Convertible Note Term Sheet by Cofounders
This term sheet outlines the fundamental conditions for a convertible promissory note financing. It details how a company can secure funding by issuing notes that will convert into equity under specific circumstances, such as a qualified financing round or upon maturity. Key aspects covered include interest rates, conversion mechanisms, valuation caps, and investor rights.
Convertible Note Term Sheet
The following is a summary of the basic terms and conditions of a proposed convertible promissory note financing of [Company Name], [Reg No.], with registered address at [Company Address]. This term sheet is for discussion purposes only and is not binding on Company or the Investors (as defined below).
Issuer | [Company Name] (the Company) |
Financing Amount | Up to $1000000 SGD worth of convertible promissory notes (the Notes). |
Closings | The Company may close the sale of the Notes in one or more closings with one or more purchasers of the Notes acceptable to the Company (the Investors). |
Investment Amount | The amount invested by an Investor for the purchase of such Investor's Convertible Securities (the Investment Amount). |
Definitive Agreement | The Notes will be issued and sold pursuant to a convertible note purchase agreement prepared by the Company's legal counsel (the Note Purchase Agreement). |
Maturity Date | Principal and unpaid accrued interest on the Notes will be due and payable twenty-four (24) months from the date of the Note Purchase Agreement (the Maturity Date). |
Interest | Interest will accrue on an annual basis at the rate of 5% per annum based on a 365 day year. |
Qualified Financing | The issuing of Equity Securities in a transaction or series of related transactions resulting in aggregate gross proceeds to the Company of at least $1000000 SGD, including conversion of the Notes and any other indebtedness. |
Conversion Price | The Conversion Price is the lesser of1) 75% of the per share price paid by the purchasers of such Equity Securities in the Qualified Financing (the Discounted Conversion Price), or |
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