Term Sheet for Debentures

I. Overview

This Term Sheet sets forth the principal terms and conditions proposed for the issuance of debentures by [Your Company Name] ("Issuer"). This document serves as a preliminary agreement and does not constitute a legally binding obligation. The final terms will be detailed in the Definitive Agreement to be negotiated and executed by the parties.

• Issuing Company: [Your Company Name]

• Date: [Date]

• Type of Security: Secured/Unsecured Debenture

II. Principal and Amount

This section outlines the total amount of debentures to be issued and the denomination of each unit.

• Total Issue Amount: [$Amount]

• Denomination per Debenture: [$Denomination]

• The total issue amount represents the gross proceeds expected to be raised by [Your Company Name] through this debenture issuance. The funds raised will be used for purposes including but not limited to capital expenditures, operational costs, and debt refinancing.

III. Interest Terms

This section details the interest rate applicable to the debentures, along with payment schedules and calculation methods.

• Interest Rate: [Interest Rate]% per annum

• Interest Payment Frequency: Monthly/Quarterly/Semi-annually/Annually

• Interest will accrue from the date of issuance and will be payable at the end of each interest period. The interest calculation will be based on a 360-day year or a 365-day year, as agreed in the Definitive Agreement.

IV. Maturity

This part specifies the term after which the debentures will mature and the repayment obligations of [Your Company Name].

• Maturity Date: [Maturity Date]

• Redemption: The debentures will be fully redeemable at par on the maturity date unless earlier redeemed in accordance with the terms set forth in the Definitive Agreement.

• At maturity, the principal amount will be payable in full unless otherwise negotiated to include options for conversion or extension, subject to approval by the debenture holders.

V. Security and Ranking

Description of the security interest, if any, that will back the debentures, and the ranking of these debentures relative to other debt.

1. Security: Secured/Unsecured

2. Ranking: Senior/Subordinated

In the case of secured debentures, a description of the collateral and terms of the security agreement will be provided. For subordinated debentures, details regarding the subordination agreement and its impact on the repayment hierarchy will be outlined.

VI. Covenants, Conditions, and Representations

Outline of the issuer's covenants and conditions to issuing the debentures, along with any representations and warranties to be made by [Your Company Name].

• Affirmative Covenants: Include maintaining certain financial ratios, ensuring corporate existence, and complying with relevant laws and regulations.

• Negative Covenants: Restrictions on additional debt, specific payments, asset sales, and other items that might compromise the financial stability or the debenture holders' position.

• Representations and Warranties: Standard representations including authority to issue debentures, no conflicts with existing agreements, accuracy of financial statements, etc.

VII. Conversion Features (Optional)

Details regarding any options to convert the debentures into equity under certain conditions.

• Conversion Ratio: [Conversion Ratio]

• Conversion Price: [$Price per Share]

• Conversion Window: From [Start Date] to [End Date]

• This optional section is applicable only if the debentures include a conversion feature. The terms will specify how and when the holders can convert their debentures into shares of [Your Company Name], the pricing mechanism, and any adjustments due to corporate actions.

VIII. Governing Law

This section specifies the legal jurisdiction that will govern the debenture issuance and the subsequent agreements.

• Governing Law: [State]

• The terms of the debentures, including any disputes arising out of the terms or execution of the debentures, will be governed by the laws of [State]

This Term Sheet is intended to serve as a foundation for further negotiation and drafting of the Definitive Agreement, which will contain more detailed terms and conditions. The effectiveness of the debentures is subject to the execution of such Definitive Agreement and satisfaction of any conditions precedent outlined therein.

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