SERIES A PREFERRED STOCK FINANCING

TERM SHEET

SUMMARY OF TERMS

TERM SHEET

SERIES A PREFERRED STOCK FINANCING OF [COMPANY NAME]

[DATE]

This Term Sheet summarizes the principal terms of the proposed Series A Preferred Stock financing of [COMPANY NAME], a Delaware corporation (the "Company"). This Term Sheet is for discussion purposes only and, except for the provisions contained in Sections 11, 12, and 13, is non-binding on the parties.

1. OFFERING TERMS

1.1 Issuer

[COMPANY NAME], a Delaware corporation

1.2 Securities to be Issued

[NUMBER] shares of Series A Preferred Stock (the "Series A Preferred")

1.3 Aggregate Proceeds

$[AGGREGATE AMOUNT] (including $[SAFE/NOTE CONVERSION AMOUNT] from conversion of outstanding SAFEs and convertible notes)

1.4 Purchasers

1.5 Price Per Share

$[PRICE] per share (the "Original Purchase Price"), based on a pre-money valuation of $[PRE-MONEY VALUATION] and [NUMBER] shares of Common Stock outstanding on a fully-diluted basis.

1.6 Use of Proceeds

Working capital and general corporate purposes.

1.7 Expected Closing Date

On or before [CLOSING DATE]

2. TERMS OF SERIES A PREFERRED STOCK

2.1 Dividends

☐ Non-Cumulative (Company-Favorable): Dividends will be paid on the Series A Preferred on an as-converted basis when and if declared by the Board of Directors.

☐ Cumulative (Investor-Favorable): The Series A Preferred shall accrue dividends at [6-8]% per annum (whether or not declared), compounded annually, payable upon a liquidation event or redemption.

2.2 Liquidation Preference

☐ Non-Participating Preferred (Standard):

In the event of any liquidation, dissolution, or winding up of the Company, the holders of Series A Preferred shall be entitled to receive, prior and in preference to any distribution to the holders of Common Stock, an amount per share equal to the greater of:
- (a) The Original Purchase Price plus any declared but unpaid dividends (the "Liquidation Preference"); or
- (b) The amount such holder would receive if all shares of Series A Preferred were converted to Common Stock.

☐ Participating Preferred with Cap:

Holders of Series A Preferred shall first receive the Liquidation Preference and shall then participate with Common Stock pro rata until holders of Series A Preferred receive an aggregate of [2-3]x the Original Purchase Price per share.

2.3 Voting Rights

The Series A Preferred shall vote together with the Common Stock on an as-converted basis. The Series A Preferred shall also have the following separate voting rights:

2.4 Protective Provisions

So long as [50% or more / 25%] of the originally issued Series A Preferred remains outstanding, the Company shall not, without the consent of the holders of a majority of the Series A Preferred:

(a) Alter or change the rights, preferences, or privileges of the Series A Preferred;

(b) Increase or decrease the authorized number of shares of Series A Preferred;

(c) Create any new class or series of shares having rights, preferences, or privileges senior to or on parity with the Series A Preferred;

(d) Redeem, repurchase, or pay dividends on any shares of Common Stock (other than repurchases at cost from employees upon termination);

(e) Merge or consolidate with any other entity, or sell all or substantially all of the Company's assets;

(f) Increase or decrease the size of the Board of Directors;

(g) Incur indebtedness in excess of $[THRESHOLD];

(h) Amend or waive any provision of the Certificate of Incorporation or Bylaws;

(i) Make any acquisition or investment in excess of $[THRESHOLD];

(j) Approve the annual budget or any material deviation therefrom.

2.5 Conversion

Conversion at Option of Holder: Each share of Series A Preferred shall be convertible into Common Stock at the option of the holder at any time, at an initial conversion rate of 1:1 (subject to adjustments for stock splits, etc.).

Automatic Conversion: The Series A Preferred shall automatically convert into Common Stock upon:
- (a) The closing of a firmly underwritten public offering of Common Stock at a price per share of at least [3-5]x the Original Purchase Price and aggregate gross proceeds of at least $[50,000,000] (a "Qualified IPO"); or
- (b) The vote or written consent of holders of a majority of the Series A Preferred.

2.6 Anti-Dilution Protection

☐ Broad-Based Weighted Average (Standard):

The conversion price of the Series A Preferred shall be subject to proportional adjustment for stock splits, stock dividends, etc., and to adjustment on a broad-based weighted average basis for issuances of additional shares of Common Stock or Common Stock Equivalents at a price less than the then-applicable conversion price (subject to customary exceptions).

