[TERM SHEET] / [LETTER OF INTENT]

Transcription

1 [TERM SHEET] / [LETTER OF INTENT] This Letter of Intent (the Letter ) is signed on [ ] between: Sample of the Letter of Intent Company A, a company duly incorporated and validly existing under the laws of [ ] whose registered office is at: [ ], registered under No. [ ], represented by [ ], acting on the basis of the [ ], (the Seller ); and Company B, a company duly incorporated and validly existing under the laws of [ ] whose registered office is at: [ ], registered under No. [ ], represented by [ ], acting on the basis of the [ ], (the Buyer ). The Seller and the Buyer shall be jointly referred to hereinafter as the Parties. WHEREAS, the Seller directly or indirectly owns [ ] % of the participatory interests and/or shares in the SPV (as defined below); and WHEREAS, the Buyer intends to acquire [ ] % of the participatory interests and/or shares in the SPV. 1. DEFINITIONS The capitalised terms used in this Letter are defined terms and shall have the meanings set out below: 1.1 Affiliated Entity means, with respect to any person, any other person, directly or indirectly, controlling, controlled by, or under common control with, such person; 1.2 AMC Approval shall have the meaning defined in Section 5.4 herein; 1.3 Closing Date shall mean the [ ]-th day following the satisfactory performance or waiver by the Buyer of the conditions precedent listed in Section 4 hereof; 1.4 Conditions shall have the meaning set forth in Section 4 herein; 1.5 Defects shall mean the following circumstances [ ]; [Drafting note: the list of potential negative circumstances which may affect the Transaction and/or the Seller s/buyer s rights under the Transaction should be developed and added to this Section] 1.6 Dispute shall have the meaning defined in Section 13.3 herein; 1.7 Due Diligence shall mean the investigation to be conducted by the Buyer and the Buyer's consultants of the[technical], [legal], [tax], [and financial] positions of the SPV and its business, properties and assets, and such other matters relating to the Transaction as the Buyer deems appropriate so as to satisfy itself as to the [technical], [legal], [tax] [and financial] issues relating to the SPV; 1.8 Due Diligence Period shall mean [ ] calendar days from the date of execution of this Letter; 1.9 Information shall have the meaning defined in Section 7.2 herein; 1.10 LCIA shall have the meaning defined in Section 13.3 herein; 1.11 Rules shall have the meaning defined in Section 13.3 herein 1.12 Shares shall mean [ ] % of the shares in SPV; 1.13 Shares Purchase Price shall mean the amount to be paid by the Buyer to the Seller for the Shares, pursuant to Section 5.1 below; 1

2 1.14 Signing Date shall mean the date of signing of the SPA that shall occur within [ ] calendar days from the date of execution of this Letter, or on a different date, as may be mutually agreed by the Parties; 1.15 SPA shall mean the agreement regarding sale and purchase of [all of] the Shares in the SPV; 1.16 SPV shall mean a company duly incorporated and validly existing under the laws of [ ] whose registered office is at: [ ], registered under No. [ ]; 1.17 Transaction Documents shall mean the SPA, [list all other documents necessary to effectuate the Transaction, if relevant]. 2. SUBJECT MATTER OF THE LETTER 2.1 The Parties agree to set forth the basic terms and conditions of the potential acquisition by the Buyer, directly or indirectly (e.g. by any Affiliated Entity designated by the Buyer at its sole discretion), of the Shares (the Transaction ). To achieve this objective, the Parties desire to structure the Transaction in the following manner: [Drafting note: the structure of the Transaction should be developed and added to this Section] 3. TRANSACTION STAGES The Transaction shall comprise of the following major stages: [Drafting note: the provision describing major stages of the Transaction should be added] 4. CONDITIONS 4.1 The Parties agreed on the following Conditions to be performed with respect to the Transaction: [Drafting note: the provision specifying the conditions precedent with respect to the Transaction shall be added] The Conditions specified above shall be more specifically described in the SPA. 5. SHARES PURCHASE PRICE AND PAYMENT OF THE SHARES PURCHASE PRICE 5.1 The Parties agree that the value of [ ] % Shares in the SPV will be [ ] (the Shares Purchase Price ) and will be subject to adjustments as it will be agreed between the parties following the results of the Due Diligence. 5.2 The payment of the Shares Purchase Price shall be performed as follows: [ ] [Drafting note: the provision specifying terms of payment should be added] 5.3 Detailed provisions regarding the calculation and payment of the Shares Purchase Price shall be set out in the SPA and any other Transaction Documents, as appropriate. 6. SELLER S WARRANTIES 6.1 The Seller will provide the Buyer with the usual warranties for this type of transaction, including, but not limited to the following: [Drafting note: list the relevant warranties, if applicable] 2

