This action might not be possible to undo. Are you sure you want to continue?
West Coast Customs Business Summary and Term Sheet
Submitted by Wil Cashen West Coast Customs Partners, LLC, 2/6/2012
Many factors in technology. Maintain and control dealership WCC inventories 7. car accessories. entertainment and performance to all generations Y. has been created to expand the West Coast Customs brand. The brand evokes quality. support and service of WCC dealerships globally. Automotive local customization and global distribution is the principle and primary market opportunity for West Coast Customs today. Ryan's secret recipe for matching individual personalities to metal and carbon-fiber creates a unique soulful relationship between the vehicle and it's owner. LLC is a new company designed and created specifically for the sales. West Coast Customs has become the brand leader globally for custom cars of all makes and models building its value to more than $28 Million. becoming a premier world brand. music and the raw human desire for celebrity attention. X. Support dealer sales leads for WCC products and vehicles 8. Growing West Coast Customs WEST COAST CUSTOMS PARTNERS. Create greater WCC brand and product awareness 2.West Coast Customs is a car remodeling company started in 1993 by Ryan Friedlinghaus on a $5. blending poetry. This attachment of man and machine has for more than seven decades been an indefinable bond unable to find a path into main stream retail. This a-mast brand energy has made West Coast Customs a truly versatile and portable consumer brand finding new markets and is redefining current ones. Support organic marketing and advertising in WCC dealer markets 5. Provide direct customer support for WCC Dealers 9. market competition and the human condition have lead to the success of West Coast Customs as a growing consumer brand. Work with dealers to improve WCC vehicles and products 10. toys and minor apparel offerings. WCCP. West Coast Customs is ranked as the #1 global custom automotive brand. Establish WCC dealerships throughout North America in major local markets 4. style. art and engineering into a customized kaleidoscope of vehicle and product designs. product and service offering into local markets around the world. retro mod designs. Create WCC dealer events and product presentation programs 6. A West Coast Customs Partners network of automotive dealership sales and vehicle customization locations of branded product offerings will service the Hip. West Coast Customs was created by Ryan Friedlinghaus who deeply understood the Hip-hop world that projects the bad boy image colored with artistic tattoos. West Coast Customs is the first and only automotive custom designer and builder to cross the unforgiving crevasse between the automotive aftermarket and main stream global retail. Edward Cifranic.000.00 loan from his grandfather. Identify out-of-the-box market opportunities 3. The business activities of WCCP are: 1. Train and support WCC dealer service department 2 . West Coast Customs is the chosen automotive brand of the Hip-hop generation.hop market of X'ers and Y'ers and will fill the need for retro design Zoomers and Boomers. the internet. media. LLC. Insertions into consumer markets of automotive customizers in the past have been limited to auto parts. Zoomers and Boomers.
