Company Favorable Term Sheet

I. Overview

This Term Sheet outlines the principal terms for a potential investment in [Your Company Name] by [Investor's Name]. This document serves as a basis for negotiation before crafting a definitive agreement. The terms described below are designed to favor [Your Company Name] while providing a fair and attractive offer to the investor.

The purpose of this Term Sheet is to establish and agree upon key investment details that will help avoid potential disputes and misunderstandings during the drafting and negotiation of the final investment agreement. This Term Sheet aims to protect [Your Company Name]'s interests by outlining clear financial terms, governance structures, and other essential investment conditions.

II. Financial Terms

[Your Company Name] is seeking an investment of [Investment Amount]. The following financial terms are proposed:

• Valuation of [Your Company Name] pre-investment: [Pre-money Valuation]

• Equity offered to [Investor’s Name]: [Percentage]%

• Type of shares to be issued: [Type of Shares] (preferred / common)

• Vesting period for shares: [Vesting Period]

• Dividend rights: [Specify Dividend Rights]

In addition to the capital injection, [Investor's Name] will have the option to participate in subsequent funding rounds to maintain or increase their ownership percentage under similar terms as new incoming investors. This allowance provides a pathway for [Investor's Name] to scale their investment in alignment with [Your Company Name]'s growth.

III. Governance

[Your Company Name] will continue to hold controlling interest in governance matters. The proposed governance structure emphasizes minimal disruption from investors in daily operations. Key points include:

• Number of board seats [Investor's Name] is entitled to: [Number of Board Seats]

• Frequency of board meetings: [Specify Frequency] (quarterly, biannually)

• Special voting rights or veto powers on specific issues: [Specify Rights]

This arrangement ensures that [Your Company Name] maintains the ability to make agile and strategic decisions effectively, reflecting our commitment to company's vision and operational integrity.

IV. Terms and Conditions

The following conditions will apply to the deal to ensure the protection and growth of both [Your Company Name] and [Investor’s Name]:

• Exclusivity period: [Exclusivity Period] during which both parties agree not to negotiate with other parties.

• Confidentiality clause to protect sensitive company information shared during the negotiation process.

• A no-shop clause effective until the definitive agreements are executed or negotiations are terminated.

These terms are designed to ensure a smooth and efficient negotiation process, ultimately leading to a solid partnership that supports the scaling and success of [Your Company Name].

V. Expiration

This Term Sheet is valid until [Expiration Date]. If the definitive agreement is not signed by this date, the terms here shall expire and cease to have any legal validity unless mutually extended by both parties.

It is intended for this Term Sheet to serve as the framework for the future relationship between [Investor Name] and [Your Company Name]. Signing this document signifies an understanding of the terms by both parties, although it is non-binding except where specifically highlighted.

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