TermSheet detailed.docx

1、TermSheet detailedTERM SHEETPreliminary Notes This Term Sheet maps to the NVCA model documents, 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

2、aim is to provide a level of detail that makes the Term Sheet useful as both a road map for 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

3、 to the material deal terms prior to execution of the final documents).TERM SHEETFOR SERIES A PREFERRED STOCK FINANCING OFInsert Company Name, INC. _, 200_This Term Sheet summarizes the principal terms of the Series A Preferred Stock Financing of _, Inc., a Delaware corporation (the “Company”). In c

4、onsideration of the time and expense devoted and to be devoted by the Investors with respect 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 legall

5、y binding obligations will be created until definitive agreements are executed and delivered 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 sha

6、ll be governed in all respects by the laws of the State of Delaware.Offering TermsClosing Date: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.

7、1: _ shares (_%), $_Investor No. 2: _ shares (_%), $_as well other investors mutually agreed upon by Investors and the CompanyAmount Raised:$_, including $_ from the conversion of principal and interest on bridge notes.Price Per Share:$_ per share (based on the capitalization of the Company set fort

8、h below) (the “Original Purchase Price”).Pre-Money Valuation:The Original Purchase Price is 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:Th

9、e Companys capital structure before and after the Closing is set forth below:Pre-FinancingPost-FinancingSecurity# of Shares%# of Shares%Common FoundersCommon Employee Stock Pool Issued UnissuedCommon WarrantsSeries A Preferred TotalCHARTERDividends:Alternative 1: Dividends will be paid on the Series

10、 A Preferred on an asconverted basis when, as, and if paid on the Common Stock Alternative 2: 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.Alternative 3: The Series A Preferred will carry an

11、 annual _% cumulative dividend compounded annually, payable upon a liquidation or redemption. For any other dividends or distributions, participation with Common Stock on an as-converted basis. Liquidation Preference:In the event of any liquidation, dissolution or winding up of the Company, the proc

12、eeds 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 SeriesA Preferred. The balance of any proceeds shall be distributed to holders of Common Stock.A

13、lternative 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 SeriesA Preferred. Thereafter, the SeriesA Preferred participates with the Common Stock on an as-converted basis.Alternative 3

14、 (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 SeriesA Preferred. Thereafter, SeriesA Preferred participates with Common Stock on an as-converted basis until the holders of Ser

15、iesA Preferred receive an aggregate of _ times the Original Purchase Price.A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer or other dispositi

16、on of all or substantially all of the assets of the Company will be treated as a liquidation event (a “Deemed Liquidation Event”), thereby triggering payment of the liquidation preferences described above unless the holders of _% of the Series A Preferred elect otherwise. Voting Rights:The Series A

17、Preferred Stock shall vote together with the Common Stock on an as-converted basis, and not as a separate class, except (i) the Series A Preferred as a class shall be entitled to elect _ (_) members of the Board (the “Series A Directors”), (ii) as provided under “Protective Provisions” below or (iii

18、) 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 and Common Stock, voting together as a single class, and without a separate class vote by t

19、he Common Stock. Protective Provisions: So long as insert fixed number, or %, or “any” shares of Series A Preferred are outstanding, 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, consolidat

20、ion, or otherwise: (i) liquidate, dissolve or windup the affairs of the Company, or effect any 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

21、issue any other security convertible into or exercisable for any equity security, 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

22、 stock prior to the Series A Preferred, other than stock repurchased from former 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); o

23、r (v)create or authorize the creation of any debt security if the Companys aggregate indebtedness would exceed $_other than equipment leases or bank lines of creditother than debt with no equity featureunless such debt security has received the prior approval of the Board of Directors, including the

24、 approval of _ Series A Director(s); (vi)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 adjustments for stock dividends, splits, combinations and similar events and

25、 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 price shall be adjusted in accordance with the following formula:Alt

26、ernative 1: “Typical” weighted average:CP2 = CP1 * (A+B) / (A+C)CP2 = New Series A Conversion PriceCP1 = Series A Conversion Price in effect immediately prior to new issueA = Number of shares of Common Stock deemed to be outstanding immediately prior to new issue (includes all shares of outstanding

27、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 this round of financing) B = Aggregate consideration received by the Corporation with respect to the

28、 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 an

29、ti-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 the conversion of any debenture, warrant, option, or other convertible security; (iii)Common Stock issuable upon a st

30、ock split, stock dividend, or any subdivision of shares of Common Stock; and (iv)shares of Common Stock (or options to purchase such shares of Common Stock) issued or issuable to employees or directors of, or consultants to, the Company pursuant to any plan approved by the Companys Board of Director

31、s including at least _ Series A Director(s) (v)shares of Common Stock issued or issuable to banks, equipment lessors pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board of Directors of the Corporation , including at least _ Series A Director(s).Mandatory Conversion:Each share of Series A Preferred will automatically be converted into Common Stock at the then applicable conversion rate in the event of