LLC. designs. 2015 Total Brand and Media Value= $909. is based on (1) the stated value of the West Coast Customs brand (2) 10% (ten percent) ownership (stock purchase) in West Coast Customs. is achieved through a 50 year West Coast Customs North American exclusive license and rights use grant from Ryan Friedlinghaus in exchange for 6. body kits.000 shares of common stock in WCCP. media and entertainment driven lifestyle group. models.312.856 The West Coast Customs forecast brand .Gen'er and Y.856 2.901. Inc. 2014 Total Brand and Media Value= $512.337. 3 . Automotive OEM Original Equipment Manufacturers Sales and Service 8. LLC. Used Car Dealers Sales and Service 3.125 4.equity value is documented as follows: 1. transportation design. willingly promote the WCC brand on a global scale through all layers on media exposure. has become the raining leader of this category attracting major music celebrities such as Wil. media. The license represents the exclusive brand use of the WCC name for use in the following market segments: 1. Auto Parts Stores (chains or Mom and Pops) 4.equity value is documented as follows: 1.613 Market Globally. highly tech savvy. Brand awareness value= $205.599.657. the celebrity and the global Hip-hop audience places the WCC brand far in front of all competition vying for attention in this large and special market lifestyle segment. Performance Parts Stores 5. etc. The West Coast Customs brand .428 4. New Car Dealers Sales and Service 2. interior kits. 2012 Total Brand and Media Value= $264.192 (segment leader) 2.Gen and Y. Young Urban Consumers enjoy an aggregate income of $850 billion annually.901.109 Total Current Brand and Media Value= $264.367.Gen trendsetters and influencers who affiliate with the hip-hop culture exercise a powerful impact on fashion.545. This endearing relationship that has been nurtured between WCC.924 5. interior design and other key consumer-focused sectors of this lifestyle. LLC and other cash considerations.Gen trendsetters and influencers the auto companies have failed in their attempts to reach this artistic. The automotive industry has spent hundreds of millions attempting to reach the 79 million Y. Online Performance Parts Catalogs 7. 2013 Total Brand and Media Value= $325.000. Online value= $30. (3) exclusive wholesale distribution rights of (one-off or production) WCC vehicles. entertainment. Broadcast Media value= $28. For the majority of X.I-AM and Justin Bieber and many other major big and small screen stars that have become a part of WCC's custom car world. knowledgeable. Print Media value= $623.Business Equity Value creation of West Coast Customs Partners.127 (television views) 3.699.602 3.Gen market with a corporate white washed messaging of cool and hip.349. Performance Shops 6. West Coast Customs without spending one dollar on advertising or other forms of Pay-for ad and promotions. 2016 Total Brand and Media Value= $1. These X. Eight (12) West Coast Customs Used Car Dealerships Sales and Service Valuation The valuation of West Coast Customs Partners.
000 *Includes: Smart Phones. Yers' are family and friend oriented.465 Boomers 65+ $4. In the workplace.320 $4.932 $998 3.850 $7.602 TVB Xers' 26-44 $12.960 $5. Generation Y Generation X encompasses the 44 to 50 million Americans born between 1965 and 1980.855 $3.766 $4.464 Entertainment $1.394 $1.001 $190 $6.990 $9. smart-phones and the internet.699 $2. Y. As a result. Word-of-mouth marketing is very powerful with Yers' because they are so friend conscious. DVD Players. 4 . Generation X is independent. The company has created a strong sustainable business model and market segment expansion strategy to capture hundreds of automotive dealerships in North America and around the world. X-Yers' are "mobile” generations Apple most like Brand Trump most disliked brand Gen Y Trend setters women when asked about luxury "CC. Ferrari. are automakers.849 Zommers 45-64 $11. This is why cell phones are so attractive to them. The first generation to grow up with computers. Zoomers and Boomer generations. WCC's instant brand association with the new car dealer provides the consumer with an emotional connection establishing a link in the customer’s mind between their dealership and WCC's products and services. and 50% less than Boomers Yers' are a confident segment that prefers to spend over saving Yers' are brand loyal and feels personally connected to their choices Yers' get information from the social web Yers' remains loyal to brands but don’t like paying full price The X-Y generations demand home entertainment systems. iPods.623 $2. Generation X values freedom and responsibility.523 $3.500 $2. other Digital readers Yers' 25-34 $8. WCCP's Customer Analytics Average Annual Expenditures Early Yers' Under 25 Transportation $5. High end hotels" Male Yers'.The Customer Over the past decade West Coast Customs has positioned its brand as the world renowned trendsetter leader in the automotive Hip-hop lifestyle custom vehicle market for X. Seven out of ten top ranked brands by US Gen Y males. Automobile marketers must offer Y-Xers' connectivity technology they consider important. resourceful and self-sufficient.Gen and Y. Porsche. iPads.608 Personal Electronics* $985 Personal Computers $362 Travel $1. technology is woven into their lives Represents 25%+ of the population in the United States X-Y have a spending power of $200 billion Yers' Trend setters men when asked about luxury "think Cars" Yers' watch 22% less TV then Xers. luxury means cars: BMW. West Coast Customs has built brand awareness with the majority of X.430 Source: With numbers estimated as high as 70 million. Brands must be aware of disenfranchisement of X-Yers'.923 $2.Gen trendsetters and influencers making it a valuable brand for automotive dealerships that have an interest in becoming a WCC brand ambassador and product center. Lamborghini and Audi.
