the
Founder have 'vested' this means that the Founder will then be
entitled to retain those shares even after ceasing to be
employed by the Company. He shall only be required to offer to
sell the 'unvested' percentage of his shares to the other
shareholders on leaving. If the Founder is a Good Leaver, they
will be required to offer their shares to the Company and/or the
other shareholders at the higher of (i) fair market value and (ii)
the price originally paid for the shares. If the Founder is a Bad
Leaver, he will be required to offer their shares to the other
shareholders at the lower of (i) fair market value and (ii) the
nominal value of the shares.
Good Leaver – death; long term critical illness, permanent
disablement, retirement at normal retirement age (being 65),
unfair dismissal (other than for reasons of procedural
irregularity) or for any other reason with Investor Consent, such
Investor Consent not to be unreasonably withheld.
Bad Leaver – any leaver who within 1 year of completion ceases
to be an employee or consultant of the Company by reason of
voluntarily resigning or dismissal by the Company due to breach
of contract. The Board and an Investor Majority can determine
whether any of these provisions shall not apply to the Founder.
Upon the Founder ceasing to be an employee or consultant, the
voting rights of the unvested shares shall be suspended until
such shares are transferred in accordance with the articles of
17. Deed of
All new shareholders shall be required to sign a deed of
adherencewhereby they consent to be bound by the terms of the
The Company may grant one or more options, warrants or
similar rights to purchase its Shares at a later date (in each
case, an “Option”) to its employees, agents and others as the
Board, with Board Observer consent, deems fit and in
accordance with the Articles and applicable law, subject to a
maximum option pool size of X% of the post-founding round
capitalization of the Company. If at any time the Company
proposes to grant one or more Options, the exercise price per
Share shall not be less than the then current market price per
Share, such market price being determined by dividing the
valuation of the Company by the number of Shares in issue
immediately prior to the issue of the Option. The valuation of
the Company shall be deemed to be the valuation set by the
most recent fundraising round prior to the grant of the Option
(the “Fundraising Valuation Date”), provided that if there has
been an independent valuation of the Company after the
Fundraising Valuation Date, then such independent valuation
may be used instead.
19. Expiry of
The Investors are requested to confirm their acceptance of the
terms of this proposal within 14 days of the date of this termsheet, failing which this proposal will lapse.
20.Confidentiality: This paragraph 21 is intended by the parties to be legally
The terms of the investment (including any matter contained
within this term sheet) shall be strictly confidential to the
Investors, the Founder, the Company and the existing
shareholders of the Company.
This paragraph 22 is intended by the parties to be legally
Each of the Angel Investors and the Company shall bear their
own costs and expenses incurred in connection with the
preparation and negotiation of the Investment Agreement
22. Governing Law
This paragraph 23 is intended by the parties to be legally
UAE law and the exclusive jurisdiction of the courts of the UAE
The Lead Investor shall receive normal financial and operational
information about the Company.
This Term Sheet may be executed in any number of
counterparts, which together shall constitute one document.
Facsimile signatures shall have the same legal effect as original
Signed for and on behalf of
Part 1: Company Obligations
1. As soon as practicable implement the proposals or recommendations contained in
the Business Plan.
2. Carry on and conduct its business and affairs in a proper and efficient manner and
for its own benefit.
3. Procure that the expansion; development or evolution of its business is effected
only through the Company or a wholly owned subsidiary of the Company or joint
4. Transact all its business on arm's-length (normal unrelated parties commercial)
5. Procure that a meeting of the Board is held at least once every three months.
6. Observe and comply in all material respects with all legislation from time to time in
force and applicable to the Company or its business.
7. Maintain proper, usual and up-to-date accounting and financial records in relation
to its business and affairs.
8. Provide to the Lead Investor a report, on the Company’s activities and progress no
less often than every quarter.
Part 2: Matters Requiring Investor Consent
1. Alter rights attaching to its shares.
2. Change share capital
3. Amend articles of association.
4. Declare dividends.
5. Acquire or dispose of any shares of any other company.
6. Acquire or dispose of the undertaking of any other person or merge with any
7. Wind up the Company.
8. Pursue a different line of business.