YourSigma MEMORANDUM OF TERMS COMMOM STOCK PURCHASE. February 7, 2014

Transcription

1 YourSigma MEMORANDUM OF TERMS COMMOM STOCK PURCHASE February 7, 2014 This memorandum summarizes the principal terms proposed by Tech Wildcatters V, LLC ( Tech Wildcatters ), with respect to a purchase of common stock in YourSigma, a Delaware corporation (the Company )The founders of the Company are: (the Founders ). This term sheet expires on February 12, 2014 at _5:00 pm Dallas, Texas time if not fully-executed. Capitalization Set forth below is the Company s current fully diluted capitalization, as adjusted to reflect the sale of all shares of common stock proposed to be purchased in this financing: Ownership % Type Founders / Common 82% Common Stock Stock Option Plan 10% Common Stock Tech Wildcatters V, LLC 8% Common Stock Total 100% Proposed Private Purchase Tech Wildcatters proposes a private purchase of shares of Common Stock of the Company which shall be made pursuant to a definitive stock purchase agreement (the Stock Purchase Agreement ) and on the following terms: Percentage of fully diluted ownership: Total Purchase Price: 8% (amount of shares TBD based on Company s capitalization table) $25,000, as follows: (i) (ii) $15,000 upon full execution of the stock purchase agreement $10,000 upon completion of the accelerator program Investor Rights: Short-term Anti-dilution Provision: Tech Wildcatters will receive the same rights as all holders of Common Stock, except as may be set forth below. Upon the closing of any financing round of less than $500,000 within one year after the execution of the Stock Purchase Agreement (a Non-Qualified

2 Financing ), Tech Wildcatters will retain its fullydiluted ownership percentage in the Company, measured as of immediately prior to such Non- Qualified Financing. Otherwise, Tech Wildcatters will dilute pro rata with the other Common Stock holders. Option Pool: Information Rights: Additional Investment: Stock Vesting: Proprietary Information Agreements: Pro Rata Rights on Future Offerings: Expenses: The Company shall have an amount of Common Stock equal to 10% of the Company s fully-diluted capitalization (on a post-closing basis and assuming the entire 8% issuance to Tech Wildcatters) reserved and unissued for an employee option pool. The Company shall provide in a reasonable timeframe to Tech Wildcatters V, LLC quarterly financial statements and a current capitalization table. Upon the initial closing of the Common Stock Purchase, a Convertible Bridge Note of up to $250,000 will be set up by Tech Wildcatters to solicit potential investors. Attachment A contains the terms of the Convertible Bridge Note. The outstanding Common Stock currently held by the Founders will be subject to the vesting schedule of 4 years with a one-year cliff. Each Founder shall have entered into an acceptable proprietary information and inventions agreement. Tech Wildcatters shall have the right to purchase its pro rata portion (calculated on a fully-diluted basis) of any future issuances of securities by the Company, other than customary exceptions. Each party shall pay their own fees and expenses. The memorandum is not legally binding on any parties and is subject to the satisfactory completion of due diligence by Tech Wildcatters and the execution of mutually agreed upon Stock Purchase Agreement, and other definitive documents, if necessary.

3 EXECUTED this [ ] day of [ ], TECH WILDCATTERS V, LLC By: Tech Wildcatters, LLC, Manager Gabriella Draney, Managing Member YOURSIGMA Morgan Intrator, Founder Chris Webb, Founder

4 ATTACHMENT A [NEWCO, INC.] SUMMARY OF PROPOSED TERMS FOR CONVERTIBLE PROMISSORY NOTE (BRIDGE) FINANCING The following is a summary of the basic terms and conditions of a proposed convertible promissory note financing of [Newco, Inc.], a Delaware corporation (the Company ). This term sheet is for discussion purposes only and is not binding on Company or the Investors (as defined below), nor is Company or any of the Investors obligated to consummate the convertible promissory note financing until a definitive convertible note purchase agreement has been agreed to and executed by Company and the Investors. Financing Amount: Up to $250,000 [can set higher amount] in aggregate principal amount of convertible promissory notes (the Notes ). Closings: Definitive Agreement: Maturity Date: Interest: The Company may close the sale of the Notes in one or more closings with one or more purchasers of the Notes (the Investors ). The Notes will be issued and sold pursuant to a convertible note purchase agreement prepared by the Investors legal counsel and will contain customary representations and warranties of the Company and the Investors (the Note Purchase Agreement ). Principal and unpaid accrued interest on the Notes will be due and payable 24 months from the date of the Note Purchase Agreement (the Maturity Date ). Simple interest will accrue on an annual basis at the rate of 7% per annum based on a 365 day year. Conversion to Equity: Automatic Conversion in a Qualified Financing. If the Company issues equity securities ( Equity Securities ) in a transaction or series of related transactions resulting in aggregate gross proceeds to the Company of at least $1,000,000, including conversion of the Notes and any other indebtedness (a Qualified Financing ), then the Notes, and any accrued but unpaid interest thereon, will automatically convert into the equity securities issued pursuant to the Qualified Financing at a conversion price equal to 80% of the per share price paid by the purchasers of such equity securities in the Qualified Financing.

5 Voluntary Conversion at the Maturity Date. If the Notes have not been previously converted pursuant to a Qualified Financing, then, effective upon the Maturity Date, the Requisite Holders (as defined below) may elect to convert each of the Notes into shares of the Company s Common Stock at a conversion price equal to the quotient of $3,000,000 divided by the aggregate number of fully-diluted shares of the Company s Common Stock as of the Maturity Date (assuming full conversion or exercise of all convertible and exercisable securities then outstanding other than the Notes). Any election to convert the Notes pursuant to this paragraph will be made in writing and delivered to the Company at least five days prior to the Maturity Date. Sale of the Company: In the event of (i) the acquisition of the Company by another entity by means of any transaction or series of related transactions (including, without limitation, any reorganization, share exchange, merger or consolidation) unless the Company s stockholders of record as constituted immediately prior to such acquisition or sale will, immediately after such acquisition or sale (by virtue of securities issued as consideration for the Company s acquisition or sale or otherwise), hold at least 50% of the voting power of the surviving or acquiring entity or (ii) a sale of all or substantially all of the Company s assets (a Change of Control ) prior to full payment or conversion of the Notes, the Company will give Lender not less than five days prior written notice of the anticipated closing date of such Change of Control transaction and, upon the closing of such Change of Control transaction, the Company will pay Lender an amount equal to the amount to be received in connection with the Change of Control assuming a conversion into shares of the Company s common stock at a conversion price equal to the quotient of (x) $3,000,000, divided by (y) the aggregate number of outstanding shares of the Company s common stock as of immediately prior to the Change of Control (and assuming full conversion or exercise of all convertible and exercisable securities then outstanding (other than the Notes)), which payment shall be in full satisfaction of the Company s obligations under this Note. Pre-Payment: The principal and accrued interest may not be prepaid unless approved in writing by Investors holding Notes whose aggregate principal amount represents a majority of the outstanding principal amount of all then-outstanding Notes (the Requisite Holders ). 2

6 Amendment and Waiver: No Security Interest: Fees and Expenses: The Note Purchase Agreement and the Notes may be amended, or any term thereof waived, upon the written consent of the Company and the Requisite Holders. The Notes will be a general unsecured obligation of the Company. Each party shall pay their own fees and expenses. 1