012 $8.341 Operations-Logistics 2 5 8 12 Total 5 14 23 32 5 . EMAV Opportunity West Coast Customs Partners Market Opportunity 2011(used 2011only) Year Sales Percentage Average Margin Gross Profit 2013 .960 $2.167 2011 Parts: New Car Custom/Special Parts (Mopar-like) Automotive Chain Custom/Special Parts (Performance-like) Source: SEMA.491.319. BMX).402. Non-profit sponsorships and cause marketing efforts get a positive response with Yers'. X-Yers' love extreme sporting events (skateboarding.808.089.033 MFG Fee $75.750) $338.000 $680.921 $39.453.403.321.000 $325.582 $4.738. AUTO BLOG MKR $139.808.767 2017 .022 $4.044.622.353 Operations $420. and still buy things for them. For X-Yers' viral marketing is a popular and effective medium.435.483.214 $635.000 $1.017.0001% 10% $104.000 $155.749 2015 .230 $2.664 $16.044.580.477.013% 26% $33.012 $2.206.140 $110.357.558 $13. offer products that help them become better. MKRESEARCH. NADA.468.204 $16.285 2016 .893 $9.400.045 $4.012 $972.642.036 $2.like) Dealer Option Installed Factory Custom (graphics. snowboarding.004% 21% $8. AUTONEWS.642 $10. Hiking events (Gen Y love the outdoors).883 Profit ($486.857 $80.000.035 2014 .891 Profit Picture West Coast Customs Partners Profit Picture Year COGs MFG Fee 2013 90% 08% 2013 82% 07% 2014 79% 06% 2015 75% 04% 2016 75% 03% 2017 75% 03% Staffing West Coast Customs Partners Head Count Year Officers Sales 2013 2 1 2013 3 6 2014 4 11 2015 5 15 $10. are close to their children.642 $40.360.146.950. Concerts (Yers' love live music) and Movies.323.068 $130.033 Expenses $96.008% 25% $20.609 Annual Sales $1.432.000 $4. Honda.398.001% 18% $1. Video games and video game competitions Market Size 2011 Automotive: Accessories (dealer and consumer installed) Custom Build to Order (Scion. engine) One-Off (Special custom) Source: SEMA.860.075 $3.807 $20. Zoomers and Boomer parents of Gen Yers'.044.585.892. Yers' are very optimistic and have a positive outlook on the world. AUTONEWS. Yers' are tenacious doers.464 2013 .993 $849. NADA.011% 25% $27. parts add on.302 $5.550.945.860.000 $1.
