Confidential Term Sheet

8/3/2019 Confidential Term Sheet

1/19

2012

Submitted by Wil Cashen

West Coast Customs Partners, LLC,

2/6/2012

West Coast Customs Business Summary and Term She


2/19

2

West Coast Customs is a car remodeling company started in 1993 by Ryan Friedlinghaus on a $5,000.00 loan

from his grandfather, Edward Cifranic, becoming a premier world brand. 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. West

Coast Customs is the chosen automotive brand of the Hip-hop generation, blending poetry, art and engineering into

a customized kaleidoscope of vehicle and product designs.

West Coast Customs is ranked as the #1 global custom automotive brand. The brand evokes quality, style,

entertainment and performance to all generations Y, X, Zoomers and Boomers. 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.

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, retro mod designs, music and the raw human desire for celebrity

attention. Ryan's secret recipe for matching individual personalities to metal and carbon-fiber creates a uniquesoulful relationship between the vehicle and it's owner. 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.

Insertions into consumer markets of automotive customizers in the past have been limited to auto parts, car

accessories, toys and minor apparel offerings. West Coast Customs is the first and only automotive custom designer

and builder to cross theunforgiving crevasse between the automotive aftermarket and main stream global retail.Many factors in technology, media, the internet, market competition and the human condition have lead to the

success of West Coast Customs as a growing consumer brand.

Growing West Coast Customs

WEST COAST CUSTOMS PARTNERS, LLC. has been created to expand the West Coast Customs brand, product

and service offering into local markets around the world. WCCP, LLC is a new company designed and created

specifically for the sales, 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. A West Coast Customs Partners network of automotive dealership sales and vehicle

customization locations of branded product offerings will service the Hip- hop market of X'ers and Y'ers and will

fill the need for retro design Zoomers and Boomers.

The business activities of WCCP are:

1. Create greater WCC brand and product awareness2. Identify out-of-the-box market opportunities3. Establish WCC dealerships throughout North America in major local markets4. Support organic marketing and advertising in WCC dealer markets5. Create WCC dealer events and product presentation programs6. Maintain and control dealership WCC inventories7. Support dealer sales leads for WCC products and vehicles8. Provide direct customer support for WCC Dealers9. Work with dealers to improve WCC vehicles and products10.Train and support WCC dealer service department


3/19

3

Business Equity

Value creation of West Coast Customs Partners, LLC. is achieved through a 50 year West Coast Customs North

American exclusive license and rights use grant from Ryan Friedlinghaus in exchange for 6,000,000 shares of

common stock in WCCP, LLC and other cash considerations.

The license represents the exclusive brand use of the WCC name for use in the following market segments:

1. New Car Dealers Sales and Service2. Used Car Dealers Sales and Service3. Auto Parts Stores (chains or Mom and Pops)4. Performance Parts Stores5. Performance Shops6. Online Performance Parts Catalogs7. Automotive OEM Original Equipment Manufacturers Sales and Service8. Eight (12) West Coast Customs Used Car Dealerships Sales and Service

Valuation

The valuation of West Coast Customs Partners, LLC. is based on (1) the stated value of the West Coast Customsbrand (2) 10% (ten percent) ownership (stock purchase) in West Coast Customs, Inc. (3) exclusive wholesale

distribution rights of (one-off or production) WCC vehicles, designs, models, body kits, interior kits, etc.

The West Coast Customs brand - equity value is documented as follows:

1. Brand awareness value= $205,367,192 (segment leader)2. Broadcast Media value= $28,599,127 (television views)3. Print Media value=$623,4284. Online value= $30,312,109

Total Current Brand and Media Value= $264,901,856

The West Coast Customs forecast brand - equity value is documented as follows:

1. 2012 Total Brand and Media Value= $264,901,8562. 2013 Total Brand and Media Value= $325,349,6023. 2014 Total Brand and Media Value= $512,699,1254. 2015 Total Brand and Media Value= $909,337,9245. 2016 Total Brand and Media Value= $1,657,545,613

Market

Globally, Young Urban Consumers enjoy an aggregate income of $850 billion annually. These X- Gen and Y- Gen

trendsetters and influencers who affiliate with the hip-hop culture exercise a powerful impact on fashion, media,

entertainment, transportation design, interior design and other key consumer-focused sectors of this lifestyle. The

automotive industry has spent hundreds of millions attempting to reach the 79 million Y- Gen market with a

corporate white washed messaging of cool and hip. For the majority of X- Gen'er and Y- Gen trendsetters andinfluencers the auto companies have failed in their attempts to reach this artistic, highly tech savvy, knowledgeable,

media and entertainment driven lifestyle group.

West Coast Customs without spending one dollar on advertising or other forms of Pay-for ad and promotions, has

become the raining leader of this category attracting major music celebrities such as Wil- 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, willingly

promote the WCC brand on a global scale through all layers on media exposure. This endearing relationship that

has been nurtured between WCC, 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.


