TermSheetFINALMay.docx

1、TermSheetFINALMayThis sample document is the work product of a national coalition of attorneys who specialize in venture capital financings, working under the auspices of the NVCA. This document is intended to serve as a starting point only, and should be tailored to meet your specific requirements.

2、 This document should not be construed as legal advice for any particular facts or circumstances. Note that this sample document presents an array of (often mutually exclusive) options with respect to particular deal provisions. TERM SHEETPreliminary Note This term sheet maps to the NVCA Model Docum

3、ents, and for convenience the provisions are grouped according to the particular Model Document in which they may be found. Although this term sheet is perhaps somewhat longer than a typical VC Term Sheet, the aim is to provide a level of detail that makes the term sheet useful as both a road map fo

4、r the document drafters and as a reference source for the business people to quickly find deal terms without the necessity of having to consult the legal documents (assuming of course there have been no changes to the material deal terms prior to execution of the final documents).TERM SHEETFOR SERIE

5、S A PREFERRED STOCK FINANCING OFINSERT COMPANY NAME, INC. _, 20_This Term Sheet summarizes the principal terms of the Series A Preferred Stock Financing of _, Inc., a Delaware corporation (the “Company”). In consideration of the time and expense devoted and to be devoted by the Investors with respec

6、t to this investment, the No Shop/Confidentiality and Counsel and Expenses provisions of this Term Sheet shall be binding obligations of the Company whether or not the financing is consummated. No other legally binding obligations will be created until definitive agreements are executed and delivere

7、d by all parties. This Term Sheet is not a commitment to invest, and is conditioned on the completion of due diligence, legal review and documentation that is satisfactory to the Investors. This Term Sheet shall be governed in all respects by the laws of the State of Delaware.Offering TermsClosing D

8、ate:As soon as practicable following the Companys acceptance of this Term Sheet and satisfaction of the Conditions to Closing (the “Closing”). provide for multiple closings if applicableInvestors:Investor No. 1: _ shares (_%), $_Investor No. 2: _ shares (_%), $_as well other investors mutually agree

9、d upon by Investors and the CompanyAmount Raised:$_, including $_ from the conversion of principal and interest on bridge notes.Price Per Share:$_ per share (based on the capitalization of the Company set forth below) (the “Original Purchase Price”).Pre-Money Valuation:The Original Purchase Price is

10、 based upon a fully-diluted pre-money valuation of $_ and a fullydiluted post-money valuation of $_ (including an employee pool representing _% of the fullydiluted post-money capitalization). Capitalization:The Companys capital structure before and after the Closing is set forth on Exhibit A.CHARTER

11、Dividends:Alternative 1: Dividends will be paid on the Series A Preferred on an asconverted basis when, as, and if paid on the Common Stock Alternative 2: The Series A Preferred will carry an annual _% cumulative dividend payable upon a liquidation or redemption. For any other dividends or distribut

12、ions, participation with Common Stock on an as-converted basis. Alternative 3: Non-cumulative dividends will be paid on the Series A Preferred in an amount equal to $_ per share of Series A Preferred when and if declared by the Board.Liquidation Preference:In the event of any liquidation, dissolutio

13、n or winding up of the Company, the proceeds shall be paid as follows:Alternative 1 (non-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. The balance of any proceeds shall be

14、 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

15、 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

16、 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 (including the amount paid pursuant to the preceding sentence).A merger or consolidation (other than one in which stockholders of the Company own a majo

17、rity 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 trigge

18、ring payment of the liquidation preferences described above unless the holders of _% of the Series A Preferred elect otherwise. The Investors entitlement to their liquidation preference shall not be abrogated or diminished in the event part of the consideration is subject to escrow in connection wit

19、h a Deemed Liquidation Event.Voting Rights:The Series A Preferred shall vote together with the Common Stock on an as-converted basis, and not as a separate class, except (i) so long as insert fixed number, or %, or “any” shares of Series A Preferred are outstanding, the Series A Preferred as a class

20、 shall be entitled to elect _ (_) members of the Board (the “Series A Directors”), and (ii) as required by law. The Companys Certificate of Incorporation will provide that the number of authorized shares of Common Stock may be increased or decreased with the approval of a majority of the Preferred a

21、nd Common Stock, voting together as a single class, and without a separate class vote by the Common Stock. Protective Provisions: So long as insert fixed number, or %, or “any” shares of Series A Preferred are outstanding, in addition to any other vote or approval required under the Companys Charter

22、 or By-laws, the Company will not, without the written consent of the holders of at least _% of the Companys Series A Preferred, either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or windup the affairs of the Company, or effect any merger or consolidation o

23、r any other Deemed Liquidation Event; (ii) amend, alter, or repeal any provision of the Certificate of Incorporation or Bylaws in a manner adverse to the Series A Preferred; (iii) create or authorize the creation of or issue any other security convertible into or exercisable for any equity security,

24、 having rights, preferences or privileges senior to or on parity with the Series A Preferred, or increase the authorized number of shares of Series A Preferred; (iv) purchase or redeem or pay any dividend on any capital stock prior to the Series A Preferred, other than stock repurchased from former

25、employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value or cost; other than as approved by the Board, including the approval of _ Series A Director(s); or (v) create or authorize the creation of any debt security if the Companys aggre

26、gate indebtedness would exceed $_other than equipment leases or bank lines of creditunless such debt security has received the prior approval of the Board of Directors, including the approval of _ Series A Director(s); (vi) create or hold capital stock in any subsidiary that is not a wholly-owned su

27、bsidiary or dispose of any subsidiary stock or all or substantially all of any subsidiary assets; or (vii) increase or decrease the size of the Board of Directors. Optional Conversion:The Series A Preferred initially converts 1:1 to Common Stock at any time at option of holder, subject to adjustment

28、s for stock dividends, splits, combinations and similar events and as described below under “Anti-dilution Provisions.”Anti-dilution Provisions:In the event that the Company issues additional securities at a purchase price less than the current Series A Preferred conversion price, such conversion pr

29、ice 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 issueCP1 = Series A Conversion Price in effect immediately prior to new issueA = Number of shares of Commo

30、n 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

31、this round of financing) B = Aggregate consideration received by the Corporation with respect to the new issue divided by CP1C = Number of shares of stock issued in the subject transactionAlternative 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.The following issuances shall not trigger anti-dilution adjustment:(i) securities issuable upon conversion of any of the Series A Preferred, or as a dividend or distribution on the Series A Preferred; (ii) securities issued upon