products and end customer with a long lasting bond. Y. This method of direct communication information and entertainment has helped make West Coast Customs the global custom vehicle brand authority for X. Each market segment or niche' has specific products and options in order to capture and retain significant market share. event and specials.West Coast Customs automotive products carry the same pricing structure as does the automotive OEMs. -Through the expansion of the West Coast Customs brand to local markets around the world. price. Zoomers and Boomer generations. -West Coast Customs products draw customers from all over the world that seek to create and own a unique vehicle built by WCC. -Long-term marketing support will be through the creation and distribution of global television programming content. focused on superior valued products and custom vehicle offerings (iii) Urban Style. West Coast Customs restore the dealers ability to continuously offer a premium product in multiple market segments. Brand Strategy Customer brand and product awareness.Gen customer's passion for personal expression and celebrity status amongst their circle of friends and community creates the need for WCC's products.Year 2016 2017 Officers 5 6 Sales 20 26 Operations-Logistics 20 22 Total 45 54 Product Strategy WCC's strategy following the 4 Ps' (product. Zoomers and Boomer generations of automotive enthusiasts. radio. print. . promotion) are based on capturing the consumer relationship via local WCC dealer presence and sales and service activities. The X. online video programming content. Business Strategy West Coast Customs Partners provides to its dealers: (i) an ability to sell premium brand products and services that have less pricing pressure (ii) highly profitable. -WCC is building its online Social Community WCC automotive enthusiasts and is focusing the design and use for the 67%Y Gen's that use social networks and the 36% of Gen Xer's. Examples of West Coast Customs vehicle products market segments: Compact Sports Car Sport Roadster 6 . local WCC dealer advertising and promotions and WCC's global online Social Community of X. allows the West Coast Customs brand and products to be accessible to everyone in every market. . internet. Y. -The Hip-hop generation of Xer's and Yer's immerse themselves in technology and an artistic creative lifestyle that cements the relationship between West Coast Customs brand. place.West Coast Customs business is to support is local dealerships by helping the dealership enhance and increase the awareness of the West Coast Customs global brand and products. preferences and expectations have been created through the airing of hundreds of WCC's award winning television programs for more than a decade.Gen and Y. local WCC infotainment radio and television syndication. Hip-hop unique by design products (iv) little to no retail pricing transparency in markets (v) local sales of a true value added unique and personalized custom product (vi) build a network of dealers promoting customer confidence of a well know brand in hundreds of local markets. WCC's media promotions are syndicated to all WCC dealerships and include Brand and Product PR and advertising for all media outlets such as local television.
auto manufactures themselves continue to make it harder for dealers across North America to maintain consistent profitability. Mini buyers typically add $5. Because of "dealer installed options and factory customization".000 in extras above the $17. Options and accessories provided by the factory branded only as the "Factory Option" carries little "Brand Value Effect" resulting in customers growing impatient or cancelling their orders with the dealer spending extra time with the customer managing expectations of their purchase. such as $200 glassy black-lacquer dashboard inserts or $100 racing stripes on the hood. For automakers. price negotiating is being taken out of dealers' hands.Sedan SUV Pickup Cross Over Sport Utility Jeep Companies like TrureCar. Chrysler Group marketing chief Joe Eberhardt says making cars to order could help end the problem of bloated inventories — vehicles stacking up either in storage lots or dealers' showrooms. The long wait for custom add on options becomes a time value proposition for the dealer and the customer. Like personal computers. the wait can take three to six months. Pricing transparency displayed on the Internet by anyone is bad for dealers and means. In hot markets such as California. it takes two to three months for the car to arrive at the dealer from the plant in Oxford. Once the customer places an order. adds significant value to the customer's vehicle purchase greatly improving the customers purchase experience.com and now even the automotive . Minis only sat on dealers' lots an average of 21 days last year. compared with 50 days for the premium compact car segment as a whole. personalization is good business and bigger profits. more cars are built to specification at the factory or the dock for buyers who ordered them in advance online. From 75% to 90% of Minis sold are custom-ordered from the factory. This environment is driving dealers to find new ways to and value to the product of which the vehicle price is not controlled or (given) to the customer by the manufacture or a third party website service. Premium Brand. Customer Premium Brand Awareness 1-10 (1)=little brand awareness (10)=high brand awareness Brand Yers' Xers' Zoomers Boomers Shelby 3 7 10 10 West Coast Customs 10 10 9 6 7 . West Coast Customs Special Buyers Only.500 base sticker on factory. As an example. Buyers can choose from 70 factory-installed options. England.and dealer-installed accessories. a trend that will continue to grow as the auto manufactures work to control and own the customer.