4/19

4

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, Y, Zoomers and Boomer generations. 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.

West Coast Customs has built brand awareness with the majority of X- Gen and Y- 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. WCC's instant brand association with the new car dealer provides the consumer

with an emotional connection establishing a link in the customers mind between their dealership and WCC's

products and services.

WCCP's Customer AnalyticsAverage Annual Expenditures Early Yers' Yers' Xers' Zommers Boomers

Under 25 25-34 26-44 45-64 65+Transportation $5,464 $8,699 $12,960 $11.850 $4,500Entertainment $1,608 $2,766 $5,855 $7,623 $2,394Personal Electronics* $985 $4,932 $3,923 $2,523 $1,001Personal Computers $362 $998 $2,320 $3,990 $190Travel $1,000 3,602 $4,849 $9,465 $6,430*Includes: Smart Phones, iPods, iPads, DVD Players, other D igital readers Source:TVB

With numbers estimated as high as 70 million, Generation Y Generation X encompasses the 44 to 50 million

Americans born between 1965 and 1980. As a result, Generation X is independent, resourceful and self-sufficient.

In the workplace, Generation X values freedom and responsibility.

The first generation to grow up with computers, 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, 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 dont like paying full price The X-Y generations demand home entertainment systems, smart-phones and the internet. Automobile marketers must offer Y-Xers' connectivity technology they consider important. Brands must be aware of disenfranchisement of X-Yers'. X-Yers' are "mobile generations Apple most like Brand Trump most disliked brand Gen Y Trend setters women when asked about luxury "CC, High end hotels" Male Yers', luxury means cars: BMW, Ferrari, Porsche, Lamborghini and Audi. Seven out of ten top ranked brands by US Gen Y males, are automakers. Yers' are family and friend oriented. This is why cell phones are so attractive to them. Word-of-mouth marketing is very powerful with Yers' because they are so friend conscious.


5/19

5

For X-Yers' viral marketing is a popular and effective medium. Yers' are very optimistic and have a positive outlook on the world. Non-profit sponsorships and cause marketing efforts get a positive response with Yers'.

Yers' are tenacious doers; offer products that help them become better. Zoomers and Boomer parents of Gen Yers', are close to their children, and still buy things for them. Concerts (Yers' love live music) and Movies. X-Yers' love extreme sporting events (skateboarding, snowboarding, BMX). Hiking events (Gen Y love the outdoors). Video games and video game competitions

Market Size2011 Automotive:Accessories (dealer and consumer installed) $139,860,012Custom Build to Order (Scion, Honda- like) $8,892,468,921Dealer Option Installed $39,860,012Factory Custom (graphics, parts add on, engine) $972,453,664One-Off (Special custom) $16,402,893Source:SEMA, NADA, AUTONEWS, AUTO BLOG MKR2011 Parts:New Car Custom/Special Parts (Mopar-like) $9,432,435.993Automotive Chain Custom/Special Parts (Performance-like) $849,323,167Source:SEMA, NADA, AUTONEWS, MKRESEARCH, EMAV

OpportunityWest Coast Customs Partners Market Opportunity 2011(used 2011only) $10,044,642,609Year Sales Percentage Average Margin Gross Profit Annual Sales2013 .0001% 10% $104,464 $1,044,642

2013 .001% 18% $1,808,035 $10,044,6422014 .004% 21% $8,403,749 $40,017,8572015 .008% 25% $20,089,285 $80,357,1402016 .011% 25% $27,622,767 $110,491,0682017 .013% 26% $33,950,891 $130,580,353

Profit PictureWest Coast Customs PartnersProfit PictureYear COGs MFG Fee Operations Expenses MFG Fee Profit2013 90% 08% $420,000 $96,000 $75,214 ($486,750)2013 82% 07% $680,000 $155,000 $635,012 $338,0222014 79% 06% $1,398,230 $325,000 $2,360,960 $4,319,558

2015 75% 04% $2,808,045 $1,550,000 $2,585,036 $13,146,2042016 75% 03% $4,400,302 $4,000,582 $2,738,075 $16,483,8072017 75% 03% $5,945,033 $4,321,033 $3,206,883 $20,477,341

StaffingWest Coast Customs PartnersHead CountYear Officers Sales Operations-Logistics Total2013 2 1 2 52013 3 6 5 142014 4 11 8 232015 5 15 12 32


6/19

6

Year Officers Sales Operations-Logistics Total2016 5 20 20 452017 6 26 22 54

Product StrategyWCC's strategy following the 4 Ps' (product, place, price, promotion) are based on capturing the consumerrelationship via local WCC dealer presence and sales and service activities.

