VC+TermSheetwith+Notes.docVIP

5.1: Term Sheet (Model Form) [DATE] NEWCO, INC. MEMORANDUM OF TERMS FOR PLACEMENT OF CONVERTIBLE PREFERRED This memorandum summarizes the principal terms with respect to a private placement of equity securities of Newco (the Company) by a group of Investors (the Investors). Introduction The Company was incorporated in Delaware on [DATE]. It presently has an authorized capitalization consisting of [_____] shares of Common Stock (Common), [_____] shares of which have been issued to [_____] shareholders, and [_____] shares of preferred stock, [_____] shares of which have been issued to [_____] shareholders. The Founders of the Company have purchased and paid for in full [_____] shares of the Companys Common at a price of [_____] per share. In addition there are outstanding options to purchase in the aggregate [_____] shares of Common at prices ranging from $[_____] to $[_____] per share of Common. Proposed Private Placement The Company and the Investors propose a private placement of shares of Preferred Stock on the following terms: Amount$[_____]Type of SecuritySeries A Preferred Stock (Preferred), convertible into Common Stock representing [_____]% of the outstanding securities of the Company on a fully diluted basis. In a well drafted term sheet, clarity can be enhanced if the parties agree on a cap table, viz.:[1]Price Per Share$[_____] (Original Purchase Price).MilestonesIt is contemplated that the $[_____] Price to Investors will be available in two take-downs, the first $[_____] on the occasion of a letter of intent or interest including a comprehensive marketing plan from a major manufacturer to join in a business partnership with Newco Inc. to market [Product] (the Product). The second $[_____], comprising the balance of the funds, will be advanced coincident with the execution by the Company of a formal strategic alliance with such major manufacturer.Milestones: Rights, Preferences, Privileges and Restrictions of Preferred Stock1. Dividend Provi