Oregon 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.

Oregon Term Sheet — Royalty Payment Convertible Note is a legally binding document that outlines the terms and conditions of a financing agreement between a company seeking funds and an investor. This type of convertible note is commonly used in the state of Oregon for startups or businesses looking to attract capital. The primary characteristic of an Oregon Term Sheet — Royalty Payment Convertible Note is that it includes a royalty payment provision in addition to the conversion feature. This means that instead of receiving equity in the company, the investor receives a percentage of the company's revenue as royalty payments until a certain predetermined amount is paid. The note also contains provisions regarding the conversion of the debt into equity. If the company successfully raises a subsequent round of financing or reaches a specific milestone, the investor has the option to convert their debt into equity at a predetermined conversion price, usually at a discount to the price paid by the new investors. The Oregon Term Sheet — Royalty Payment Convertible Note protects both the investor and the company by establishing various terms and conditions such as the interest rate on the debt, maturity date, events of default, and investor rights. It ensures that the investor's investment is adequately protected while allowing the company to obtain the necessary funds to grow its business. Different types of Oregon Term Sheet — Royalty Payment Convertible Note may include variations in terms and conditions, depending on the specific requirements and negotiations between the company and investor. Some key variations may include the percentage of royalty payments, conversion price, maturity date, interest rate, and investor rights. It is essential for both parties to carefully review and negotiate the terms outlined in the Oregon Term Sheet — Royalty Payment Convertible Note to reach a mutually beneficial agreement. Consulting legal and financial professionals experienced in convertible notes can provide invaluable guidance throughout the process.