Template term sheet - M&A transaction

User notes
black text means that:

This is a template term sheet for use ▲ the requested details need to be
when one tech company is acquiring the inserted
shares of another tech company. It sets
out the principal terms agreed between ▲ there are different options for you
the acquiring company and the to consider within a clause
shareholders of the target company prior ▲ the whole clause is optional and
to preparing the formal sale and you need to consider whether to
purchase agreement. The acquisition of include it, based on the company’s
a competing and/or complementary circumstances and the user notes.
business in this manner is a common
strategy of well-funded high growth Before finalising your document, check
technology companies. for all square brackets to ensure you
have considered the relevant option and
This term sheet assumes that the ensure that all square brackets have
transaction will be structured as a share been deleted.
sale (as is most common). It should not
be used in connection with the acquisition If you delete any clauses or schedules,
of the business and assets of a target remember to cross reference check the
company. This term sheet is not legally document.
binding (other than the confidentiality
obligations in part B); it simply sets out
the terms agreed in relation to the
acquisition.

applicable law

This document is intended for use by

companies domiciled in Southeast Asia.
Because the laws in each Southeast
Asian country are different, you should
have the document reviewed by a local
lawyer. We have suggested (as a
placeholder) that the document be
subject to Singapore law as this is the
most common domicile of post-funded
tech companies in Southeast Asia, and
Singapore is well respected as a legal
jurisdiction.

using this template

The User Notes and the statements in

the footer below (all marked in red) are
included to assist in the preparation of
this document. They are for reference
only –you should delete all user notes
and the statements in the footer from the
final form of your document.

The use of [square brackets] around

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer
to complete it. Use of this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

 TERM SHEET
FOR THE ACQUISITION OF SHARES IN [INSERT NAME OF COMPANY]
(Company)

This document (Term Sheet) summarises the principal terms of a proposed acquisition by [insert name
of buyer] (the Buyer) of the entire issued share capital of the Company (Acquisition). This Term Sheet
is not legally binding except for the terms stated in part B and there will be no obligation to sell or purchase
the shares of the Company until a binding sale and purchase agreement is signed by the parties.

PART A: INVESTMENT TERMS (NON-BINDING)

Business: The business of the Company is [insert a description of the Company’s

business].

Subsidiaries: [OPTION ONE - User note: Use the following wording if the Company
has no subsidiaries.]

[The Company has no subsidiaries.]

OR

[OPTION TWO - User note: Use the following wording if the Company
has one or more wholly-owned subsidiaries.]

[The Company has the following wholly owned subsidiaries (which together
with the Company constitute the Group):

▲ [insert names of wholly-owned subsidiaries]]

Acquisition: The Buyer will purchase, and the shareholders set out in the appendix to this
Term Sheet (Sellers) will sell, the full legal and beneficial interest in 100% of
the shares of the Company, including all shares issued or to be issued on the
exercise or conversion of any outstanding options, warrants, convertible notes
or similar (Sale Shares), in the proportions set out against each Seller’s name
in the appendix.

Purchase Price: [User note: In order to keep this Term Sheet simple, we have not
included any terms relating to the Purchase Price being held in escrow
or subject to an earn-out. If the Acquisition will involve escrow or earn-
out arrangements, this Term Sheet will need to be updated.]

[OPTION ONE - User note: Use the following wording if the purchase
price is payable in cash only.]

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

 [Subject to due diligence, the purchase price for the Sale Shares will be
$[insert] (Purchase Price), to be paid to the Sellers pro rata.]

OR

[OPTION TWO - User note: Use the following wording if the purchase
price includes a combination of cash and new shares in the Buyer.]

[Subject to due diligence, the purchase price for the Sale Shares will be
$[insert] (Purchase Price), to be satisfied by:

i the payment of $[insert] in cash; and

ii the issue of [insert number] new [ordinary] shares in the Buyer

(Consideration Shares) at a deemed issue price of $[insert] per
Consideration Share (Issue Price),

to the Sellers pro rata.

The Consideration Shares will represent approximately [insert]% of the issued

share capital of the Buyer on a fully-diluted basis.]

Anticipated Completion of the Acquisition is to occur following the completion of formal

completion: legal documentation, anticipated to be approximately [30] days after the date
of this Term Sheet.

