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Convertible Note Term Sheet-1

The document summarizes terms for a convertible note financing for a Delaware corporation. The financing would raise between $250,000-$500,000 through the issuance of convertible notes with 0% annual interest and a maturity date of one year. If the company completes a qualified financing of over $2 million in preferred stock before maturity, the notes will automatically convert to the preferred stock. Otherwise, the notes can voluntarily convert to common stock at $25 per share. Upon a change of control or IPO, the notes will also convert to common stock at $25 per share. This summary outlines key terms but does not include all provisions of definitive documentation.

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Josh Westerman
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3K views

Convertible Note Term Sheet-1

The document summarizes terms for a convertible note financing for a Delaware corporation. The financing would raise between $250,000-$500,000 through the issuance of convertible notes with 0% annual interest and a maturity date of one year. If the company completes a qualified financing of over $2 million in preferred stock before maturity, the notes will automatically convert to the preferred stock. Otherwise, the notes can voluntarily convert to common stock at $25 per share. Upon a change of control or IPO, the notes will also convert to common stock at $25 per share. This summary outlines key terms but does not include all provisions of definitive documentation.

Uploaded by

Josh Westerman
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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CONVERTIBLE NOTE FINANCING SUMMARY OF TERMS This Summary of Terms represents only the current thinking of the parties

with respect to certain of the major issues relating to the proposed private offering and does not constitute a legally-binding agreement. This Summary of Terms does not constitute an offer to sell or a solicitation of an offer to buy securities in any state where the offer or sale is not permitted. Issuer: Type of Security: Amount of Financing: Purchase Price: Interest Rate: Term: {_______}, a Delaware corporation (the Company) Convertible notes (the Notes). $250,000 to $500,000 of Notes may be issued. Face value. Annual interest rate of 0%, payable at maturity. All principal, together with accrued and unpaid interest under the Notes, is due and payable one year after the initial issuance of the Notes (the Maturity Date). The Notes may not be prepaid without the prior written consent of holders of the Notes that hold a majority of the aggregate outstanding principal amount of the Notes. In the event the Company consummates, prior to the Maturity Date, an equity financing pursuant to which it sells shares of its preferred stock, which are expected to be Series A Preferred Stock (the Preferred Stock), with an aggregate sales price of not less than $2,000,000, excluding any and all indebtedness that is converted into Preferred Stock (e.g., the Notes), and with the principal purpose of raising capital (a Qualified Financing), then the Notes will automatically convert all principal, together with all accrued and unpaid interest under the Note, into the Preferred Stock. The conversion price will be a price per share equal to the price per share paid by the other investors purchasing the Preferred Stock in the Qualified Financing. If the Company does not consummate a Qualified Financing prior to the Maturity Date, the Notes will be convertible into common stock at a conversion price equal to $25.00 per share. Upon a change of control or an IPO, the Notes will be convertible into common stock at a conversion price equal to $25.00 per share. This Summary of Terms is intended as an outline of certain of the material terms of the Notes and does not purport to summarize all of the conditions, covenants, representations, warranties and other provisions that would be contained in definitive documentation for the Notes.

Prepayment:

Automatic Conversion:

Voluntary conversion:

Liquidity events: Other:

Document1 (2060)

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