2) Term Sheet The Galion

Galion Term Sheet Serie A https://thegalionproject.com/term-sheet-new-edition (abr-2020)

Issuer Company [SA/SAS] (the “Company”)

Founder[s] [__●__], [__●__] and [__●__] (the “Founder[s]”).

Seed Investor[s] [__●__][, [__●__] and [__●__]] (together the “Seed Investor[s]”), representing all pre-closing shareholders other than the Founder[s].

Series A Investor[s] [__●__], [__●__] and [__●__] (together the “Series A Investor[s]” and, with the Seed Investor[s], the “Investor[s]”).

Shareholders Any holder of shares of the company is individually called a “Shareholder” and collectively “Shareholders”.

Type of Security Series A [ordinary/preferred] shares (the “Series A Shares”).

Structure of Financing The Series A investment (the "Series A Investment") will amount to an aggregate of €[__●__] in newly issued Series A Shares based on a fully diluted pre-money valuation of €[__●__], i.e., €[__●__] per Series A Share (the “Subscription Price”), allocated between the Series A Investor[s] [and the Seed Investor[s]] as follows:

Investors

Number of Series A Shares

Amount subscribed

[__●__]

[__●__]

€[__●__]

[__●__]

[__●__]

€[__●__]

[__●__]

[__●__]

€[__●__]

TOTAL

[__●__]

€[__●__]

The fully diluted capitalization table before and after completion of the Series A Investment shall be as set out in Appendix A.

Closing conditions (the "Closing")

(i) satisfactory completion of confirmatory due diligence ([commercial, technical,] legal, tax, social, financial and accounting due diligences covering usual matters);

(ii) negotiation of customary legal documentation in compliance with this term sheet (including a simplification/modification of the Company’s by-laws, to the extent relevant);

(iii) approval of the proposed investment/definitive agreements by the. Series A Investor[s]’ respective investment committees or other competent bodies, if applicable;

(iv) receipt by the Investors of anti-money laundering documents reasonably satisfactory to them;

(v) receipt of waiver of any existing pre-emptive/anti-dilution rights and/or other necessary approvals and consents;

(vi) execution by all the Shareholders and all the holders of securities of the Company of the Agreement or of a Short-Form Agreement as the case may be (as these terms are defined below) and agreement between the parties regarding any other documentation (including corporate documentation);

(vii) no unanticipated material adverse events.

Liquidation Preference In the event of (i) a liquidation, dissolution, winding up, bankruptcy or other comparable event, (ii) sale, merger or other transfer of shares of the Company resulting in a change of control of the Company, or (iii) sale of all or substantially all of the Company’s intellectual property or assets, the higher of [Non-participating [reco Galion] : [10 to 15%]/ [Participating : 20%] of the proceeds and par value shall first be distributed to all shareholders pro rata to the number of shares held by them irrespective of class or category. Then, out of the remaining proceeds, the holders of Series A Shares shall be entitled to receive, in preference to all other shareholders, an amount per Series A Share equal to their Subscription Price (as adjusted for stock splits, combinations and anti-dilution adjustment) minus the amount per Share received in the first distribution, plus any declared but unpaid dividends.

[Non-participating [reco Galion]. Thereafter, the remaining proceeds (if any) shall be distributed to the holders of ordinary shares pro rata to the number of such shares (excluding, for the avoidance of doubt, any Series A Shares) held by them (1x-non participating allocation) (the “Liquidation Preference").

[or]

[Participating. Thereafter, the remaining proceeds (if any) shall be distributed to all shareholders pro rata to the number of shares held by them irrespective of class or category (the “Liquidation Preference”).]

Automatic Conversion The Series A Shares shall automatically convert into ordinary shares upon the closing of an IPO of the Company (i) approved by the Series A Majority (as defined below) or (ii) procuring aggregate net proceeds to the Company of at least €[•] million based on a price per share at least equal to [3 to 5] times the Subscription Price (a “Qualifying IPO”).

Optional Conversion Each holder of the Series A Share shall have the right to convert its shares at any time into ordinary shares. The conversion ratio shall be 1:1, subject to adjustment in the event of stock split or grouping.

Ratchet One anti-dilution equity warrant (a “Ratchet Warrant”) will be attached to each Series A Share, entitling its holder to subscribe for a variable number of new Series A Shares at par value in case a new round of financing shall be completed by the Company within [2/4] years of the Series A Investment at price below the Subscription Price, thereby obtaining an adjustment of the cost of such holder’s shares based on a customary broad based weighted average ratchet formula [; provided that holders of Ratchet Warrants shall only be entitled to exercise them to the extent that they participate in the relevant down round pro rata].

