Form of Letter of Intent - VC.doc

Form of Letter of Intent - VC.doc - PERSONAL AND...

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PERSONAL AND CONFIDENTIAL [ Date ] __, 2001 Mr [ s ] . [ _______ ] Chairman and President [ Company ] [ Address ] Dear Mr [ s ] . [ _______ ] This letter (“ Letter ”) sets forth our understanding in principle with regard to a proposed investment in [ Company ] (the “ Company ”) to be made by [_________________], and one or more affiliated entities (collectively, “[_________]”). 1. Summary Transaction; Securities to be Purchased . At the closing of [_________]’s investment in the Company (the “ Closing ”), [_________] will invest $ [ __ ] million [ , of a $ [ __ ] million round ] (the “ Preferred Round ”), in a newly-issued class of participating preferred stock to be designated as [ __ ] % Series [ A ] Convertible Participating Preferred Stock (the “ Participating Preferred ”) at an original purchase price of $ [ __ ] per share (the “ Original Purchase Price ”). 1 As reflected in Annex A, 2 the Participating Preferred will (assuming full conversion thereof immediately after Closing) represent approximately [ __ ] % of the fully diluted capitalization of the Company, at a $ [ __ ] million pre-money valuation assuming the issuance and exercise in full of all of the shares ( [ insert total option pool shares ] ) of the Company’s common stock (the “Company Common Stock ) available for issuance under the Company Plan (as hereinafter defined) [ after giving effect to the increase (from [ __ ] to [ __ ] ) of the number of shares available for issuance under the Company Plan to be effectuated immediately prior to the consummation of the Preferred Round ] 3 . The Company shall use the proceeds of the Preferred Round for [ general corporate purposes ] [ describe use of proceeds ] . 4 2. Capitalization . The Company will be capitalized immediately after the consummation of the Preferred Round, on a fully- diluted basis, in the manner set forth in the pro forma capitalization table attached hereto as Annex A. 3. Terms of the Participating Preferred . 5 a. Conversion . Each holder of the Participating Preferred will have the right to convert all or any part of its Participating Preferred, at any time and from time to time, into shares of Company Common Stock. All shares of Participating Preferred will convert automatically into shares of Company Common Stock in the event of [ (i) an election to so convert by [ two-thirds ] of the holders of the Participating Preferred or (ii) ] a Qualified IPO (as hereinafter defined). The total number of shares of Company Common Stock into which each share of Participating Preferred may be converted initially will be determined by dividing the Liquidation Preference (as hereinafter defined) by the Conversion Price (as hereinafter defined). 6 The “ Conversion Price ” shall initially be the Original Purchase Price. 7 b. Redemption . There will be no mandatory redemption of the Participating Preferred by the Company at any time. [ The holders of a majority of the Participating Preferred shall have the right to cause the Company to redeem the Participating Preferred at any time on or after the [ seventh ] anniversary of the Closing Date (as hereinafter defined). ] The redemption price shall be equal to the greater of the fair market value of the
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  • Summer '17
  • allen dasu
  • Company common stock

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