G/500Startups-KISS-CmA/Form/Debt/0.md

/Docs/G/500Startups-KISS-CmA/Form/Debt/0.md
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Definitions

"Conversion Shares" shall mean:
with respect to a conversion pursuant to Section 2.1, shares of Preferred Stock issued in the Next Equity Financing; provided, however, that, at the Company's election, "Conversion Shares" with respect to a conversion pursuant to Section 2.1 shall mean shares of a Shadow Series;
with respect to a conversion pursuant to Section 2.2, shares of Common Stock; and
with respect to a conversion pursuant to Section 2.3, shares of a newly created series of the Company's Series Seed Preferred Stock, upon the terms and provisions set forth in the most recent version of the Series Seed documents posted at www.seriesseed.com (or if not so posted, as reasonably agreed by the Company and a Majority in Interest); provided that, for the avoidance of doubt, the Conversion Price shall be determined pursuant to Section 1.2.3).
"Conversion Price" shall equal:
1. with respect to a conversion pursuant to Section 2.1, the lower of (A) the product of (1) one (1) minus the Discount and (2) the price paid per share for Preferred Stock by the investors in the Next Equity Financing or (B) the quotient resulting from dividing (1) the Valuation Cap by (2) the Fully-Diluted Capitalization immediately prior to the closing of the Next Equity Financing;
2. with respect to a conversion pursuant to Section 2.2, the quotient resulting from dividing (A) the Valuation Cap by (B) the Fully-Diluted Capitalization immediately prior to the closing of the Corporate Transaction; and
3. with respect to a conversion pursuant to Section 2.3, the quotient resulting from dividing (A) the Valuation Cap by (B) the Fully-Diluted Capitalization immediately prior to the conversion.
"Corporate Transaction" shall mean:
1. the closing of the sale, transfer or other disposition of all or substantially all of the Company's assets,
2. the consummation of the merger or consolidation of the Company with or into another entity (except a merger or consolidation in which the holders of capital stock of the Company immediately prior to such merger or consolidation continue to hold at least 50% of the voting power of the capital stock of the Company or the surviving or acquiring entity),
3. the closing of the transfer (whether by merger, consolidation or otherwise), in one transaction or a series of related transactions, to a person or group of affiliated persons (other than an underwriter of the Company's securities), of the Company's securities if, after such closing, such person or group of affiliated persons would hold 50% or more of the outstanding voting stock of the Company (or the surviving or acquiring entity), or
4. the liquidation, dissolution or winding up of the Company;
provided, however, that a transaction shall not constitute a Corporate Transaction if its sole purpose is to change the state of the Company's incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company's securities immediately prior to such transaction. Notwithstanding the prior sentence, the sale of shares of Preferred Stock in a bona fide financing transaction shall not be deemed a "Corporate Transaction."
"Corporate Transaction Payment" shall mean an amount equal to all accrued and unpaid interest due on this KISS plus two times (2X) the Purchase Price.
"Discount" shall mean {Discount.%}.
"Equity Securities" shall mean the Company's Common Stock ("Common Stock") or the Company's Preferred Stock ("Preferred Stock") or any securities conferring the right to purchase the Common Stock or Preferred Stock or securities convertible into, or exchangeable for (with or without additional consideration), the Common Stock or Preferred Stock, except any security granted, issued and/or sold by the Company to any director, officer, employee or consultant of the Company in such capacity for the primary purpose of soliciting or retaining their services.
"Financial Statements" shall mean an income statement, balance sheet, statement of stockholder's equity, and/or a statement of cash flows, in each case as of the end of (i) each of the first three (3) fiscal quarters and (ii) each fiscal year of the Company.
"Fully-Diluted Capitalization" shall mean the number of shares of outstanding Common Stock on a fully-diluted basis, including (i) conversion or exercise of all securities convertible into or exercisable for Common Stock, (ii) exercise of all outstanding options and warrants to purchase Common Stock and, in the case of Section 1.2.1 and Section 1.2.3 only, (iii) the shares reserved or authorized for issuance under the Company's existing stock option plan or any stock option plan created or increased in connection with such transaction; but excluding, for this purpose, the conversion contemplated by the applicable provision of Section 2.
"Holder" shall mean a member of the KISS Group that holds a KISS (including, without limitation, the Investor, for so long as the Investor holds this KISS).
"Interest Rate" shall mean a rate of four percent (4%) per annum, compounded annually.
"KISS" or "KISSes" shall mean the KISS instruments issued by the Company to Holders in the form hereof.
"KISS Group" shall mean the holders of all KISSes in the Series, collectively.
"Majority in Interest" shall mean members of the KISS Group holding a majority in interest of the aggregate Purchase Prices of all KISSes in the Series.
"Maturity Date" shall mean the date that is eighteen (18) months following the Date of Issuance.
"Next Equity Financing" shall mean the next sale (or series of related sales) by the Company of its Preferred Stock following the Date of Issuance from which the Company receives gross proceeds of not less than $1,000,000 (excluding the aggregate amount of securities converted into Preferred Stock in connection with such sale (or series of related sales)).
"Participation Amount" shall mean an amount in US dollars equal to one times (1X) the Purchase Price.
"Shadow Series" shall mean shares of a series of Preferred Stock that is identical in all respects to the shares of Preferred Stock issued in the Next Equity Financing (e.g., if the Company sells Series A Preferred Stock in the Next Equity Financing, the Shadow Series would be Series A-1 Preferred Stock), except that the liquidation preference per share of the Shadow Series shall equal the Conversion Price (as determined pursuant to Section 1.2.1), with corresponding adjustments to any price-based antidilution and dividend rights provisions.
"Valuation Cap" shall mean {ValuationCap.$}