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Convertible Note Financing Terms Summary

This document outlines the terms for a proposed financing of a company through convertible promissory notes, aiming to raise up to $750,000. The notes will have a 6% interest rate, a maturity date of twelve months, and will convert into Series A Preferred Stock during the next equity financing of at least $2,000,000. The memorandum is non-binding and serves as a basis for negotiation towards a definitive agreement.

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2 views2 pages

Convertible Note Financing Terms Summary

This document outlines the terms for a proposed financing of a company through convertible promissory notes, aiming to raise up to $750,000. The notes will have a 6% interest rate, a maturity date of twelve months, and will convert into Series A Preferred Stock during the next equity financing of at least $2,000,000. The memorandum is non-binding and serves as a basis for negotiation towards a definitive agreement.

Uploaded by

glk1062
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

812-141

TN Exhibit 3 Convertible note example

MEMORANDUM OF TERMS FOR THE PRIVATE PLACEMENT OF SECURITIES OF

THIS TERM SHEET SUMMARIZES THE PRINCIPAL TERMS OF THE PROPOSED


FINANCING OF _ _ _ _ (THE "COMPANY"). THIS TERM SHEET IS FOR DISCUSSION
PURPOSES ONLY; THERE IS NO OBLIGATION ON THE PART OF ANY NEGOTIATING
PARTY UNTIL A DEFINITIVE NOTE PURCHASE AGREEMENT IS SIGNED BY ALL
PARTIES. THIS TERM SHEET IS SUBJECT TO THE SATISFACTORY COMPLETION OF DUE
DILIGENCE. THIS TERM SHEET DOES NOT CONSTITUTE EITHER AN OFFER TO SELL OR
AN OFFER TO PURCHASE SECURITIES. •

Type ofSecurity: Convertible promissory notes (the "Notes").

Amount to be Raised: Up to $750,000.

Investors: Angel 1: $475,000. .v

Other lnves~0fs: ·up to $27~,000, subject to the mutual agreement of


the Compa~~ and A:~gel 1.

Interest Rate: 6% per annum.

Maturity Date: Twelve months from the date of issuance.

Prepayment: The Notes may not be prepaid.

Conversion: Principal and accrued and unpaid interest shall be automatically


converted into Series A Preferred Stock on the closing of the
Company's next equity financing in an aggregate amount of at least
$2,000,000 (including conversion of the Notes) (the "Next Equity
Financing"). The principal and accrued and unpaid interest shall
convert at 80% of the lesser of (i) the price per share in the Next
Equity Financing and (ii) the price per share at which the
Company's shares would be valued at a pre-money, fully diluted
valuation of $6,000,000 (assuming an authorized, unissued option
pool of __% of the Company's equity).

Angel I shall have the right to purchase in the Next Equity


Financing 40% of the securities issued in such Next Equity
Financing.

Next Equity Financing: The Next Equity Financing shall be in the aggregate amount of at
least $2,000,000 (including conversion of the Notes).

Acquisition: If the Company is acquired prior to the conversion as provided


above, Angel I shall be entitled to receive 150% of the outstanding
principal of the Note as of the closing of the acquisition.

17

This Teaching Note is authorized for use only by SATYASIBA DAS, Indian Institute of Management . Raipur until Nov 2024. Copying or posting is an infringement of copyright.
Permissions@[Link] or 617 .783.7860.
•

812-141 .t,J;eaching Note-PunchTab, Inc.

Board of Directors: Until the Next Equity Financing, the Board of Directors shall
consist of two members. The two members shall be ___ and

Exclusivity: From the signing date hereof until the earlier of i) 5:00 pm Pacific
Time on January 31, 2011, (ii) the Closing, or (iii) written
notification by Angel I that it does not intend to proceed with the
financing of Company. Company agrees that it shall not solicit,
encourage others to solicit, encourage or accept any offers with
respect to the acquisition or financing of the Company, and it shal I
not negotiate with or enter into any agreement or understanding
with any other person with respect to any such transaction.

No Obligation: This memorandum of terms represents the basis upon which the
parties intend to negotiate toward a definitive agreement. This
memorandum shall not, however, be binding on any party, nor shall
any party be obligated to consummate a transaction on the terms
proposed herein or otherwise (and no obligation on the part of
either party shall arise by virtue of such things as parol evidence,
extended negotiations, "handshakes," oral understandings or course
of conduct) until such time as a definitive agreement shall have
been negotiated, prepared and executed by the parties.

If you are in agreement with the terms and conditions set forth above and desire to proceed on
that basis, please sign this letter in the space provided below and return an executed copy to the
undersigned.

ACKNOWLEDGED AND AGREED:

By _ _ _ _ _ _ _ _ _ _ __ By - - - - - - - - - - - - -

Date - - - - - - - - - - - - Date - - - - - - - - - - - -

Source: Cascwriter.

18

Tn1s Teaching Note Is [Link] for use only by SATYASIBA DAS, Indian Institute of Management - Raipur until Nov 2024. Copying or posting Is an infringement of copyright.
Perm1ss1ons@[Link] or 617.783.7860.

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