1. is seeking and investment of $4.000.Customer Premium Brand Awareness 1-10 (1)=little brand awareness (10)=high brand awareness Roush 1 6 8 5 Alpine 1 4 6 7 Saleen 1 6 7 4 AMG 6 10 9 8 Abarth 1 1 4 6 Mopar 7 10 10 9 SVT 1 8 6 4 Deal Points West Coast Customs. dollars.000. LLC.000. for $1. The purchase 50 year West Coast Customs exclusive license for $1.500. services.000 U. 8 .(to be used as operating capital) 3. For use in marketing West Coast Customs branded products. for $1. Inc. The purchase 40% equity in West Coast Customs Partners.500. Inc.S. The purchase 10% equity in West Coast Customs.000.000. vehicles through. 2. (i) New Car Dealers Sales and Service (ii) Used Car Dealers Sales and Service (iii) Auto Parts Stores (chains or Mom and Pops) (iv) Performance Parts Stores (v) Performance Shops (vi) Online Performance Parts Catalogs (vii) Automotive OEM Original Equipment Manufacturers Sales and Service (viii) the creation of up to 12 West Coast Customs Used Car Dealerships Sales and Service centers.
the investors will pay an aggregate of $4. (ii) elect not to make such milestone payment but reserve the right to make subsequent milestone payments.000 shares $1.DRAFT WEST COAST CUSTOMS PARTNERS. legally binding agreements among the parties hereto. 9 . The purchase price will be payable as follows: At the initial closing. and other investors acceptable to the Company. If. This Memorandum of Terms does not constitute an offer to sell or a solicitation of an offer to buy securities in any state where the offer or sale is not permitted. a performance milestone has not been satisfied. in the sole and absolute judgment of the investors.00 Ryan Friedlinghaus (founder) or affiliated entities. a California Limited Liability Company (the “Company”) Series A Preferred Stock (the “Series A Preferred”) Up to $4. 2012.000 (the “Initial Amount”).000. with one or more additional closings within 60 days thereafter.000. or a portion thereof. or (iii) terminate the Commitment without any further obligation or liability on the part of the investors. the investors may in their discretion invest additional amounts (the “Commitment”) as set forth in Exhibit A. Initial closing on or before March 15. LLC.000. MEMORANDUM OF TERMS Except with respect to the provisions entitled “Confidentiality”. which are intended to be.CONFIDENTIAL . such payment to be conditioned upon the receipt by the investors of a written commitment by the Company to use its best efforts to complete the applicable milestone by a specified date and to satisfy such other conditions as the investors may require. LLC.000 Cash 10. and are. then the investors may either (i) waive the failure and pay the amount. THE OFFERING Issuer: Securities: Amount of the offering: Consideration: Number of securities: Price per share: Investors: Anticipated closing date: Milestone payments: West Coast Customs Partners. Upon completion of the performance milestones set forth in Exhibit A. set forth opposite such milestone on Exhibit A. this Memorandum of Terms represents only the current thinking of the parties with respect to certain of the major issues relating to the proposed private offering and does not constitute a legally binding agreement.
Conversion: Automatic conversion: Anti-dilution: 10 . The Series A Preferred may be converted at any time.00 (a “Qualified Public Offering”). Limit on participation: Cap on participation at 3 times the initial liquidation preference. Adjustments. The conversion price of the Series A Preferred will be subject to adjustment. The conversion rate will initially be 1:1. There will be no adjustment to the conversion price for: shares issued upon conversion of the Series A Preferred. upon (i) the closing of a firmly underwritten public offering of common stock at a price per share that is at least $3. into shares of common stock. or (ii) the consent of the holders of a majority of the then outstanding shares of the Series A Preferred. Liquidation preference: Amount: Original purchase price plus accrued dividends. at the option of the holder. The redemption price will be the purchase price plus declared dividends. the Series A Preferred participates in liquidation proceeds to the common. plus a 40% per annum return from the closing date.TERMS OF THE PREFERRED Dividends: Dividend rate: 10% Cumulation: Noncumulative Priority: Pari passu with common. on a narrow-based weighted-average basis (based on outstanding common and preferred only). at the then applicable conversion rate. Priority: Senior to common. if the Company issues additional securities at a price per share less than the then applicable conversion price. subject to anti-dilution and other customary adjustments. Redemption: Outstanding shares of Series A Preferred will be redeemable at the election of the Company Share Price X 3. Participation: After payment of preferential liquidation proceeds. A deemed liquidation may be waived upon the election of the holders of a majority of the outstanding shares of preferred stock. Exceptions. Each share of preferred stock will automatically convert into common stock. Deemed liquidation: A sale of all or substantially all of the Company’s assets or a merger or consolidation of the Company with any other company will be treated as a liquidation of the Company.
