An Equity Line Commitment is a commitment for a PIPE available to the issuer in draw downs ( usually weekly or bi-weekly). For example if you have an equity line for $10,000,000 you may have draw downs between $50,000 and $200,000 each. The funds may be used in whole or in part entirely at the company’s discretion, subject to an effective registration.
We have equity lines available for US public companies, public companies listed on Frankfurt, and public companies listed anywhere in the world.
Here is a sample term sheet for a US public company:
Issuer: XXXXXXXXX Corporation (“Company”)
Securities: The Company’s common stock (“Stock”)
Structure: Credit Line (“Line”)
Line Amount: The Investor shall commit to purchase up to $10,000,000 of the Company’s Stock over the course of 36 months (“Line Period”), after a registration statement of the Stock has been declared effective (“Effective Date”) by the U.S. Securities and Exchange Commission (“SEC”). The Company shall have the right, but not the obligation, to sell Stock to the Investor. Company shall submit a Written Notice (“Notice”) to the Investor for an amount up to 1) $250,000 or 2) 200% of the averaged daily volume (U.S market only) (“ADV”) multiplied by the average of the 3 daily closing prices immediately preceding the Notice Date. The ADV shall be computed using the three (3) trading days prior to the Notice Date.
Pricing Period: The 5 consecutive trading days immediately after the Notice Date.
Market Price: The lowest closing Bid Price of the Stock during the Pricing Period.
Purchase Price: The Purchase Price shall be set at 95% of the Market Price.
Notice Date: The date that the Investor receives Notice of draw down by Company of a portion of the Line.
Notice Restrictions: Shall mean the days between the Notice Date and the Closing Date with respect to that Notice. During this time, the Company shall not be entitled to deliver another Notice.
Lock-Up: The Company agrees that any and all its officers, insiders, affiliates or other related parties shall refrain from selling any Stock, during the Pricing Period.
Closing Date: Seven (7) business days after the Notice Date, for each tranche.
Short Sales: During the term of this agreement, the Investor agrees not to engage in any short selling of the Issuer’s stock.
Preparation Fee: The Company agrees to pay a non-refundable document preparation fee of $10,000 for the preparation of the Investment Agreement and Registration Rights Agreement. All funds are due upon execution of this Term Sheet.
Commitment Fee: Upon each Notice, the Investor shall receive directly from escrow cash compensation equal to one percent (1%) of the gross proceeds of such Notice.
Upon closing, the Issuer shall issue to the Investor 1,000,000 warrants underlying the Issuer’s Common Stock at an exercise price of 120% and 150% of the initial market valuation. Warrants shall have a seven year term from the date of issuance with a cash exercise, if registered.
The Company shall file a registration statement covering the underlying Stock of the Line with the SEC (“Filing Date”). The Company shall continuously maintain the effectiveness of the registration statement for a period of 36 months after the effective date.
Exclusivity: From the date of the execution of this term sheet until the effective date, the Company agrees not to pursue a transaction of the nature contemplated herein with any other person unless and until good faith negotiations with the Investor have terminated.
Confidentiality: The Company agrees to keep the existence of this term sheet and its contents confidential and not to distribute it to, or discuss it with, any third party (other than the Company’s legal and financial advisors, who shall be informed of the confidential nature of this document) without the prior express written consent of the Investor.
This term sheet is intended for discussion purposes only and is not an offer for the purchase or sale of the Company’s securities. Closing is subject to mutual agreement of final documentation between the Company and Investor. This term sheet will be considered void if not executed by both parties prior to the close of business on August 31, 2008. The undersigned Company officer, on behalf of the Company hereby represents and warrants that this term sheet has been duly authorized, executed and delivered by the Company.
Agreed and Accepted;
AGREED TO AND ACCEPTED:
XXXXXXXXXXXX Corporation COUNTERSIGNED:
By: By: xxxxxxxxxxxxxxxxxx
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