8/3/2019 Sample Discount Convertible Note Terms

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STARTUP, INC.

SUMMARY OF PROPOSED TERMS

OF CONVERTIBLE NOTES

 ___________, 2007

THIS SUMMARY OF PROPOSED TERMS IS FOR DISCUSSION PURPOSES ONLY, AND THERE SHALL BE NO

OBLIGATION ON THE PART OF ANY NEGOTIATING PARTY UNTIL A DEFINITIVE NOTE PURCHASE

AGREEMENT IS SIGNED BY ALL OF THE PARTIES TO SUCH AGREEMENT . THIS SUMMARY OF PROPOSED

TERMS CONSTITUTES NEITHER AN OFFER TO SELL NOR AN OFFER TO PURCHASE SECURITIES.

Summary of Terms

Issuer: Startup, Inc., a Delaware corporation (the “Company”).

Investors: The Notes will only be offered to accredited  investors (“ Investors”), as such term is defined bythe Securities Act of 1933, as amended and the rules promulgated thereunder.

Type of Security: Convertible Notes (the “ Notes”).

Principal Amount of Notes: Up to an aggregate of $300,000.

Minimum Individual Investment: $25,000 (or such lesser amount as the Company may determine at itsdiscretion).

Closing: The Company expects to hold the initial closing of this offering on or about June 30, 2007 (the“ Initial Closing ”), as determined by the initial Investors and the Company, in its discretion. The Companymay hold subsequent closings, as determined by the Company and additional Investors, up until September 30, 2007 (each a “ Subsequent Closing ”), unless this date is extended by the Company at its discretion.

Note Purchase Agreement: Each Investor will purchase the Notes pursuant to a Note PurchaseAgreement.

Senior Equity Securities: The Company’s issued and outstanding share of Series A Preferred Stock.

Term of Notes: All principal and accrued but unpaid interest will become due and payable upon the earlier of (i) a Change of Control of the Company; (ii) a Qualified Financing; and (iii) the date that is 24 monthsafter the date of issuance.

Interest Rate: Interest shall accrue at the simple annual rate of 10% per annum, payable as set forth in“Term of Notes” immediately above.

Conversion: At any time prior to the expiration of the Term, holders of the Notes may elect to convert the Notes into the Company’s Senior Equity Securities; provided, however in the event there is a “QualifiedFinancing” as described below, the Notes shall be automatically converted into “Conversion Stock”.

Qualified Financing.

In the event of the Company’s sale of the Series B Preferred Stock (or equivalent securities issued inconnection with the Company’s next round of financing) (the “Conversion Stock ”) for aggregate cashconsideration of at least $1,000,000, not including the principal or accrued interest converted under outstanding Notes, in one transaction or series of related transactions (a “Qualified Financing ”), the Notes,

8/3/2019 Sample Discount Convertible Note Terms

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including principal and any accrued interest (“ Balance”) shall automatically convert into shares of Conversion Stock at a discounted price equal to the price applicable to the other Investors that purchase theConversion Stock in the Qualified Financing (“Qualified Financing Price”) less 25% (“ Discount ”), and onthe same other terms, as those applicable to the other Investors that purchase the Conversion Stock in theQualified Financing.

Change of Control

In the event of an acquisition of the Company by merger or sale of all or substantially all of the Company’sassets or otherwise (“Change of Control ”), the Balance shall convert at the option of the note holder intothe right to receive the same consideration as is otherwise payable to the holders of Senior Equity Securitieson substantially the same other terms, as those applicable to the holders of Senior Equity Securities, provided that the holders of Notes will be entitled to receive the consideration payable upon conversion of the Notes in full before the holders of the Senior Equity Securities and all other outstanding equitysecurities receive any consideration in connection with such Change of Control.

If the consideration payable upon such Change of Control is not sufficient to pay the full amount of theconsideration otherwise payable to the holders of Notes, then all of such consideration shall be payable tothe holders of Notes. For example, if the consideration payable to holders of Senior Equity Securities iscash, holders of outstanding Notes will receive an amount equal to the outstanding principal and interest

outstanding under the Notes; and if such consideration is payable in securities of the acquirer, the holdersof Notes would receive a number of such securities having a value equal to the outstanding principal andinterest outstanding under the Notes

Expenses: The Company and the Investors shall each bear their own legal expenses with respect to thetransaction.