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TERM SHEET FOR ONGRID BUSINESS ACQUISITION SELLER NOTE

Borrower

Entity formed to acquire OnGrid business assets (the Business) from


Andrew Black (Seller).
Seller.

Noteholder
Term Sheet Definitions

Use of Proceeds
Principal Amount of Note

Seller Note: The note titled ONGRID BUSINESS


ACQUISITION SELLER NOTE
Acquisition Notes: The notes collectively titled ONGRIDS
ACQUISITION FINANCING NOTES
Working Capital Notes: The notes collectively titled
ONGRIDS WORKING CAPITAL FINANCING NOTES
To pay part of the acquisition price.
$400,000.

Interest Rate

17%, subject to adjustment as shown on Attachment A hereto.

Scheduled Payments

Up to one hundred (100) $7,500 monthly (mortgage style


amortization) payments until the Seller Note is paid in full. The
monthly payment amount shall not be affected by voluntary
prepayments, and can only be adjusted with Sellers consent.

Voluntary Prepayments
Mandatory Prepayment Upon
Change in Control

Maturity Date
Collateral

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Borrower may prepay all or portion of principal from time to time.


Borrower will repay the Seller Note in full if there is a change in
control, including:
If a third party acquires the Business by purchasing the
Business assets from Borrower, or
If Borrower issues equity securities to any third party for cash
consideration.
Eight (8) years and Four (4) months from Closing.
The Seller Note is secured by one hundred percent (100%) of the
Borrowers equity (the Pledged Equity) pursuant to pledge
agreement between Seller and Michael Bishop (the Pledge
Agreement). The Pledge Agreement will prohibit Borrowers
issuance of equity to third parties while the Note is outstanding, other
than an issuance that results in a mandatory prepayment of the Note. If,
during an Event of Default, Seller enforces the pledge of Borrowers
equity securing the Seller Note, Seller must repossess the entire entity,
including liabilities and debts.

Subordination/Priority
In a liquidation, winding up or bankruptcy of Borrower the Seller Note
shall be paid in full before any payment is made with respect to any
other notes and all other indebtedness for money borrowed.
Seller Approval Rights

Seller approves Acquisition Notes


totaling up to $100,000. If Seller enforces the Pledge Agreement, total
outstanding Acquisition Notes principal will be limited to $100,000.
Seller approves Working Capital Notes totaling up to $50,000. If Seller
enforces the Pledge Agreement, total outstanding Working Capital
Notes principal will be limited to the lesser of (i) $25,000, or (ii)
principal payments made on the Seller Note.
Borrower must seek Sellers approval before entry into any third party
contract with a term greater than one (1) year or involving over
$10,000 in expenditures. Such approval shall not be unreasonably
withheld, delayed or conditioned.
Borrower must seek Sellers approval before any future Borrower debt
obligation with a repayment term greater than one (1) year or a
borrowed amount over $10,000.

Board of Directors Observer


Rights

Seller has Observer Rights to all Board of Directors activities, and


will be given copies of all communications, resolutions, reports,
minutes, and accounting statements. Borrower will provide Seller with
quarterly financial statements.
Michael Bishop, as Borrowers controlling equity holder, may appoint
members to the Board of Directors. Such appointments shall be subject
to Sellers approval.

Restrictions

Michael Bishops total annual compensation not to exceed $90,000,


unless and until Borrowers twelve (12) month trailing revenues
exceed $500,000. Michael Bishops total annual compensation not to
exceed $110,000 under any circumstances.

Events of Default

The Seller Note will be considered Current if all payments due have
been paid.
Payments will be credited on a First Due, First Paid basis.
The Seller Note will be considered in Default if Borrower is late on
an accumulation of 3 payments at any one time.
Failure to pay three (3) consecutive monthly payments over sixty-one
(61) days (such 61 days the Cure Period).
While the Seller Note is not Current, Borrower may not make
any principal or interest payments on any other Note; however
interest will accrue on the other Notes.

Advisory Board

To be eligible for Forbearance through Advisory Board vote, Borrower


must have the five (5) member Advisory Board in place before

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initiating Forbearance proceedings. Seller shall be appointed to the


Advisory Board, and shall remain on the Advisory Board until the
Seller Note is paid in full. The four (4) remaining Advisory Board
members are subject to Seller's approval.
Forbearance

The Note holder will forbear from exercise of rights and remedies,
including under the Pledge Agreement, for Forbearance Period (which
commences upon entry into Default), if:

The Seller Note is considered in Default, and


Seller or the Advisory Board (by vote of at least 4 members)
approves Borrowers proposal for improving its financial and
business condition

Forbearance Period means (i) six (6) months, or (ii) such longer
period approved by Seller.
During Forbearance Period:
No Seller, Acquisition, or Working Capital Note interest or
principal payments will be made
Interest will accrue
Michael Bishops salary will accrue, but not be paid, and will
be reduced to the minimum required under California law
(approximately $37,440 annually)
Assignment

Governing Law
Expenses

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Seller may not assign or encumber the Seller Note without Borrowers
prior written consent; provided, however, that Seller may assign all or
any portion of the Seller Note to family members and/or trusts
established for estate planning purposes.
California.
Each party is responsible for its own legal and other expenses in
connection with the Note issuance.

ATTACHMENT A
AGGREGATE AMOUNT
OF VOLUNTARY
PRINCIPAL
PREPAYMENTS

INTEREST RATE

$25,000-$49,999

15.93%

$50,000-$74,999

14.83%

$75,000-$99,999

14.11%

$100,000-$124,999

13.43%

$125,000-$149,999

13.08%

$150,000-$174,999

12.71%

$175,000-$199,999

11.82%

$200,000-$224,999

10.88%

$225,000-$249,999

10.25%

$250,000-$274,999

9.53%

$275,000-$299,999

8.69%

$300,000-$349,999

7.89%

$350,000-$374,999

6.98%

$375,000-$399,999

6.11%

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