Financial
Statements
and Reporting:
Right of First Refusal:
Right of First Refusal and
Co-Sale:
Other Provisions:
Expenses:
Confidentiality:
The Company will provide all information and materials,
including, without limitation, all internal management
documents, reports of operations, reports of adverse
developments, copies of any management letters,
communications with shareholders or directors and press
releases and registration statements as well as access to all senior
managers as requested by holders of Series A Preferred Stock.
In addition, the Company will provide the holders of Series A
Preferred Stock with unaudited monthly and quarterly and
audited yearly financial statements, as well as an annual budget.
Holders of Series A Preferred Stock shall have a pro rata right,
based on their percentage of fully-diluted equity interest in the
company, with an undersubscription right up to the total number
of shares being offered, to participate in subsequent stock
issuances.
In the event that any of the founders and existing executive
management propose to sell their stock to third parties, the
Company shall have the first right to purchase the securities on
substantially the same terms as the proposed sale; the Series A
Preferred Stockholders shall next have said right according to
respective percentage ownership of Series A Preferred Stock or
to sell proportionate percentage pursuant to co-sale rights. Such
rights shall terminate upon a Qualified Public Offering.
The purchase agreement shall include standard and customary
representations and warranties of the Company and the founders.
The other agreements prepared to implement this financing shall
contain other standard and customary provisions. Definitive
agreements will be drafted by counsel to the Investor. This term
sheet is intended by the parties to be non-binding.
The Company will reimburse the holders of Series A Preferred
Stock for reasonable legal fees in connection with the
transaction, payable at closing and only in the event that the
transactions contemplated by this term sheet are consummated.
The Company will not disclose or discuss the terms of this term
sheet with any person other than key officers, members of the
Board of Directors of the Company or the Company’s
accountants or attorneys without the written consent of Investor,
except as required by law. In addition, the Company shall not
use the Investor’s name in any manner, context or format
(including, reference on or links to websites, press releases, etc.)
without the prior review and approval of Investor.
5