$100K Seed investment for 3% equity in company – Convertible Preferred Stock

1 points by bobbysax ↗ HN
I'm giving this $100K seed investment as a bridge funding to the company to help them financially. In return, they are giving me a 3% equity in the company.

1. Can someone proof this for any loopholes and let me know how and from where can I generate the legal Convertible preferred stock document? 2. Does the Anti-dilution protection clause ensure my stocks will never dilute in any future event?

TERM SHEET

Investment Security: Seed Convertible Preferred Stock will be issued at the closing of this transaction

Investment Amount: Investor will lead the round of $100,000

Pre-Money Valuation: $20.3 Million

Ownership: The investor will own 3% of the Company for the $100,000 invested

ESOP Pool: 20% ESOP pool included in the pre-money valuation

Minority Protection Rights: The Convertible Preferred Stock issued to the Investor will carry rights of being shares are corporate fixed-income securities that the investor can choose to turn into shares of the company's common stock (up to 3%) after the closing of a Series A financing round, a merger or acquisition of the Company or Company revenues that exceed $10 million, whichever comes first.

Liquidation Preference: In the event of the liquidation of the Company, the Convertible Preferred Stock issued to the Investors will have liquidation rights pari-pasu to all other outstanding preferred securities of the Company. Seed liquidation preference: The Investors will have a liquidation preference pursuant to which they will be entitled to receive, in preference to all other outstanding securities of the Company, an amount equal to 100% of the aggregate purchase price paid for the shares of Convertible Preferred Stock of the Company purchased in the transaction contemplated hereby, plus any accrued or declared but unpaid dividends on such shares

Anti-dilution Protection: All Investors will have a broad based and equal weighted average anti-dilution protection

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