Redemption The Series A Shares will not be redeemable consistent with applicable French law.

Dividends The Series A Shares shall be entitled to participate in any dividend distribution on a pro rata basis.

Voting The Series A Shares shall carry the same number of votes as the other shares of the Company issued and outstanding consistent with applicable French law.

Series A Majority Approval The consent of holders of at least [2/3] of the Series A Shares (the "Series A Majority") shall be required for:

(i) any action which alters or amends any of the rights, preferences or privileges of the Series A. Shares;

(ii) creating or authorizing the creation of any security senior to [or on parity with] the Series A Shares (including any convertible into or exercisable for such series) or reclassifying, altering or amending any existing security that is junior to [or on parity with] the Series A Shares, if such reclassification, alteration or amendment would render such other security senior to [or on parity] with the Series A Shares.

A shareholders’ agreement (the “Agreement”) will be entered into on the Closing date among the Founder[s] and the Investor[s] owning more than [5%] of the share capital, for a term of 15 years renewable. The Agreement will replace and supersede in all respect any and all pre-existing shareholders agreements entered into between the shareholders of the Company. The Agreement shall automatically terminate in case of Qualifying IPO.

All other shareholders including the Investors owning less than [5%] of the share capital and security holders (the "Minority Holders") shall sign with the parties to the Agreement (represented for this purpose by the Company) a separate, shorter shareholders’ agreement (the "Short-Form Agreement") under which the Minority Holders shall have a full tag along right in case of transfer of more than 50% of the shares of the Company and, in return, shall be subject to all major obligations provided for in the Agreement (including the Right of First Refusal, the Drag Along, the Liquidity and the Liquidation Preference). [The Founders and the Series A Investor[s] shall discuss in good faith before the Closing on the opportunity to include leaver provisions for the Minority Holders employed by the Company]. Also, the Minority Holders will agree in such Short-Form Agreement to be bound by the terms of any lock-up obligation which the banks in charge of the IPO and the Board may reasonably see fit.

Please note that this term sheet has been drafted under the assumption that (i) the By-laws do not contain specific rights (such as pre-emptive right, approval for transfer of shares, exclusion of shareholders), (ii) the decisions of the shareholders meeting shall be approved at a 2/3 majority should the decision concerns a modification of the By-laws or at a simple majority otherwise and (iii) right of the shareholders holding more than 10% of the capital to call a shareholders meeting is provided.

Pre-emptive Rights Each Founder, for so long as he/she is employed by the Company as an officer, director, employee or consultant (the “Active Founders”), and the Series A Investor[s] shall have a pre-emptive right to subscribe their pro rata share of any new securities of the Company issued other than securities issued to officers, employees, directors or consultants, in each case pursuant to plans or agreements approved by the Board at a Qualified Majority (as these terms are defined below).

Lock Up No security may be transferred by the Founders until the [fourth] anniversary of Closing, except for transfers by the Founders (i) not exceeding [10 to 15%] in the aggregate, of the securities held by each of them at the Closing date, (ii) in case of Free Transfers, Co-Sale or Liquidity situations or (iii) being subject to Leaver or Drag Along.

Right of First Refusal Each Series A Investor [holding more than [•]% of the share capital] and the Active Founders will have a right of first refusal on any security proposed to be transferred by any security holder, pro rata to their respective shareholding with a right of oversubscription, except for transfers (i) to an affiliate entity, (ii) to a personal or family holding company, (iii) by any investment fund to a secondary fund in the context of the liquidation of the transferor (“Free Transfers”) and (iv) by the Founders in the context of their R&W, in all cases subject to customary limitations and provided that the Active Founders shall have priority over any shares proposed to be transferred by the Seed Investor[s].

Co-Sale In case of a change of control or sale to an industrial acquirer not approved by (i) the Series A Majority and (ii) the Active Founders, all shareholders shall have a full tag-along right.

The rights of first refusal and co-sale shall not apply to Free Transfers.

Drag Along If a bona fide arms' length offer is made by any third party to acquire all of the shares in the Company, which is accepted by the holders of more than [75] % of the shares of the Company, all shareholders shall be required to sell their shares on the same terms and conditions subject to the Liquidation Preference. In this case, the rights of first refusal shall not apply.

