|Monthly Repayment Amount|
________% of the borrower’s preceding month’s net revenue, due and payable on or before the [5th] day of each month.
|“Net Revenue”:||“Net Revenue” means all of the borrower’s revenues and cash receipts, from all product or service sales, except customer returns and shipping charges.|
|Repayment Amount:||The note will be considered paid in full when the borrower has paid the lender [|
___ times] the amount of the loan, not including any penalties, attorneys’ fees or similar items.
|Maturity Date:||As soon as the borrower has paid the lender the Repayment Amount, or 5 years.|
|Security Interest:||The borrower will grant lender a first priority security interest in all of the borrower’s property.|
|Acceleration of Repayment Amount:||The Repayment Amount will become immediately due and payable upon a change of control of the borrower, a sale of all or substantially all of the borrower’s assets, or the borrower’s insolvency or an event of default (as defined in the definitive documents).|
|Reporting:||The borrower will report to the lender its monthly Net Revenues each month. The borrower will also provide the lender customary information rights. In the event that the borrower underpays the lender, the borrower will pay the lender the deficiency plus a fee of 5% of the underpayment the lender’s audit costs in uncovering such deficiency.|
|Success Fee:||On a sale of the borrower’s business, the borrower will pay the lender a success fee in the amount of $|
________ or X% of the amount paid to the borrower’s owners as a result of the sale.
|Closing Fee:||The borrower will pay the lender closing fee of $|
|Lender’s Expenses:||The borrower will reimburse the lender’s legal fees for documenting the loan.|
|Closing Conditions:||The loan will be subject to the lenders due diligence and the borrower’s execution of the lender’s standard loan documents. The loan documents will contain customary representations and warranties.|
|Negative Covenants:||The borrower may not incur additional indebtedness or grant additional security interests on any of its assets, make loans or advances, dispose of all or substantially all of its assets, or consummate a change in control without the consent of the lender.|
|Accounting:||The loan will be treated as such on the borrower’s balance sheet. In no event will the loan be treated or considered equity.|
|Confidentiality:||The borrower will hold this term sheet in strict confidence. This is a binding term.|
|Non-Binding:||Except for the paragraph titled Confidentiality, this term sheet is non-binding, and shall not imply any obligation to negotiate. Either party may terminate discussions at any time.|