Mississippi Term Sheet - Royalty Payment Convertible Note

• Category: Corporations - Startup - Venture Financing Process
• State: Multi-State
• Control #: US-ENTREP-0049-1
• Format: Word; Rich Text

Description

This Term Sheet summarizes the principal terms with respect to a potential private placement of equity securities of a "Company") by a group of investors ("Investors") led by a Venture Fund. This Term Sheet is intended solely as a basis for further discussion and is not intended to be and does not constitute a legally binding obligation except as provided under "Confidentiality," "Exclusivity", and "Expenses" below. No other legally binding obligation will be created, implied or inferred until a document in final form entitled "Stock Purchase Agreement" is executed and delivered by all parties. Without limiting the generality of the foregoing, it is the parties intent that, until that event, no agreement shall exist among them and there shall be no obligations whatsoever based on such things as parol evidence, extended negotiations, "handshakes," oral understandings, courses of conduct (including reliance and changes of position), except as provided under "Confidentiality," "Exclusivity", and "Expenses" below.

The Mississippi Term Sheet — Royalty Payment Convertible Note is a legal document that outlines the terms and conditions of a financial agreement between a lender and a borrower. This type of note is specifically designed to enable the lender to receive royalty payments along with interest payments for a specified period of time. The borrower agrees to repay the loan amount, including the principal and interest, by making regular royalty payments based on a percentage of their revenue. There are different types of Mississippi Term Sheet — Royalty Payment Convertible Note, each catering to specific needs or circumstances of the borrower and lender. Some common variations include: 1. Fixed Royalty Percentage Note: This type of note sets a fixed percentage of royalty payments that the borrower must make to the lender. The percentage is determined at the time of the agreement and remains constant throughout the repayment period. 2. Variable Royalty Percentage Note: In this case, the royalty percentage is not fixed but rather adjusted based on certain performance metrics of the borrower. For example, the percentage may increase if the borrower's revenue surpasses a specified threshold or decrease if the revenue falls below a certain level. 3. Deferred Royalty Payments Note: This type of note allows the borrower to defer royalty payments for a certain period, usually during the initial stages of the loan. The deferred payments will be accumulated and paid back later, either in a lump sum or through increased royalty payments over the remaining term. 4. Convertible Royalty Note: A convertible royalty note provides an option for the lender to convert their debt into equity in the borrower's company. This conversion typically occurs if the borrower achieves certain milestones or if there is a subsequent round of funding. It is crucial for both parties to carefully review and negotiate the terms of the Mississippi Term Sheet — Royalty Payment Convertible Note before finalizing the agreement. This document serves as a binding contract that protects the rights and obligations of both the lender and borrower while ensuring a fair and transparent financial arrangement.