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FR Y6 0 MB Number 71000297 Approval expires November 30, 2019-Page 1 of 2Board of Governors of the Federal Reserve Systematical Report of Holding Companies FR Y6 Report at the close of business as
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How to fill out convertible note term sheet

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How to fill out convertible note term sheet

01
Define the terms: Start by clearly defining the terms of the convertible note, including the interest rate, maturity date, conversion discount, and valuation cap.
02
Include protective provisions: Consider including provisions to protect the investor, such as conversion triggers, voting rights, and information rights.
03
Specify events of default: Clearly outline the events that would trigger a default under the convertible note, such as missed payments or breaches of covenants.
04
Consult with legal counsel: It is important to consult with legal counsel to ensure that the terms of the convertible note are legally enforceable and protect the interests of both parties.
05
Sign the term sheet: Once the terms of the convertible note term sheet have been agreed upon, both parties should sign the document to make it legally binding.

Who needs convertible note term sheet?

01
Startups seeking funding: Startups looking to raise capital quickly and without having to give up equity may benefit from using convertible notes.
02
Investors looking for flexibility: Investors who are interested in investing in early-stage startups but want to defer valuation discussions may find convertible notes to be a useful tool.
03
Companies with uncertain valuations: Companies that are still in the early stages of development and have uncertain valuations may find convertible notes to be a more suitable form of financing than traditional equity investments.
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A convertible note term sheet is a document outlining the key terms and conditions of a convertible note investment, including the interest rate, maturity date, conversion terms, and other important details.
Both the investor and the startup company are typically required to sign and file the convertible note term sheet.
To fill out a convertible note term sheet, both parties should review the terms, negotiate any changes, and then sign the document to make it legally binding.
The purpose of a convertible note term sheet is to establish the key terms of a convertible note investment to avoid misunderstandings and disputes in the future.
The convertible note term sheet should include details such as the principal amount, interest rate, maturity date, conversion terms, and any other relevant terms agreed upon by the parties.
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