投资条款模板英文版.doc

FUND L P AND INC SERIES A PREFERRED STOCK FINANCING TERM SHEET 20 This Term Sheet is not a legally binding agreement between the Investors and the Company except the sections of Confidentiality Exclusivity and Administrative Fee Notwithstanding anything to the contrary any obligations of the Investors to complete or provide funding for any transaction whether contemplated herein or otherwise are subject to the receipt of internal approvals completion of due diligence to the satisfaction of the Investors in their sole and absolute discretion and the parties having negotiated approved executed and delivered the appropriate definitive agreements Until execution and delivery of such definitive agreements the Investors shall have the absolute right to terminate all negotiations for any reason without liability Exclusivity The Company agrees that within forty five 45 days from the date of the signing of this Term Sheet the Company and its shareholders board members employees and their respective relatives or affiliates shall not directly or indirectly take any action to solicit or support any inquiry proposal or offer form furnish any information to or participate in any negotiations or discussions with any third party or enter into any agreement or arrangement regarding any equity debt funding or sale without the prior written consent of the Investors This exclusivity is automatically extended to the period necessary for the Company to satisfy the closing conditions outlined in the Stock Purchase Agreement section of this Term Sheet Notwithstanding the foregoing if neither the Company nor the Investors give written notice of its wish to terminate this Term Sheet at least five days prior to the end of the exclusivity period the Term Sheet shall remain in full force and effect and the Company shall continue to negotiate exclusively with the Investors until the Company or the Investors give written notice of termination In this Term Sheet or dollar means United States dollars Ordinary Share Holders mean the holders of Ordinary Shares Preferred Shares mean shares of the Series A Preferred Stock and Shareholders mean holders of Ordinary Shares and Preferred Shares OFFERING TERMS Closing Date As soon as practicable following the Company s acceptance of this Term Sheet and satisfaction of the Conditions to Closing the Closing provide for multiple closings if applicable Investors Investor No 1 shares Investor No 2 shares as well other investors mutually agreed upon by Investors and the Company Investment Amount million for Preferred Shares initially representing approximately ownership of the Company immediately post closing on a fully diluted basis including shares reserved for any employee option pool Type of Securities Series A Convertible Redeemable Participating Preferred Stock Series A Preferred Stock of the Company initially convertible on a 1 1 basis into shares of the Company s Ordinary Shares Purchase Price and Valuation per share the Purchase Price The Purchase Price represents a fully diluted pre money valuation of and a fully diluted post money valuation of A capitalization table showing the Company s capital structure immediately following closing is attached Understanding of Year Earning The valuation is based on the Company after tax net earning for Year is no less than Results shall be based on US GAAP and shall be audited by one of the big four international accounting firms Warrants Upon the closing the Company will issue to the Investors a warrant to purchase million or of additional Preferred Shares The exercise price for the warrant will be per share which represents of the Purchase Price representing of the Series A post money valuation The conversion price of these shares shall initially be the same as the exercise price but shall be proportionally adjusted for share splits share dividends recapitalizations and similar transactions The warrants will not be subject to any material conditions on its exercise and will be exercisable at any time after the closing until the earlier of i 5 years after the closing or ii a Qualified IPO as defined below Use of Proceeds The Company shall use the proceeds from the Series A Financing for business expansion working capital in accordance with the approved budget and business plan of the Company Confidentiality The terms and conditions of the Series A Financing including the terms and even existence of this Term Sheet and any investment related documentation will be confidential information and will not be disclosed by any party except as permitted below In the event of a disclosure required by law the disclosing party shall at a reasonable time before making any such disclosure or filing consult with the other parties regarding such disclosure or filing and to the extent possible seek confidential treatment for such portions of the disclosure or filing as may be requested by the other parties Notwithstanding the foregoing the Company will be entitled after closing to disclose the existence of the investment as well as the Investors investment in the Company solely to the Company s investors investment bankers lenders accountants legal counsel business partners and bona fide prospective investors employees lenders and business partners in each case only where such persons or entities are under appropriate nondisclosure obligations No announcements regarding the Investors investment in the Company in a press conference in any professional or trade publication in any marketing materials or otherwise to the general public may be made without the prior written consent of the Investors The Investors shall be entitled to disclose their respective investments in the Company and the terms thereof to third parties or to the public RIGHTS AND PREFERENCES OF PREFERRED SHARES Dividend Preference Alternative 1 All shareholders agree that no dividends are distributed prior to IPO Alternative 2 The