shares issued to suppliers of goods or services in connection with the provision of goods or services pursuant to transactions approved by the board (including at least two director elected by the investors share holder vote by 66.67% approval).000 shares issued after the closing date. warrants or other rights issued to employees. shares issued or issuable pursuant to an acquisition of another corporation or a joint venture agreement approved by the board (including at least two director elected by the investors share holder vote by 66.g. shares issued as a dividend or distribution on the preferred stock or for which adjustment is otherwise made pursuant to the articles of incorporation (e. shares issued pursuant to other transactions approved by the board (including at least two director elected by the investors share holder vote by 66. OEM. equipment lessors or other financial institutions pursuant to debt financing or commercial transactions approved by the board (including at least two director elected by the investors share holder vote by 66. shares issued upon exercise of options. shares or options. development. shares issued in connection with a Qualified Public Offering. 11 . shares issued or issuable in connection with any settlement approved by the board (including at least two director elected by the investors share holder vote by 66. stock splits).000. shares issued or issuable to banks. shares issued or issuable in connection with sponsored research.67% approval).67% approval). collaboration. consultants or directors in accordance with plans. technology license. marketing or other similar arrangements or strategic partnerships approved by the board (including at least two director elected by the investors share holder vote by 66. agreements or similar arrangements.67% approval). and shares that are otherwise excluded by consent of holders of a majority of the Series A Preferred. warrants or convertible securities.67% approval).67% approval). but not to exceed a total of 2..
approve the voluntary liquidation or dissolution of the Company.“Pay-to-play” requirement: If a holder of preferred stock fails to participate in this financing or any future Qualified Financing (as defined below) on a pro rata basis. So long as at least 4. preferences or privileges with respect to dividends or liquidation senior to or on a parity with the Series A Preferred or having voting rights other than those granted to the preferred stock generally.000. then the preceding will apply proportionally to the extent of the failure to participate. So long as there are at least 1. preferences. then such holder will have all preferred stock that it owns converted to common stock. consent of the holders of at least 65% of the Series A Preferred will be required to: alter any provision of the articles of incorporation or the bylaws if it would alter the rights.000 shares of Series A Preferred are outstanding. privileges or powers of or restrictions on the preferred stock or any series of preferred. The preferred stock will vote with the common stock on all matters except as specifically provided in the articles of incorporation or as otherwise required by law. The holders of common stock will be entitled to elect three directors. approve any transaction or series of transactions deemed to be a liquidation of the company. Any additional directors will be elected by the holders of preferred stock and common stock voting together.000 shares of Series A Preferred outstanding. approve any merger. 12 Voting for directors: Protective provisions: . Such determination will be made regardless of whether the price is higher or lower than any series of preferred stock.67% board approval) determines in good faith must be purchased pro rata among the stockholders of the Company subject to the “pay-to-play” provisions. If such holder participates in any such financing but not to the full extent of its pro rata share.000. the holders of Series A Preferred will be entitled to elect two directors. sale of assets or other corporate reorganization or acquisition. A “Qualified Financing” is that portion of any financing by the Company that the board (including two directors elected by the investors and by 66. General voting rights: Each share of preferred stock will have the right to a number of votes equal to the number of shares of common stock issuable upon conversion of each such share of preferred stock. increase or decrease the authorized number of shares of preferred stock or any series of preferred. authorize or create (by reclassification or otherwise) any new class or series of shares having rights.