Conditions In addition to customary conditions precedent for transactions of this type, the
precedent: Acquisition will be conditional on the following:

i due diligence being completed to the satisfaction of the Buyer;

ii the Sellers obtaining all necessary director and shareholder resolutions,

waivers and consents for the Acquisition (including a waiver of any
rights of first refusal or similar);

iii there being no material adverse change in the business, operations,

assets, position (financial, trading or otherwise), profits or prospects of
the [Company] [Or – delete as appropriate] [Group] prior to
completion;

iv the representations and warranties of the Sellers remaining true,

accurate and not misleading in all material respects up to completion;

v any other conditions precedent arising out of due diligence; and

vi [insert any other conditions to the Acquisition.]

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

 [Board:] [User note: If the Consideration Shares (if any) represent a material
interest in the Buyer, the Sellers may seek a right to appoint a director to
the board of the Buyer.]

[[insert] will be appointed to the Board of the Buyer, with effect on and from
completion.]

Representations and The Sellers will give customary representations, warranties, indemnities and
warranties: undertakings to the Buyer (covering the business and taxation), subject to the
following:

i the liability of each Seller will be limited to that Seller’s proportion of the
Purchase Price;

ii no warranty claims will be permitted in respect of any matter that is

fairly disclosed in any disclosure letter or schedule, or that arises
because of any action taken with the written consent of the Buyer; and

iii any warranty claims must be brought by the Buyer with [18] months
after the completion date.

[Claw-back of [User note: Include the below if Consideration Shares form a material part
Consideration of the Purchase Price.]
Shares:]
[The Buyer may demand that the Sellers are to satisfy any warranty claim either
in cash (up to the total amount of cash received as part of the Purchase Price)
or by selling back some of the Consideration Shares to the Buyer for nominal
consideration (or a combination of the two).]

Restraint / non- Each of the Sellers will undertake not to compete with the [Company] [Or –
compete: delete as appropriate] [Group] or to solicit any customers or employees of
the [Company] [Or – delete as appropriate] [Group] for a period of [insert]
months following the Acquisition.

Costs: The parties will meet their own costs relating to the negotiation, documentation
and implementation of the Acquisition.

Governing law: This Term Sheet and the formal legal documentation will be governed by the
laws of [Singapore].

PART B: LEGALLY BINDING TERMS

Confidentiality: The contents of this Term Sheet, and the fact that one has been issued, may
only be disclosed by the Company to its shareholders, directors, advisers and
potential investors or other person(s) approved by the Buyer (on a need to
know basis).

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

 Exclusivity: For a period of [60] days from the date of signing this Term Sheet, none of the
Company, its shareholders, its directors, or its officers, will conduct or solicit
any discussions or negotiations with any third party regarding any sale of a
material number of shares in the Company or any sale of a material part of the
business and assets of the Company, unless approved in advance by the
Buyer in writing.

To confirm your acceptance of this Term Sheet, please sign and date the duplicate of this Term Sheet
and return it to me.

[User note: Use the following signature block for the Company.]

SIGNED for and on behalf of [INSERT )

NAME OF COMPANY]: )

Signature of authorised signatory

Print full name of authorised

signatory

Date

[User note: Use the following signature block for the Buyer.]

SIGNED for and on behalf of [INSERT )

NAME OF BUYER] by: )

Signature of authorised signatory

Print full name of authorised

signatory

Date

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

[User note: Use the following signature block for each selling shareholder.]

SIGNED by [INSERT NAME OF )

SELLER]: )

[Insert name of Seller]

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3

 APPENDIX

Sellers

[User note: Insert a table showing all of the shareholders of the Company, and the number
and classes of shares held by each of them, OR fill out the table below.]

Shareholder Name Number of Class of Percentage

Shares* Shares Shareholding on a
fully diluted basis*

[insert] [insert] [insert] [insert]

Total [insert] [insert] [insert]

*Include details of any warrants or options over shares in the Company, any convertible loans and any other obligations to

issue shares in the Company.

This template document is provided for guidance purposes only. We recommend you obtain the help of a qualified lawyer to complete it. Use of
this document is subject to the terms and conditions set out at https://kindrik.sg/templates.

© Kindrik Partners Limited 2020 SEA V1.3