Convertible Note with Warrants Term Sheet

I. Introduction

Welcome to the Convertible Note with Warrants Term Sheet of [Your Company Name]. This document outlines the terms under which [Investor Name] ("Investor") will make a financial investment in [Your Company Name], a company incorporated under the laws of [Your State or Country].

This Term Sheet serves to provide both parties with a clear understanding of the commitments involved.

This Term Sheet summarizes the principal terms of the Convertible Note and attached Warrants.

Note that this Term Sheet is not legally binding except for the terms stated in the sections “Confidentiality”, “Exclusivity”, and “Governing Law” and is intended solely as a basis for further discussion.

II. Investment Details

The following terms are proposed for the investment under the Convertible Note and Warrant agreement:

• Date: [Date] (Date of Agreement)

• Principal Amount: [Amount]

• Interest Rate: [X]% per annum, compounded annually

• Maturity Date: [Date], unless converted before this date

This investment is intended to provide [Your Company Name] with necessary capital to pursue its objectives while providing the Investor with opportunities for future equity in the company.

III. Conversion Terms

The terms of conversion for the Convertible Note into shares of [Your Company Name] are as follows:

• Conversion Trigger: Automatic conversion upon a Qualified Financing round achieving a minimum raise of [Specified Amount] or at the Maturity Date.

• Conversion Discount: [X]% discount on the price per share paid by new investors in the subsequent financing round.

• Valuation Cap: The valuation cap is set at [Specified Amount], protecting the investor by setting a maximum effective price per share at conversion.

These terms are designed to offer incentives for the Investor to support the company until more substantial financing is secured.

IV. Warrant Details

Attached to the Convertible Note are purchase warrants that grant the Investor the right to buy additional shares under the terms outlined below:

• Number of Warrants: [Number] Warrants, each warrant entitling the holder to purchase one share of [Your Company Name]'s common stock.

• Exercise Price: [Price] per share, payable in cash or equivalent.

• Exercisability: The Warrants are exercisable any time before the expiry date of [Date].

These Warrants provide a mechanism for the Investor to increase their equity interest in the company under favorable terms should the company perform well.

V. General Terms and Conditions

All terms proposed herein are subject to the satisfactory completion of due diligence, negotiation, and execution of definitive agreement(s) by both parties. The obligations and benefits conferred by this Term Sheet shall be as per the laws of [Your State or Country].

Until the execution of the definitive agreements, no legal obligation is assumed by either party except to pursue the transaction in good faith. This Term Sheet is confidential and intended only for the use of the parties involved.

VI. Use of Proceeds

The funds from this investment will be primarily used for [specific purposes]. This allocation is designed to accelerate the growth and expansion of [Your Company Name] in a strategic and sustainable manner.

VII. Representations and Warranties

a. [Your Company Name] represents and warrants that it is duly organized, validly existing, and in good standing under the laws of [Your State or Country].

b. [Your Company Name] has the full power and authority to execute, deliver, and perform its obligations under this Agreement.

c. The execution, delivery, and performance of this Agreement by [Your Company Name] have been duly authorized by all necessary corporate action.

d. There is no litigation, proceeding, or investigation pending or threatened against [Your Company Name] that could materially affect its ability to perform its obligations under this Agreement.

VIII. Termination

a. This Term Sheet may be terminated at any time by mutual written agreement of both parties.

b. Either party may terminate this Term Sheet if the other party breaches any material provision of this Term Sheet and fails to cure such breach within [number] days of receiving written notice thereof.

c. In the event of termination, neither party shall have any further obligations under this Term Sheet, except for obligations that expressly survive termination.

IX. Jurisdiction and Signatory

This Term Sheet shall be governed by and construed in accordance with the laws of [Your State or Country]. Any disputes arising under or in connection with this Term Sheet shall be subject to the exclusive jurisdiction of the courts of [Your State or Country].

This Term Sheet is executed by the duly authorized representatives of [Your Company Name] and [Investor Name] as of the date first above written.

[Your Name]

[Your Company Name]

[Investor Name]

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