☐ Full Ratchet (Investor-Favorable):

In the event of a down round, the conversion price shall be reduced to the price at which new shares are issued.

Standard Exceptions: The anti-dilution adjustment shall not apply to:
- (i) Shares issued pursuant to the equity incentive plan approved by the Board;
- (ii) Shares issued upon conversion of the Series A Preferred;
- (iii) Shares issued in connection with strategic partnerships approved by the Board;
- (iv) Shares issued upon exercise of warrants outstanding as of the Closing.

2.7 Pay-to-Play

☐ No Pay-to-Play

☐ Mild Pay-to-Play: Investors who do not participate pro rata in subsequent down rounds will have their Series A Preferred converted to Common Stock.

☐ Strong Pay-to-Play: Investors who do not participate pro rata in subsequent down rounds will have their Series A Preferred converted to a shadow preferred series with reduced rights.

3. INVESTOR RIGHTS

3.1 Registration Rights

Demand Registration: Holders of a majority of Registrable Securities may require the Company to file an S-1 registration statement if the anticipated aggregate offering price is at least $[20,000,000]. The Company shall not be obligated to effect more than [2] demand registrations.

S-3 Registration: Holders of at least [10-20]% of Registrable Securities may require the Company to file an unlimited number of S-3 registrations (if available) for offerings of at least $[5,000,000].

Piggyback Registration: Holders of Registrable Securities shall be entitled to piggyback registration rights on registrations of the Company, subject to pro rata cutback at the discretion of the underwriters.

Expenses: The Company shall bear all registration expenses (excluding underwriting discounts and selling expenses).

Lock-Up: Holders of Registrable Securities shall agree to a market stand-off not to exceed 180 days following an IPO.

Termination: Registration rights shall terminate [5] years after an IPO or upon Rule 144 eligibility.

3.2 Information Rights

Investors holding at least [THRESHOLD] shares of Series A Preferred shall receive:

(a) Annual Audited Financial Statements: Within [90-120] days after fiscal year end;

(b) Quarterly Unaudited Financial Statements: Within [45] days after each fiscal quarter end;

(c) Annual Budget: The annual budget and business plan, as approved by the Board;

(d) Monthly Financial Reports: Within [30] days of month end (optional based on stage);

(e) Inspection Rights: Reasonable inspection rights during normal business hours upon reasonable notice;

(f) Capitalization Table: Upon request, a current capitalization table.

Information rights shall terminate upon an IPO.

3.3 Pro Rata Rights (Right to Participate)

Major Investors (holding at least [THRESHOLD] shares) shall have the right to participate in subsequent issuances of equity securities pro rata based on their percentage ownership on a fully-diluted basis.

3.4 Board Observer Rights

The Lead Investor shall be entitled to designate one representative to attend all meetings of the Board of Directors as a non-voting observer. Observer rights may be suspended for matters involving:
- (a) Conflicts of interest;
- (b) Competitive harm; or
- (c) Attorney-client privileged matters.

4. BOARD OF DIRECTORS

4.1 Board Composition

At Closing, the Board of Directors shall consist of [5] members:

• [2] representatives designated by the holders of Common Stock (the "Common Directors")
• [1] representative designated by the Lead Investor (the "Series A Director")
• [1] representative designated by [Second Investor, if applicable]
• [1] independent director mutually agreed upon by the Common and Preferred Directors

4.2 Board Meetings

The Board shall meet at least [quarterly/monthly], with written consent resolutions permitted.

4.3 Board Committees

The following Board committees shall be established:
- Compensation Committee
- Audit Committee (following IPO)

4.4 D&O Insurance

The Company shall maintain directors' and officers' liability insurance of at least $[2,000,000].

5. VOTING AGREEMENT

5.1 Board Election

The Investors and Key Holders (founders and significant employees) shall enter into a Voting Agreement providing for the election of the Board as set forth above.

5.2 Drag-Along Rights

If holders of [majority] of Common Stock and holders of [majority] of Series A Preferred approve a sale of the Company, all shareholders shall vote in favor of and not oppose such transaction, provided that:
- (a) Holders of Series A Preferred receive at least [1-2]x Liquidation Preference; and
- (b) All shareholders receive the same form and amount of consideration per share (subject to Series A Preferred liquidation preference).

6. RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT

6.1 Right of First Refusal

The Company and Investors shall have a right of first refusal on any proposed transfer of shares by Key Holders (founders), subject to customary exemptions.

6.2 Co-Sale Rights (Tag-Along)

If Key Holders propose to sell shares to a third party, Investors shall have the right to participate in such sale on a pro rata basis (co-sale or tag-along right).

6.3 Lock-Up

Key Holders shall not sell any shares for [12-24] months following the Closing without Board consent.

7. EMPLOYEE AND EQUITY MATTERS

7.1 Employee Option Pool

The Company shall reserve shares of Common Stock so that [10-20]% of the fully-diluted capitalization (post-Closing) is available for future employee grants under an equity incentive plan approved by the Board.

7.2 Vesting

All employee and founder equity shall be subject to four-year vesting with a one-year cliff, unless otherwise approved by the Board.

7.3 Proprietary Information Agreements

All employees and consultants shall execute the Company's Proprietary Information and Inventions Assignment Agreement (PIIA).

8. OTHER MATTERS

8.1 Founders Activities

Each Key Holder shall devote 100% of their professional time to the Company.

8.2 Key Person Insurance

The Company shall obtain key person life insurance on [FOUNDER NAME(S)] in the amount of at least $[1,000,000].

8.3 FCPA/Anti-Corruption Compliance

The Company shall implement appropriate compliance procedures.

8.4 National Security Compliance

Each Investor shall represent that it is not a "person of concern" under applicable national security regulations (OISP, DSP). The Company shall comply with all applicable outbound investment and data security requirements.

9. CONDITIONS TO CLOSING

9.1 Company Conditions

• Completion of satisfactory legal, financial, and business due diligence
• Execution of definitive documents (Stock Purchase Agreement, Investor Rights Agreement, Voting Agreement, Right of First Refusal and Co-Sale Agreement, amended Certificate of Incorporation)
• Satisfactory capitalization table
• Key employee retention
• No material adverse change

9.2 Standard Conditions

• Legal opinion of Company counsel
• Compliance certificate
• Good standing certificates
• Bring-down of representations and warranties

10. TRANCHED FINANCING (OPTIONAL)

☐ Tranched Financing Applies:

The financing shall close in [NUMBER] tranches:

Milestone Determination: Achievement of milestones shall be determined by [the Board / mutual agreement].

Failure to Achieve Milestone: If a milestone is not achieved by the target date, [Investors may waive / financing terminates / alternative terms].

11. CONFIDENTIALITY (BINDING)

This Section is legally binding. Each party shall maintain the confidentiality of this Term Sheet and the proposed transaction, except as required by law or with the prior written consent of the other party.

12. EXCLUSIVITY (BINDING)

This Section is legally binding. For a period of [30-60] days from the date hereof, the Company shall not solicit, negotiate, or enter into any agreement with any other party regarding any equity financing, merger, acquisition, or similar transaction without the prior written consent of the Lead Investor.

13. EXPENSES (BINDING)

This Section is legally binding. Upon Closing, the Company shall reimburse the Lead Investor for reasonable legal fees and expenses incurred in connection with this transaction, up to a maximum of $[25,000-50,000]. If the transaction does not close due to the Company's breach or termination, the Company shall reimburse such expenses regardless of Closing.

14. GOVERNING LAW

This Term Sheet shall be governed by the laws of the State of Delaware, without regard to conflict of laws principles.

15. NON-BINDING NATURE

Except for Sections 11, 12, and 13, this Term Sheet is intended solely as a summary of the terms that are currently proposed by the parties. The parties acknowledge that they do not intend to be bound by this Term Sheet and that they will not be bound unless and until they negotiate and execute definitive agreements.

SIGNATURES

COMPANY:

[COMPANY NAME]

By: _________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: CEO

Date: _________________________________

LEAD INVESTOR:

[INVESTOR NAME]

By: _________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: [TITLE]

Date: _________________________________

APPENDIX A - CAPITALIZATION TABLE

This Term Sheet is based on the NVCA Model Term Sheet (October 2025 update) and is intended for discussion purposes only. Except for the binding provisions indicated, this Term Sheet does not constitute a binding agreement. Definitive agreements will be negotiated and executed upon mutual agreement of the parties. Securities issued in this transaction are intended to be exempt from registration under the Securities Act of 1933 pursuant to Section 4(a)(2) and/or Regulation D.