Convertible Preferred Stock Term Sheet

1. Investment Overview

This Convertible Preferred Stock Term Sheet outlines the terms and conditions for investment in the convertible preferred stock of [YOUR COMPANY NAME] by [INVESTOR NAME]. The investment amount is set at $10,000,000, subject to the terms herein. The investment will support the company's growth initiatives, including expansion into new markets and product development. The preferred stock will be convertible into common shares under specified conditions.

2. Investment Terms

1. Investment Amount: The investor agrees to invest $10,000,000 in convertible preferred stock of [YOUR COMPANY NAME].

2. Conversion Terms:

   • Conversion Ratio: Each share of preferred stock will be convertible into 10 common shares.

   • Conversion Conditions: Conversion of preferred stock into common shares can be initiated at the discretion of the investor, subject to certain conditions such as a specified minimum period post-investment or upon a qualified financing event.

3. Dividend Rights

The convertible preferred stock shall carry a 5% dividend rate per annum, payable quarterly or as otherwise agreed upon. Dividends may be paid in cash or additional shares of preferred stock.

4. Liquidation Preferences

In the event of a liquidation, dissolution, or winding up of [YOUR COMPANY NAME], the holders of convertible preferred stock will have the right to receive a preferential amount of $20 per share before any distribution is made to common shareholders.

5. Additional Provisions

1. Anti-dilution Protection: The preferred stock will include anti-dilution provisions to protect the investor against future issuances of common stock at a lower valuation.

2. Voting Rights: The holders of convertible preferred stock shall have voting rights on matters affecting their rights, including amendments to the company's charter or any proposed sale of the company.

3. Redemption Rights: The company may have the option to redeem the preferred stock under certain circumstances, subject to agreed-upon redemption terms.

6. Conditions Precedent

The investment is contingent upon the fulfillment of standard conditions precedent, which include the completion of satisfactory due diligence, the execution of definitive investment documentation, and the obtaining of any necessary regulatory approvals.

7. Confidentiality

All interactions and any information that are exchanged under the auspices of this term sheet are to remain strictly confidential and must not be disclosed by either party involved, except in instances where such disclosure is mandated by applicable legal requirements.

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