Senior Loan Term Sheet

I. Overview

This Term Sheet outlines the principal terms and conditions proposed for the Senior Loan to be extended to [Your Company Name] ("Borrower") by [Lender Name] ("Lender"). This document serves as a preliminary agreement and will be followed by a definitive loan agreement that elaborates on the terms herein in greater detail. This Term Sheet is intended to facilitate further discussions and does not constitute a legally binding obligation until a full agreement is executed by all parties.

• Borrower: [Your Company Name]

• Lender: [Lender Name]

• Purpose of Loan: The funds will be used for [Specify Purpose of Loan, e.g., working capital, expansion, debt refinancing].

• Date of Issue: [Date]

II. Loan Amount and Disbursement

• Total Loan Amount: The total loan amount will be [Specify Loan Amount].

• Disbursement Schedule: The loan amount will be disbursed as follows:

  • First Disbursement: [Specify Amount] on [Specify Date]

  • Subsequent Disbursements: Based on milestones agreed between [Your Company Name] and [Lender Name].

• Final Disbursement: To be made by [Specify Date], subject to fulfillment of conditions set forth in this Term Sheet.

III. Interest Rate and Repayment Terms

• Interest Rate: The loan will carry an interest rate of [Specify Interest Rate]% per annum.

• Interest Calculation: Interest will be calculated on a 360-day year basis and charged on the actual outstanding balance.

• Repayment Schedule:

  • Repayment will commence [Specify Period, e.g., six months] after the first disbursement.

  • The loan will be repaid in [Specify Number] equal quarterly installments of principal plus accrued interest, starting [Specify Start Date].

IV. Security and Covenants

• Collateral: The loan will be secured by [Specify Collateral, e.g., property, equipment, inventory].

• Covenants: [Your Company Name] agrees to maintain the following financial ratios throughout the term of the loan:

  • Debt to Equity Ratio: Not to exceed [Specify Ratio]

  • Current Ratio: Minimum of [Specify Ratio]

• Additional Security: [Your Company Name] will provide [Additional Security Measures] if specific performance targets are not met.

V. Conditions Precedent to Disbursement

• Legal and Regulatory Approvals: All necessary legal and regulatory approvals must be obtained prior to any disbursement of the loan funds.

• Due Diligence: Completion of satisfactory due diligence by [Lender Name], including but not limited to financial, legal, and operational aspects of [Your Company Name].

• Documentation: Execution of definitive loan documentation including but not limited to a Loan Agreement, Security Agreement, and any other related documents.

VI. Representations and Warranties

• Accuracy of Information: [Your Company Name] represents and warrants that all financial statements and other information provided to [Lender Name] are true, accurate, and complete.

• Compliance with Laws: [Your Company Name] warrants that it is and will remain in compliance with all laws and regulations applicable to its operations and the use of the loan funds.

VII. Miscellaneous

• Governing Law: This Term Sheet and the ensuing loan documents will be governed by the laws of [Specify Jurisdiction].

• Confidentiality: Both parties agree to keep the terms of this loan and all related negotiations confidential.

• Amendment: This Term Sheet can only be amended in writing signed by both parties.

This Term Sheet is intended to outline the fundamental terms of a Senior Loan and facilitate further negotiation towards a definitive agreement. Please review carefully and provide feedback or confirmation of the terms so that we may proceed to finalize the loan documentation.

Name: [Your Name]

Date: [Date Signed]

Name: [Lender's Name]

Date: [Date Signed]

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