Legal Documents

What is a Convertible Note Term Sheet ?

Convertible Note Term Sheet is a simple, non-legally binding document that records the major terms of negotiation between a company and investors for the issue of convertible notes.

Creating a Convertible Note Term Sheet helps facilitate discussion between the company and its investors in the negotiation stage.

Given the non-legally binding nature of a Convertible Note Term Sheet, it is necessary for the parties to execute a Convertible Note Instrument or Convertible Note Subscription Agreement to record the binding terms in full.

Key points included

  • Aggregate principal amount;
  • Principal amount;
  • Interest rate;
  • Maturity date;
  • Discount rate;
  • Valuation cap; and
  • Qualified financing amount.

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