Revenue-Based Financing Term Sheet

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I. Introduction

This Term Sheet outlines the preliminary terms and conditions under which [Investor Name] (the "Investor") proposes to provide Revenue Based Financing (RBF) to [Your Company Name] (the "Company"). This financial support is intended to foster the growth of the Company by aligning the incentives of both parties through revenue sharing.

II. Investment Details

Under the proposed agreement, [Investor Name] agrees to provide the capital necessary for [Your Company Name]'s operational costs and expansion projects. The specifics of the investment are as follows:

• Investment Amount: $500,000

• Revenue Share Rate: 8% of monthly gross revenue

• Payment Cap: $750,000, representing the maximum total repayment amount

• Minimum Monthly Revenue Threshold: $100,000

• Term of Revenue Share: 5 years or until the Payment Cap is reached, whichever comes first

III. Use of Funds

The capital provided by the Investor is earmarked specifically for the following purposes to ensure strategic growth and scalability of operations at [Your Company Name]. Misallocation of funds outside these predefined areas may constitute a breach of terms:

• Expansion of operational capacity: This includes activities such as increasing production capabilities, scaling the workforce, or opening new locations to meet growing demand.

• Research and development of new products or services: Funds will be allocated towards innovation efforts, such as designing and testing new products, improving existing offerings, or exploring new market opportunities.

• Marketing and promotion activities: Investment will support marketing campaigns, advertising initiatives, and promotional activities aimed at increasing brand visibility, customer acquisition, and market share.

• Enhancement of IT infrastructure: Funds will be utilized to upgrade technology systems, implement software solutions, enhance cybersecurity measures, and improve overall IT capabilities to support business operations effectively.

• Other purposes as mutually agreed in writing: Additional uses of funds may be considered upon mutual agreement between [Your Company Name] and the Investor, documented in writing to ensure transparency and compliance with agreed-upon terms.

IV. Representations and Warranties

Both parties agree to make certain representations and warranties, including but not limited to the legality of operations, compliance with applicable regulations, and accuracy of financial statements. [Your Company Name] warrants that:

• Legal Existence: [Your Company Name] is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its incorporation.

• Corporate Authority: [Your Company Name] possesses all the requisite corporate power and authority that are necessary to operate and manage its business as it is currently being conducted.

• Undisclosed Liabilities: [Your Company Name] does not have any undisclosed liabilities that could have a material impact on its business operations.

V. Conditions Precedent to Funding

Before the disbursement of funds, [Your Company Name] must satisfy the following conditions to the satisfaction of [Investor Name]:

• Completion of Due Diligence: [Your Company Name] must undergo a due diligence process conducted by [Investor Name] to assess the company's financial, legal, and operational aspects.

• Investment Approval: The investment must be approved by the Investment Committee or the relevant decision-making body of [Investor Name].

• Execution of Definitive Agreements: Both parties must execute definitive agreements consistent with the terms outlined in this Term Sheet. These agreements must also be satisfactory to the legal counsel of both parties.

• Additional Conditions: [Investor Name] reserves the right to impose any other conditions deemed necessary for the disbursement of funds, as mutually agreed upon.

VI. Confidentiality

Both [Your Company Name] and [Investor Name] agree to maintain the confidentiality of the information exchanged during the negotiation and due diligence process. This confidentiality agreement remains in effect until the information becomes publicly known through no fault of either party. Any breach of this confidentiality clause may lead to termination of negotiations and potential legal action for damages.

VII. Binding Provisions

This Term Sheet is intended to be non-binding, except for certain provisions that are designed to be binding, specifically confidentiality, exclusivity, and governing law. The details of these binding provisions are as follows:

• Confidentiality: All negotiations and documentation relating to the investment must be kept confidential by both parties.

• Exclusivity: [Your Company Name] agrees not to engage in any discussions or negotiations with other potential investors for a period of [PERIOD]

• Governing Law: This Term Sheet and the definitive agreement will be governed by the laws of [GOVERNING LAW STATE]

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