3 7. REGULATORY MATTERS 7.1 In the event that merger control approval for the Transaction is necessary from the Anti- Monopoly Committee of Ukraine (the AMC Approval ), the Seller shall assist the Buyer in obtaining such approval. The Parties agree that the Shares shall not be transferred to the Buyer until the unconditional AMC Approval (if required) has been obtained. 7.2 The Buyer shall retain the right to select a notary for the purposes of notarization of the SPA (if needed), as well as notarization of any security agreements or any other relevant documents necessary or desirable for the purposes of implementing the SPA. 8. CONFIDENTIALITY Each of the Parties shall keep all aspects related to the Transaction strictly confidential, including without limitation the existence and content of this Letter and the identity of the Parties. Disclosure may be made to the Parties lawyers, accountants, brokers or professional advisor/consultants and potential financiers only to the extent required and if such lawyers, accountants, brokers, advisors, consultants and financiers agree to abide by the confidentiality obligations herein. This obligation shall not apply if: (i) disclosure is required by applicable law; or (ii) the information is publicly known without having breached the terms of this Letter. 9. DISCLOSURE/PUBLIC ANNOUNCEMENTS 9.1 The Parties agree that the content and existence of this Letter shall be treated with the strictest confidence. Neither the Seller nor the Buyer, nor any of their respective representatives, will make any public announcement concerning the Transaction or related negotiations without the other Party s prior written approval, except as may be required by law. Where such an announcement is required by law, the Party required to make the announcement will inform the other Party of the contents of the announcement proposed to be made and will use its reasonable efforts to obtain the other Party s approval for the announcement and such approval may not be unreasonably withheld. 9.2 The Parties agree that each Party may require the other to disclose certain financial and general information relating to its business positions (the Information ), in order to clarify matters relating to the Transaction and to satisfy themselves as to the other Party s capacity to complete the Transaction. Any request made by one Party for Information, shall give rise to the right of the other Party to request the same type of Information from the initial requesting Party. All Information will be treated as confidential information. 10. LIABILITY FOR FEES AND COSTS 10.1 The Seller and the Buyer shall each be responsible for their own internal costs and any legal, accounting and other professional fees incurred in connection with this Letter and the negotiation, preparation and execution of the SPA, or otherwise in relation to the Transaction [The Parties agree that the SPV shall not be liable for any of the Seller s costs or expenses in connection with the Transaction, unless otherwise provided by this Letter. Any costs or expenses relating to the Transaction incurred by the SPV on or before the Signing Date shall be borne and paid for by the Seller.] 3

4 11. DUE DILIGENCE 11.1 The Buyer shall conduct the Due Diligence within the Due Diligence Period as provided for in this Letter The Seller shall provide to the Buyer all documents which may be requested by the Buyer in connection with the Due Diligence and which are in the Seller s possession or control or, if not, which may be reasonably obtained by the Seller. The Seller also agrees to assist the Buyer in obtaining any required clarifications or confirmations or documentation from the management of the SPV or any public authorities. The Seller shall promptly respond to any requests for additional information or clarification by the Buyer Prior to the completion of the Due Diligence and in the course of its performance, if the findings of the examinations of the SPV appear to be satisfactory to the Buyer (as determined at its sole discretion) and no Defects have been revealed, the Parties shall conduct and proceed with negotiations in good faith, exclusively with each other, to agree upon the mutually acceptable terms of the SPA with the intention to execute the SPA within [ ] days from the date of the execution of this Letter. 12. NO NEGOTIATIONS WITH OTHER PARTIES AND UNDERTAKINGS [Drafting note: this section is optional] 12.1 The Seller acknowledges that the Buyer will incur substantial costs, directly and indirectly, in evaluating and investigating the Transaction and in consideration of the Buyer doing so and its execution of this Letter, the Seller agrees that from the date hereof until the Signing Date the Seller not enter into or continue negotiations or discussions with any third party in respect of the sale of the Shares or any part of the business of the SPV, in any manner whatsoever In the event that the Seller is approached by any third party with an offer in relation to the subject matter of this Letter (being, without limitation, the sale of the Shares in the SPV or its assets), the Seller undertakes to notify the Buyer regarding the existence of the third party offer and identity of the offeree within two (2) business days from the date of receipt of the offer The Seller undertakes to the Buyer after the signing of this Letter not to transfer, charge, pledge, mortgage, hypothecate, secure, or otherwise dispose or encumber any shares and/or participation interest in the SPV for any reason whatsoever, including (without limitation) in connection with any financing of the Seller, SPV or any entity related to the Seller prior to the Signing Date Any breach of the obligation provided for in Section 10, during the period of the validly of this Letter, either in full or in part, shall be considered serious and a breach of an essential obligation of this Letter and will entitle the Buyer to claim against the Seller for damages. 13. TERMINATION Each Party shall have the right to terminate this Letter if the other Party is in default of its obligations under this Letter, provided that a Party claiming a default shall provide the Party claimed to be in default (the Defaulting Party ) with a prior written notice of a default. The Defaulting Party shall have [ ] days, or as may otherwise be agreed by the Parties, to cure any default and provide documentary evidence of resolving the relevant circumstances that caused such default or otherwise legitimately cure the default within the above defined period. 4