each holder of Registrable Securities will have the right to include shares on a pro rata basis as among all such holders and to include shares in preference to any other holders of common stock. The holders of Registrable Securities will be entitled to “piggyback” registration rights on any registered offering by the Company on its own behalf or on behalf of selling stockholders. provided that. Subject to customary exceptions.000. subject to customary exceptions.000. in the event of marketing limitations. The Company will not be required to file more than two such Form S-3 registration statements in any twelve month period.000. Subject to customary exceptions. 13 . In the event of such marketing limitations. declare or pay any dividend or distribution or approve any repurchase with respect to the preferred stock (except as otherwise provided in the articles of incorporation) or the common stock (subject to customary exceptions). increase the size of the board. to limit the number of Registrable Securities included in the offering. holders of at least 50% of the Registrable Securities will be entitled to demand that the Company effect up to three firmly underwritten registrations (provided that each such registration has an offering price of at least $5. the Registrable Securities may not be limited to less than 15% of the total offering. the managing underwriters will have the right. INVESTOR RIGHTS Registration rights: Registrable securities.” Demand registration. in an offering other than the initial public offering. holders of Registrable Securities will be entitled to demand registrations on Form S-3 (if available to the Company) so long as the offering is for common stock having an aggregate offering price of not less than $5. or increase the number of shares authorized for issuance under any existing stock or option plan or create any new stock or option plan.000) at any time following the earlier of (i) three years following the closing of the financing and (ii) 365 days following the Company’s initial public offering.00 per share and has aggregate proceeds of at least $10. “Piggyback” registration. The Company will have the right to delay such registration under certain circumstances for up to four periods of up to 180 days each in any twelve month period. The common stock issued or issuable upon conversion of the preferred stock will be “Registrable Securities. S-3 rights. In an underwritten offering. encumber or grant a security interest in all or substantially all of the assets of the Company in connection with an indebtedness of the Company.
Market stand-off. on a pro rata basis. on which such holder may immediately sell all shares of its Registrable Securities under Rule 144 during any three-month period and (ii) two years after the initial public offering. provided that all officers and directors of the Company and all holders of at least 1% of the Company’s voting securities are similarly bound. Subject to customary exceptions.The Company may defer an S-3 filing four times during any twelve month period for up to 180 days. The pro rata share will be based on the ratio of (x) the number of shares of Series A Preferred held by such holder (on an as-converted basis) to (y) the Company’s outstanding securities (on an as-converted and as-exercised basis). The registration rights of a holder of Registrable Securities will terminate on the earlier of (i) such date. provided that the Company will not be required to pay the fees of more than one counsel to all holders of Registrable Securities. Holders of Registrable Securities will agree not to effect any transactions with respect to any of the Company’s securities within 365 days following the initial public offering by the Company. This right will terminate immediately prior to the Company’s initial public offering. the Company will bear the registration expenses (exclusive of underwriting discounts and commissions) of all demand. Expenses. Participating holders will have the right to purchase. provided the Company is given written notice. subject to customary exceptions. on or after the Company’s initial public offering. including with respect to indemnification. underwriting arrangements and restrictions on the grant of future registration rights. Right to maintain proportionate ownership: Each holder of Series A Preferred will have a right to purchase its pro rata share of up to 5% of any offering of new securities by the Company. Termination. The Investor Rights Agreement will contain such other provisions with respect to registration rights as are customary. any shares as to which eligible holders do not exercise their rights. Other provisions.000 shares of the Company’s outstanding capital stock. Transfer. and affiliates of that holder and to other persons acquiring at least 500. Right of first refusal: 14 . piggyback and S-3 registrations. the Company will have a right of first refusal to purchase any or all the shares on the same terms as the proposed transfer. Registration rights may be transferred by a holder of Registrable Securities to current and former partners and members. In the event Ryan Friedlinghaus proposes to transfer any common stock or other securities convertible into or exercisable for common stock.
