/Docs/G/SeriesSeed-Cooley-CmA/notes/Term_Sheet/0.md
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Promissory Notes:
The {_Company} shall issue promissory notes (the "{DefT.Notes}") in exchange for amounts invested by the Investors. The Notes will have the following principal provisions:- Maturity:
Unless earlier repaid or converted, outstanding principal and unpaid accrued interest on the Notes shall be due and payable upon request of the Majority Holders made on or after {Note.MaturityDate.cl} (the "{DefT.Maturity_Date}"). - Interest:
Select- Interest shall accrue on an annual basis at the rate of {Note.InterestRate.Annum.%} per annum, compounded annually.
- Simple interest shall accrue on an annual basis at the rate of {Note.InterestRate.Annum.%} per annum
- Future Notes:
If, while the Notes are outstanding, the {_Company} issues other indebtedness of the {_Company} convertible into equity securities of the {_Company} with material terms that are more favorable to the Investor (the "{DefT.Other_Debt}"), than the terms of the Notes, then the {_Company} will provide each Investor with written notice thereof, together with a copy of all documentation relating to the {_Other_Debt} and, upon request of such Investor, any additional information related to the {_Other_Debt} as may be reasonably requested by such Investor. The {_Company} will provide such notice to the Investors promptly (and in any event within 30 days) following the issuance of the {_Other_Debt}. In the event an Investor determines that the terms of the {_Other_Debt} are preferable to the terms of the Notes, such Investor will notify the {_Company} in writing within five days following such Investor's receipt of such notice from the {_Company}. Promptly after receipt of such written notice from such Investor, but in any event within 30 days, the {_Company} will amend and restate such Investor's Note to be substantially identical to the promissory note evidencing the {_Other_Debt}, excluding the principal and accrued interest. - Conversion at {_Qualified_Financing}:
In the event the {_Company} consummates, on or prior to the Maturity Date, an equity financing pursuant to which it sells shares of its equity securities (the "{DefT.Next_Round_Securities}"), with an aggregate sales price of not less than {EquityEvent.ThresholdProceeds.$}, excluding any and all indebtedness under the Notes that is converted into {_Next_Round_Securities}, and with the principal purpose of raising capital (a "{DefT.Qualified_Financing}"),
then all principal, together with all unpaid accrued interest under the Notes, shall automatically convert into shares of the {_Next_Round_Securities}
at {Convert.PriceDiscount.%} of the cash price per share paid by the other purchasers of {_Next_Round_Securities} in the {_Qualified_Financing}.
If the conversion price of the Notes is less than the cash price per share at which {_Next_Round_Securities} is issued in the {_Qualified_Financing}, the {_Company} may, solely at its option, elect to convert the Notes into shares of a newly created series of capital stock having the identical rights, privileges, preferences and restrictions as the {_Next_Round_Securities} issued in the {_Qualified_Financing}, and otherwise on the same terms and conditions, other than with respect to (if applicable): (i) the per share liquidation preference and the conversion price for purposes of price-based anti-dilution protection, which will equal the conversion price; and (ii) the per share dividend, which will be the same percentage of the conversion price as applied to determine the per share dividends of new investors in the {_Qualified_Financing} relative to the purchase price paid by such investors. - Optional Conversion at non-Qualified Financing.
In the event the {_Company} consummates, on or prior to the Maturity Date, an equity financing pursuant to which it sells shares of Next Round Securities in a transaction that does not constitute a {_Qualified_Financing}, then {OptionalConversion.Deciders.cl} shall have the option to treat such equity financing as a {_Qualified_Financing} on the same terms set forth herein. - Conversion at Maturity:
In the event that the Note remains outstanding on the Maturity Date, then the outstanding principal balance of the Investor's Note and any unpaid accrued interest shall [automatically without any further action by such Investor][upon the election of the Majority Holders][upon the election of such Investor] convert into shares of [the {_Company}'s common stock][a newly created series of the {_Company}'s preferred stock on the terms and conditions set forth on Exhibit A] at a conversion price equal to the quotient resulting from dividing $________ by the number of outstanding shares of common stock of the {_Company} [as of the Maturity Date][as of the date of the Note] (assuming conversion of all securities convertible into common stock and exercise of all outstanding options and warrants,[ including all shares of common stock reserved and available for future grant under any equity incentive or similar plan of the {_Company},] but excluding the shares of equity securities of the {_Company} issuable upon the conversion of the Notes or other indebtedness).] - Change of Control:
If the {_Company} is acquired prior to the {_Qualified_Financing}, [then at each Investor's option, either (i) such][each] Investor shall receive a cash repayment equal to the outstanding principal and unpaid accrued interest[, plus an additional payment equal to [___]% of the principal amount of such Investor's Note][, or (ii) such Investor's Note shall be converted into shares of common stock at a conversion price equal to the quotient resulting from dividing $________ by the number of outstanding shares of common stock of the {_Company} [immediately prior to the Change of Control][as of the date of such Investor's Note] (assuming conversion of all securities convertible into common stock and exercise of all outstanding options and warrants, but excluding the shares of equity securities of the {_Company} issuable upon the conversion of the Notes or other indebtedness)]. - Pre Payment:
The principal and accrued interest may not be prepaid unless approved in writing by the Majority Holders. - Security:
The Notes shall be unsecured obligations of the {_Company}.
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