Liquidity The Company and its shareholders will use their reasonable best efforts to achieve a sale of the Company or initial public offering of its shares on a [recognized] stock exchange (an “IPO”) on or before the [5th/ to 8th] anniversary of Closing.

If a liquidity event for the Series A Shares has not been achieved by the [6]th anniversary of Closing, the Series A Majority” shall have the right, at any time following such date, to require the Company (within a designation process to be detailed in the Agreement) to engage an internationally recognized investment bank in order to initiate an IPO or sale of the Company; provided that (i) all shareholders shall be required to sell their shares to any acquirer having made an offer for 100% of the share capital of the Company which is accepted by the Series A Majority and (ii) such transfer shall not be subject to the Right of First Refusal.

Information and Audit Rights Each Series A Investor holding more than [5%] of the shares shall be entitled to receive: (i) annual audited accounts for each group company and on a consolidated basis, together with the related auditors’ report, within 4 months of the end of each year; (ii) semi-annual accounts for each group company within [45] days following the end of each semester; (iii) [quarterly/monthly] reporting within [45/30] days following the end of each [quarter/month]; and (iv) any change in the share capital or voting rights of the Company or any subsidiary thereof within [20] days of such change.

Each Series A Investor holding more than [5%] of the shares shall also have the right, once a year, at its cost and subject to execution of a customary non-disclosure agreement, to visit the Company and inspect its books and records upon reasonable notice and during normal business hours.

BOARD OF DIRECTORS

Board Representation The Company shall have a board of directors (the “Board”) of no more than [3-5] members, including:

- [1-3] members representing the Active Founders

- [1-2] members representing the Investors

The right of a Series A investor to have a dedicated board seat is subject to the condition of continuous holding of at least 15% of the share capital

- one independent member to be designated by mutual agreement of the other members of the Board][1]

The chairman of the Board shall be designated by the Board by a simple majority vote. [Subject to the Material Decisions, the chairman of the Board shall have a casting vote.][2] At the Closing date, [__●__] shall be the chairman of the Board.

The members of the Board shall not receive any compensation and out of pocket expenses for their office, except as may be agreed by the Active Founders and the Series A Majority for Independent Members.

Board Meetings The Board shall be convened by its chairman or by any of its members. The Board will meet at least [2] times per quarter, at intervals not exceeding [2] months, with a minimum [8-day] prior notice except in case of urgency.

Board Decisions All Board decisions shall be made at a simple majority of the members present or represented except for Material Decisions listed in Appendix B which shall be subject to a simple majority of the Board including the favorable vote of a least [1 member designated by the Series A Investor[s]] (the "Qualified Majority").

[Management Rights[3] The Company will execute a standard management rights letter that will give holders of Series A Shares rights to consult with management sufficient to meet their venture capital operating company requirements.]

Leaver [100]% of the securities held by Founders shall vest on a quarterly basis over a period of [four] years from Closing.

In case of leave of a Founder before the [fifth] anniversary of Closing,

(i) the Active Founders (pro rata among them) will have a call option for a period of 3 months over half of the unvested shares at their nominal value,

(ii) the Company will have a call option for a period of 3 months over the other half of the unvested shares at their nominal value,

(iii) the Active Founders and the Series A Investor[s] (pro rata among them) will have a call option for a period of 3 months over all remaining shares of the leaver at their then fair market value.

As an exception to the above, in case of dismissal of a Founder for willful misconduct (faute lourde) before the [fifth] anniversary of Closing, all shares held by such Founder, whether vested or unvested, may be purchased at their nominal value by the Active Founders and the Series A Investor[s] (pro rata among them).

Employee Stock Option Plan Following the new round, an incentive plan for existing and future managers and employees of the Company will be adopted. This plan will represent [10]% of the Company’s capital on a fully diluted basis after Closing. Each stock option will allow its holder to subscribe for one ordinary share at a price at least equal to the Subscription Price conditioned upon continued employment and standard vesting terms: 25% after one year and the balance on a quarterly basis over the following three years, it being specified that, unless otherwise decided by the Board [at Qualified Majority] on a case-by-case basis, in the event of termination of the employment/office of any optionee, all (but not less than all) of his/her/its vested Securities not exercised within four (4) weeks thereafter shall automatically expire.

Assignment of IP Rights The Closing shall be subject to the assignment of all intellectual property rights related to the business of the Company to the Company by the Founders or any entity controlled or owned by the Founders.

