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Term Sheet for Private Equity Financing

This is a document that outlines a potential agreement between an investor and a company. The investor agrees to invest private equity in the company in return for preferred stock. This document does not create a binding agreement between the parties. Rather, this document sets forth the terms that are already agreed upon and shows the parties good faith intent to enter into a binding agreement. This document can be used by small businesses or other entities that want to memorialize agreed upon terms with a potential investor.



Term Sheet for Private Equity Financing
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This is a document that outlines a potential agreement between an investor and a
company. The investor agrees to invest private equity in the company in return for
preferred stock. This document does not create a binding agreement between the
parties. Rather, this document sets forth the terms that are already agreed upon and
shows the parties good faith intent to enter into a binding agreement. This document
can be used by small businesses or other entities that want to memorialize agreed upon
terms with a potential investor.
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           TERM SHEET FOR PRIVATE EQUITY FINANCING                                              y
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Issuance                        _____________(“Investor”)            shall       purchase       g
                                _____________ shares of Preferred Convertible Preferred         h
                                Stock ("Preferred Stock") to be issued by _____________         t
                                (the "Company") at a price per share of $______ (the
                                "Purchase Price"). In addition, Investor acknowledges that      B
                                other investors will purchase at least _____________ ( )        i
                                shares but not more than _____________ ( ) shares of            z
                                Preferred Stock at the Purchase Price.                          T
                                                                                                r
                                The Preferred Stock shall be convertible on a one-for-one       e
                                exchange basis (adjusted for future stock splits) into          e
                                common stock of the Company ("Common Stock") at any             .
                                time at the option of the stock holder.
                                                                                                2
                                The Purchase Price shall be equivalent to a pre-investment      0
                                valuation of the Company of $_____. The calculation is          0
                                based on ____ ( ) shares of Common Stock. If the number         6
                                of shares issued increases before the close of this             .
                                transaction, the price per share for Preferred Stock will be
                                reduced so as to maintain the pre-investment valuation of       A
                                the Company.                                                    l
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Use of Proceeds                 The funds raised from the sale of Preferred Stock shall be
                                used for working capital purposes.                              r
                                                                                                i
Dividend                        The Preferred Stock is entitled receive to an annual            g
                                $______ per share dividend distribution, in all cases           h
                                payable when and if such distribution is declared by the        t
                                Board of Directors. In the event of a dividend distribution,    s
                                Preferred Stock holders shall receive such distribution prior
                                to any payment on Common Stock. Dividends are not               r
                                cumulative.                                                     e
                                                                                                s
Pre-emptive Rights              Preferred Stock shall have the right to participate in future   e
                                rounds of equity financing based upon their pro-rata, if-       r
                                converted, ownership of the Company.                            v
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Voting Rights                   The Preferred Stock shall have the right to vote with the       d
                                Common Stock on an as-if-converted basis.                       .

Liquidation Preference          The Preferred Stock shall have a liquidation preference.        P
                                The proceeds of a merger, sale or liquidation will be paid      r
                                first to the Preferred Stock and shall include an additional    o
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                                ____ % return, compounded annually, calculated based on
                                the total amount invested. Upon completion of this round of
                                funding, the additional ____ % return element will expire
                                and will not be offered in any subsequent rounds of
                                funding.

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