Series A Preferred will accrue dividends at the rate of per annum payable only when and if declared by the Board or upon a liquidation or redemption For any other dividends or distributions participation with Common Stock on an as converted basis Liquidation Preference In the event of any liquidation dissolution or winding up of the Company the proceeds shall be paid as follows Alternative 1 non participating Preferred Stock First pay the greater of i one times the Original Purchase Price plus accrued dividends plus declared and unpaid dividends on each share of Series A Preferred or ii such amount as would have been payable had all shares of Preferred Stock been converted to Common Stock on each share of Series A Preferred The balance of any proceeds shall be distributed pro rata to holders of Common Stock Alternative 2 full participating Preferred Stock First pay one times the Original Purchase Price plus accrued dividends plus declared and unpaid dividends on each share of Series A Preferred Thereafter the Series A Preferred participates with the Common Stock pro rata on an as converted basis Alternative 3 cap on Preferred Stock participation rights First pay one times the Original Purchase Price plus accrued dividends plus declared and unpaid dividends on each share of Series A Preferred Thereafter Series A Preferred participates with Common Stock pro rata on an as converted basis until the holders of Series A Preferred receive an aggregate of times the Original Purchase Price per share at which point each holder of Series A Preferred is entitled to receive the greater of i that amount per share or ii the amount such holder would receive if all shares of Series A Preferred Stock had been converted to Common Stock immediately prior to such liquidation A merger or consolidation other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation and a sale lease transfer exclusive license or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event a Deemed Liquidation Event thereby triggering payment of the liquidation preferences described above unless the holders of of the Series A Preferred elect otherwise Redemption Beginning on the fifth anniversary of the Closing Date the holders of a majority of the then outstanding Series A Preferred may require the Company to redeem all of the outstanding Series A Preferred Shares at a redemption price of of the Purchase Price plus all accrued but unpaid dividends the Redemption Price proportionally adjusted for share splits share dividends recapitalizations and the like If on the date of redemption the number of Series A Preferred Shares that may then be legally redeemed by the Company is less than the number of Series A Preferred Shares to be redeemed then any unredeemed Series A Preferred Shares will be carried forward and redeemed as soon as the Company is legally able to do so Voting Rights Each share of Series A Preferred will be entitled to vote on all matters submitted to a vote of the shareholders and will be entitled to the number of votes equal to the number of Ordinary Shares then issuable upon conversion at the applicable conversion price and ratio The Series A Preferred Shares will generally vote together with the Ordinary Shares and not as a separate class except as provided below under the heading Protective Provisions Conversion Rights Each holder of Series A Preferred will have the right at its sole discretion to convert all or any portion of its Series A Preferred into Ordinary Shares at any time after the Closing Date The initial conversion price will be the Purchase Price resulting in an initial conversion ratio of 1 for 1 but will be subject to adjustment as provided in the sections below Series A Preferred Shares upon conversion repurchase or redemption will be cancelled and retired and will not thereafter be reissued Automatic Conversion or Mandatory Conversion All of the Series A Preferred Shares will automatically be converted into Ordinary Shares at the applicable conversion price upon the closing of a firm commitment underwritten registered public offering of Common Shares in the United States or in Hong Kong at a pre offering Company valuation of at least million and raising at least million a Qualified IPO or an offering or listing substantially equivalent to the foregoing in another jurisdiction acceptable to Investors General Anti Dilution Conversion Price and Ratio Adjustments The conversion price and ratio will be proportionally adjusted for share splits share dividends recapitalizations and similar transactions In the event that the Company issues additional securities at a purchase price less than the current Series A Preferred conversion price such conversion price shall be adjusted in accordance with the following formula Alternative 1 Typical weighted average CP2 CP1 A B A C CP2 Series A Conversion Price in effect immediately after new issue CP1 Series A Conversion Price in effect immediately prior to new issue A Number of shares of Common Stock deemed to be outstanding immediately prior to new issue includes all shares of outstanding common stock all shares of outstanding preferred stock on an as converted basis and all outstanding options on an as exercised basis and does not include any convertible securities converting into this round of financing B Aggregate consideration received by the Corporation with respect to the new issue divided by CP1 C Number of shares of stock issued in the subject transaction Alternative 2 Full ratchet the conversion price will be reduced to the price at which the new shares are issued Alternative 3 No price based anti dilution protection Preemptive Rights to New Issuances Each holder of Series A Preferred Shares will have a preemptive right to purchase up to its pro rata share based on its percentage of outstanding Ordinary Shares on an as if converted basis of any securities offered by the Company on the same price terms and