Non-Compete/Exclusivity The Founders shall dedicate substantially all of their professional time to the Company for so long as they are in office. They shall be bound by customary non-competition and non-solicitation for so long as they are in office and during a 12-month period after termination of their office, providing that (i) such obligations may be waived by the Company (with the previous approval of the Board at Qualified Majority) and that (ii) the non-competition obligation post termination of their office shall be compensated by monthly payments equal to [30%-50%][4] of their average monthly salary during their last 12 months of employment.

Other provisions The Agreement shall include, to the extent requested by certain Series A Investors, customary and reasonable anti-money laundering, anti-corruption, common reporting standard and ethics provisions.

D&O Insurance The Company shall enter into insurance policies for its directors and officers, for such level of cover as the Board may reasonably require.

Documentation Definitive contractual agreements shall be drafted by counsel to the Series A Investor[s] and shall include customary representations and warranties of the Founders (the "R&W") who shall have the option to pay in cash or in shares of the Company and, in case of payment in shares, shall not be liable beyond the lesser of the investment amount and the value of their shares except in case of fraud. Definitive corporate documents shall be drafted by counsel to the Company. The documents other than corporate documents shall be in English.

Exclusivity The Company and the Founders agree not to solicit or receive any funding from any investors other than the Series A Investor[s] for a period of 4 weeks from the date this term sheet is signed by the Company; provided that the Series A Investor[s] shall promptly inform the Company of their decision not to pursue their proposed investment in the Company, as the case may be, in which case such exclusivity period shall immediately lapse.

Expenses Upon transaction completion, the Company shall pay the Series A Investor[s]’ external fees and expenses incurred in connection with the transaction not to exceed €30,000 (before VAT) in the aggregate.

Confidentiality The parties agree to treat this term sheet confidentially and will not distribute or disclose its existence or contents, except to their respective shareholders and professional advisors as reasonably required to complete the Financing.

Applicable Law This Summary of Terms and the definitive agreements shall be governed and construed in accordance with the laws of France. Any dispute arising therefrom or in connection therewith shall be submitted to the exclusive jurisdiction of the commercial court of [place of incorporation of the company], France.

Acknowledged and agreed:

[Company]

By:

Print Name:

Title:

Date:

[Investors]

By:

Print Name:

Title:

Date:

[Founders]

By:

Print Name:

Title:

Date:

Appendix A – Capitalization table (pre and post)

Appendix B – List of Material Decisions subject to qualified Board approval

(i) [adoption and modification of the annual budget,][5]

(ii) effecting a merger, consolidation, sale of all or substantially all of the assets, or other reorganization of the Company (or a subsidiary) in which control of the Company (or a subsidiary) is transferred to a third party,

(iii) authorizing a liquidation or winding-up of the Company,

(iv) any material amendment, alternation or repeal of the Company’s bylaws,

(v) creating or authorizing the creation of any security senior to or on parity with the Series A Shares (including any convertible into or exercisable for such series) or reclassifying, altering or amending any existing security that is junior to or on parity with the Series A Shares, if such reclassification, alteration or amendment would render such other security senior to or on parity with the Series A Shares,

(vi) permitting the issue of any digital currency, coins, tokens or similar products as part of an initial coin offering,

(vii) distributing dividends,

(viii) purchasing or redeeming any capital stock other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value or cost,

(ix) any increase in the number of shares issuable pursuant to the Company’s Stock Option Plan],

(x) authorizing any financial commitment [not provided for in the budget and][6] greater than [20%] of remaining cash,

(xi) creating or authorizing the creation of any debt security and/or other borrowings [not provided for in the budget and][7] greater than [200k€] in aggregate,

(xii) creating any subsidiary that is not a wholly-owned subsidiary,

(xiii) any acquisition or disposition of assets (including but not limited to a majority or minority stake in another company) for value above [30%] of remaining cash,

(xiv) any transfer or license of the Company's technology or intellectual property rights outside the ordinary course of business,

(xv) undertaking an initial public offering or listing of Company shares,

(xvi) any transaction between the Company and any officer, director or affiliate of the Company other than entered into at arm’s length and in the ordinary course of business, or

(xvii) compensation of each Founder and dismissal of any Founder who is an employee.

[1] To the extend the Board has less than 5 other members. [2] If the Board is composed of an odd number of members. [3] To the extent relevant (typically for US investors). [4] Depending on the relevant amount. [5] Please note that if maintained in a situation in which one Series A Investor only is represented on the Board, such investor will have a veto right on the budget. [6] To be deleted if clause (i) (approval of budget) is deleted. [7] To be deleted if clause (i) (approval of budget) is deleted.