Series Seed Preferred Stock Term Sheet
Series Seed Preferred Stock Term Sheet
I. Overview
This Term Sheet summarizes the principal terms of the Series Seed Preferred Stock financing of [Your Company Name], herein referred to as the "Company". This document is intended solely as a basis for further discussion and is not intended to be legally binding except for the terms stated in "Binding Provisions" and will become null and void if the transaction is not completed on or before [Closing Date].
This Term Sheet is confidential and requires prior written consent from both parties for disclosure. The financing aims to fund the Company's next corporate milestones, including product development and market expansion as outlined in its strategic growth plan.
II. Offer Terms
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Issuer: [Your Company Name]
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Type of Security: Series Seed Preferred Stock
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Amount Being Raised: $2,000,000.
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Price Per Share: $1.00 per share, based on a pre-money valuation of $8,000,000.
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Minimum Investment: $25,000
These terms are designed to align the interests of new investors and existing stakeholders by providing investment opportunities at a fair valuation with protective provisions typical to early-stage investments.
III. Rights, Preferences, and Privileges of Preferred Stock
Preferred stock acquired in this transaction shall have the following rights, preferences, and privileges:
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Voting Rights: Every individual share of Series Seed Preferred Stock is granted the right to one vote on every matter that is put forward for consideration to the shareholders of the Company.
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Dividends: Dividends on the Series Seed Preferred Stock may be distributed to shareholders if and when such distributions are formally declared by the Board of Directors of the Company.
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Liquidation Preference: In the event of liquidation, dissolution, or winding up, Series Seed Preferred Stockholders will receive their original purchase price per share plus any declared and unpaid dividends before any assets are distributed to Common Stockholders.
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Conversion: The Series Seed Preferred Stock is convertible into Common Stock at the option of the holder at any time after the date of issuance at a conversion ratio initially equal to one (subject to adjustments).
IV. Governance
Company governance shall be conducted by the following terms:
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Board Composition: The initial composition of the board of directors will include a total of five directors. This group will comprise two Investor Directors, who are to be appointed by the entities that hold the Series Seed Preferred Stock.
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Information Rights: Individuals or entities possessing Preferred Stock shall be entitled to receive financial statements every month, forecasts of the annual budget, and standard financial reports every quarter.
These governance provisions ensure that investors have adequate oversight and input into the strategic direction of the Company, safeguarding the investment.
V. Conditions to Financing
Closing of this financing will be subject to the satisfaction of the following conditions:
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Due Diligence: Completion was achieved following a thorough and satisfactory review that was conducted across several key areas including financial, legal, and business domains, specifically for due diligence.
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Legal Documentation: Execution of definitive agreements, including a Stock Purchase Agreement, Investor Rights Agreement, Right of First Refusal and Co-Sale Agreement, and Voting Agreement.
Each of these conditions must be met to the satisfaction of the investors, ensuring a thorough understanding of the Company's operational, legal, and financial status.
VI. Binding Provisions
Confidentiality and exclusivity obligations under this Term Sheet shall constitute binding obligations of the parties. These obligations shall survive for [Duration] following the date of this Term Sheet. No solicitation of alternative transactions is permitted during this period without the prior agreement of the parties. Upon execution of the final agreements, this Term Sheet, excluding its binding provisions, will become null and void.
VII. Miscellaneous
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Notices: All notifications mandated or allowed by this agreement must be written and delivered either in person, by email, or by certified mail to the designated addresses specified herein.
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Governing Law: This Term Sheet and related agreements are governed by the laws of [State/Country], without regard to conflicts of laws principles.
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Entire Agreement: This Term Sheet, with attachments, constitutes the entire agreement between the parties and supersedes all prior agreements, whether written or oral.
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Severability: If any provision of this agreement is found to be invalid or unenforceable, all other provisions not affected by such invalidity or unenforceability shall continue to be valid and enforced to the fullest extent permitted by law.