conditions as the Company proposes to offer such securities to other potential investors with a right of oversubscription if any holder of Series A Preferred Shares elects not to purchase its full pro rata share This right would not apply to any issuances of Ordinary Shares i pursuant to the ESOP ii upon conversion of Preferred Shares or upon exercise of outstanding options or warrants iii in a bona fide acquisition of another business entity iv in an underwritten registered public offering by the Company or v in connection with any stock split stock dividend recapitalization or similar transaction Protective Provisions Consent of the Board Directors who represent the holders of the outstanding Series A Preferred Shares or Ordinary Shares upon conversion of the Preferred Shares would be required for any action whether by amendment of the Company s Memorandum or Articles of Association or otherwise and whether in a single transaction or a series of related transactions that approves or effects any of the following transactions involving the Company or any of its subsidiaries i Alter or change the rights preferences or privileges of the Preferred Shares or creates by reclassification or otherwise any new class or series of shares having rights preferences or privileges senior to or on a parity with the Series A Preferred ii Sell or issue any equity or debt security or warrant option or other right to purchase any equity or debt security with the exception of any shares issued pursuant to the ESOP or upon conversion of Preferred Shares iii Declare or pay any dividend or distribution or otherwise results in the redemption or repurchase of any equity security iv Make or results in any acquisitions sale of control or assets merger consolidation joint venture or partnership arrangements or incorporate any subsidiary or pass any resolution relating to reduction of share capital dissolution or liquidation v Effect a recapitalization reclassification split off spin off or bankruptcy of the Company vi Sell mortgage pledge lease transfer or otherwise dispose of any of the Company s assets which are i outside the ordinary course of business and ii in excess of 300 000 in aggregate over any twelve months vii Approve or amend any quarterly and annual budget business plan and operating plan including any capital expenditure budget operating budget and financing plan such approval shall be required before the Company can continue operations at the beginning of each quarter viii Engage in any business materially different from that described in the then current business plan change the name of the Company or cease any business undertaking of the Company ix Incur any indebtedness or assume any financial obligation or issue assume guarantee or create any liability such indebtedness financial obligation or liability is between the Company and a third party for borrowed money in excess of 100 000 in aggregate at any time outstanding unless such liability is incurred pursuant to the then current business plan x Make any expenditure or other purchase of tangible or intangible assets in excess of 300 000 in aggregate over any twelve months unless such expenditure is made pursuant to the then current business plan xi Enter into any material agreement or contract with any party or group of related parties under which the Company s aggregate commitments pledge or obligations to such party or group of related parties are unlimited or potentially exceed 100 000 over any twelve months or in the aggregate xii Acquire through purchase lease or rental any automobile with a purchase value greater than 30 000 or any real estate including office space used by the Company whether or not accounted for as a capital expenditure xiii Engage or enter into any transaction or agreement with any of the Company s affiliates shareholders or other related parties xiv Increase or decrease the authorized size of the Board or any committee thereof xv Appoint terminate or determine the compensation of the CEO President COO CFO CTO or any senior manager Vice President level or above xvi Increase the compensation of any of the five most highly compensated employees of the Company by more than 15 within a 12 month period unless such increases are specified to and discussed by the Board in the approved budget and business plan xvii Approve amend or administer the ESOP xviii Change materially the accounting methods or policies or appoint or change the auditors xix Amend or waive any provision of the Memorandum or Articles of Association or By Laws and xx Select the listing exchange and the underwriters for an IPO or approve the valuation and terms and conditions for the IPO STOCK PURCHASE AGREEMENT Representations and Closing Conditions The purchase of the Series A Preferred Shares would be made pursuant to a Stock Purchase Agreement acceptable to the Company and the Investors and shall include among other things appropriate or customary representations warranties and covenants by the Company and the Founders The Stock Purchase Agreement shall include customary closing conditions Conditions Precedent to Signing Standard conditions to Closing which shall include among other things satisfactory completion of financial and legal due diligence Administrative Fee Upon closing the Stock Purchase Agreement shall require the Company to pay Fund L P up to 00 000 as administrative fee to cover the costs and expenses already and to be incurred by Fund LP in conducting due diligence on the Company and in preparing negotiating and executing all documentation including the expenses of its outside legal counsel and financial due diligence SHAREHOLDERS AGREEMENT In addition to the Share Subscription Agreement the Company its existing shareholders and the Investors would also enter into an Shareholders Agreement reasonably acceptable to the Company and the Investors containing the following provisions Board Matters Each non