The third common stock designee will be chosen by founders holding at least 66 2/3% of the common stock held by all founders. The first Series A designee will be chosen by investors holding at least 66 2/3% of the Series A Preferred held by all investors. The Company will also obtain D&O insurance reasonably satisfactory to the Company and its directors. One of the common stock designees will be the Company’s CEO.If the Company does not exercise its right of first refusal.000 shares of Series A Preferred will have a right of first refusal (on a pro rata basis based on the total shares of Series A Preferred then outstanding) with respect to the proposed transfer. unaudited quarterly financial statements within 60 days following quarter-end. The Series A designees will initially be TBA and TBA. Three common stock designees as the common stock directors.000 shares of Series A Preferred: unaudited annual financial statements within 120 days following year-end. The first common stock designee will be chosen by Ryan Friedlinghaus. The mutual designees will initially be TBA.000. The second common stock designee will be chosen by founders holding at least 66 2/3% of the common stock held by all founders.000. as approved by (i) founders holding a majority of the common stock held by all founders and (ii) investors holding a majority of the shares held by all investors. Rights to purchase any unsubscribed shares will be reallocated pro rata among the other eligible holders of Series A Preferred. The Company will deliver to each holder of at least 1. Voting agreement: The principal stockholders of the Company will agree to elect to the board: Two Series A designees as the Series A directors. Director liability: The directors will be entitled to customary indemnification from the Company and reimbursement of reasonable costs of attendance at board meetings. The common stock designees will initially be TBA. TBA. 15 Information rights: . TBA. Five mutual designees. TBA and TBA. The rights of first refusal will be subject to customary exceptions and will terminate on an initial public offering. The second Series A designee will be chosen by investors holding at least 66 2/3% of the Series A Preferred held by all investors. TBA and TBA. holders of at least 1. and annual operating plans 45 days before each fiscal year.
receipt of all required authorizations. with proceeds payable to the Company. appropriate representations and warranties of the Company and the investors and appropriate conditions of closing.000. delivery of customary closing certificates and an opinion of counsel for the Company. except as may be (i) reasonably required to consummate the transactions contemplated hereby (provided that any persons receiving the information agree to the confidentiality restrictions contained herein or are otherwise subject to confidentiality obligations) or (ii) required by law.000.The information rights will terminate upon an initial public offering. the existence and terms of this Memorandum of Terms and the fact that negotiations may be ongoing with the investors shall not be disclosed to any third party without the consent of the Company and the lead investor(s). and the absence of material adverse changes with respect to the Company. The Company and the investors will each indemnify the other for any finder’s fees for which they are respectively responsible. among other things. 16 Finders: Legal fees and expenses: Confidentiality: Conditions precedent: . The Company will obtain a “key person” life insurance policy on Ryan Friedlinghaus in the amount of $4. The Company will pay the reasonable fees and expenses of a single counsel to the investors. EMPLOYEE MATTERS Proprietary information agreements: “Key person” life insurance: The Company will have all employees and consultants enter into proprietary information and inventions agreements. if the financing closes. negotiation and execution of definitive agreements customary in transactions of this nature. Until the initial closing of the financing contemplated by this Memorandum of Terms. up to a maximum of $25. approvals and consents.000. The investment will be subject to customary conditions. OTHER MATTERS Purchase agreement: The investment will be made pursuant to a stock purchase agreement which will contain. including but not limited to: completion of due diligence to the satisfaction of the investors.
(Signature page follows) 17 .
This Memorandum of Terms may be executed in counterparts. Facsimile signatures shall have the same legal effect as original signatures. The legally binding portions of this Memorandum of Terms will be governed by California law. LLC Signature Signature Print name Print name Print title Print title Date Date . WEST COAST CUSTOMS PARTNERS. without regard to conflicts-of-law principles. which together will constitute one document.
Exhibit A Performance Milestones TBD .
This action might not be possible to undo. Are you sure you want to continue?