5 14. ASSIGNMENT Except for assignment to an Affiliated Entity, no Party shall have the right to assign its rights and obligations under this Letter without the prior written consent of the other Party. 15. GOVERNING LAW AND DISPUTE RESOLUTION 15.1 This Letter shall be governed by and construed in accordance with the laws of [England and Wales] [Drafting note: choose other jurisdiction if England and Wales, for some reasons, cannot be accepted by the Parties] Any dispute arising out of or in connection with this Letter (including any dispute regarding the existence, validity or termination of this Letter or the consequences of its nullity) (a Dispute ) shall be referred to and finally resolved under the Arbitration Rules (the Rules ) of [the London Court of International Arbitration (the LCIA )] [The arbitral tribunal shall consist of three arbitrators. The claimant shall nominate one arbitrator; the respondent shall nominate the second arbitrator; and a third arbitrator, who shall serve as chairman, shall be agreed by the first two arbitrators or, failing such agreement, shall be appointed by the President of the LCIA within 4 days of such failure.] 15.4 [In the event the claimant and/or the respondent fail to nominate their respective arbitrators within the time limits specified in the Rules, such arbitrators shall be appointed by the LCIA within 20 days of such failure. In the event that the claimant and/or the respondent fail to nominate their respective arbitrators within the time limits defined in the Rules, then all 3 arbitrators shall be appointed by LCIA within 40 days from the date of such failure, and LCIA will appoint one of them as a chairman.] 15.5 [If all the parties to arbitration so agree, there shall be a sole arbitrator appointed by the LCIA within 10 days of such agreement.] 15.6 [The seat of arbitration shall be London, England and the language of the arbitration shall be English.] 15.7 [Any decision taken by the arbitrators in any Dispute shall be final and binding. The parties undertake to honour any such decision voluntarily without prejudice to any rights a prevailing party may have under applicable law to enforce any arbitral award rendered pursuant to this Section 13. Parties waive any rights of appeal, including on the point of law, they may have under 1996 Arbitration Act.] 16. NOTICES 16.1 All notices and other communications required or permitted hereunder shall be in English and in writing and shall be delivered either by (a) personal delivery, (b) certified or registered mail (airmail, if available), postage prepaid, return receipt requested, or (c) or fax, addressed to each of the parties as first set out in this Letter, or to such other addresses provided by any party in writing Notice by certified mail shall be effective 2 business days after the date it is officially recorded as delivered to the intended recipient by return receipt or equivalent. All notices and other communication required or contemplated by this Letter, delivered in person or by fax or , shall be deemed to have been delivered to and received by the addressee and shall be effective on the date of personal delivery All notices by the Seller to the Buyer shall be sent to [ ]. 5

6 16.4 All notices by the Buyer to the Seller shall be sent to [ ] The terms of this Letter shall be valid for 90 days from the date hereof. 17. LEGAL EFFECT, COUNTERPARTS, ENGLISH LANGUAGE 17.1 This Letter is not legally binding and does not, therefore, establish any legal rights and/or obligations for the parties, except for the rights and obligations arising under clauses 7, 8, 11, 14 set out above. [Notwithstanding the provisions of this clause, the Buyer, in its own discretion and unilaterally, shall be entitled to refuse to sign the Transaction Documents without any compensation being due to the Seller.] 17.2 This Letter has been executed in two (2) counterparts, each in English; one for the Seller and one for the Buyer IN WITNESS WHEREOF the Parties, by their duly authorised representatives, have affixed their signature below as of the date first written above. 18. SIGNATURES SELLER BUYER 6