-West Coast Customs products draw customers from all over the world that seek to create and own aunique vehicle built by WCC. The X- Gen and Y- Gen customer's passion for personal expression andcelebrity status amongst their circle of friends and community creates the need for WCC's products.-Through the expansion of the West Coast Customs brand to local markets around the world, allows the

West Coast Customs brand and products to be accessible to everyone in every market.- West Coast Customs automotive products carry the same pricing structure as does the automotive OEMs.Each market segment or niche' has specific products and options in order to capture and retain significantmarket share.- 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. WCC's media promotionsare syndicated to all WCC dealerships and include Brand and Product PR and advertising for all mediaoutlets such as local television, radio, internet, print, event and specials.

BrandStrategyCustomer brand and product awareness, preferences and expectations have been created through the airing ofhundreds of WCC's award winning television programs for more than a decade. This method of directcommunication information and entertainment has helped make West Coast Customs the global custom vehiclebrand authority for X, Y, Zoomers and Boomer generations.

-Long-term marketing support will be through the creation and distribution of global televisionprogramming content, online video programming content, local WCC infotainment radio and televisionsyndication, local WCC dealer advertising and promotions and WCC's global online Social Community ofX, Y, Zoomers and Boomer generations of automotive enthusiasts.

-WCC is building its online Social Community WCC automotive enthusiasts and is focusing the design anduse for the 67%Y Gen's that use social networks and the 36% of Gen Xer's.-The Hip-hop generation of Xer's and Yer's immerse themselves in technology and an artistic creativelifestyle that cements the relationship between West Coast Customs brand, products and end customer witha long lasting bond.

BusinessStrategyWest Coast Customs Partners provides to its dealers: (i) an ability to sell premium brand products and services thathave less pricing pressure (ii) highly profitable, focused on superior valued products and custom vehicle offerings(iii) Urban Style, Hip-hop unique by design products (iv) little to no retail pricing transparency in markets (v) localsales of a true value added unique and personalized custom product (vi) build a network of dealers promotingcustomer confidence of a well know brand in hundreds of local markets.

West Coast Customs restore the dealers ability to continuously offer a premium product in multiple marketsegments. Examples of West Coast Customs vehicle products market segments:

Compact Sports Car Sport Roadster


7/19

7

Sedan SUV Pickup

Cross Over Sport Utility Jeep

Companies like TrureCar.com and now even the automotive ,auto manufactures themselves continue to make it

harder for dealers across North America to maintain consistent profitability. 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. Pricing transparency displayed on the Internet by anyone is bad for

dealers and means, price negotiating is being taken out of dealers' hands, a trend that will continue to grow as the

auto manufactures work to control and own the customer.

Like personal computers, more cars are built to specification at the factory or the dock for buyers who ordered them

in advance online. For automakers, personalization is good business and bigger profits. As an example; Mini buyers

typically add $5,000 in extras above the $17,500 base sticker on factory- and dealer-installed accessories. Because

of "dealer installed options and factory customization", 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. Chrysler Group marketing chief

Joe Eberhardt says making cars to order could help end the problem of bloated inventoriesvehicles stacking up

either in storage lots or dealers' showrooms.

From 75% to 90% of Minis sold are custom-ordered from the factory. Once the customer places an order, it takes

two to three months for the car to arrive at the dealer from the plant in Oxford, England. In hot markets such as

California, the wait can take three to six months. Buyers can choose from 70 factory-installed options, such as $200

glassy black-lacquer dashboard inserts or $100 racing stripes on the hood. The long wait for custom add on options

becomes a time value proposition for the dealer and the customer.

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. West Coast Customs Special Buyers Only, Premium Brand,

adds significant value to the customer's vehicle purchase greatly improving the customers purchase experience.

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


8/19

8

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, Inc. is seeking and investment of $4,000,000 U.S. dollars.

1. The purchase 10% equity in West Coast Customs, Inc. for $1.500,000.2. The purchase 40% equity in West Coast Customs Partners, LLC. for $1,000,000.(to be used as operating

capital)

3. The purchase 50 year West Coast Customs exclusive license for $1,500,000. For use in marketing WestCoast Customs branded products, services, vehicles through; (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.


9/19

9

CONFIDENTIAL - DRAFT

WEST COAST CUSTOMS PARTNERS, LLC.

MEMORANDUM OF TERMS

Except with respect to the provisions entitled Confidentiality, which are intended to be, and are, legallybinding agreements among the parties hereto, this Memorandum of Terms represents only the current thinking ofthe parties with respect to certain of the major issues relating to the proposed private offering and does notconstitute a legally binding agreement. This Memorandum of Terms does not constitute an offer to sell or asolicitation of an offer to buy securities in any state where the offer or sale is not permitted.

THE OFFERING

Issuer: West Coast Customs Partners, LLC, a California Limited LiabilityCompany (the Company)

Securities: Series A Preferred Stock (the Series APreferred)

Amount of the offering: Up to $4,000,000

Consideration: Cash

Number of securities: 10,000,000 shares

Pricepershare: $1.00

Investors: Ryan Friedlinghaus (founder) or affiliated entities, and other investorsacceptable to the Company.

Anticipated closing date: Initial closing on or before March 15, 2012, with one or more additionalclosings within 60 days thereafter.

Milestone payments: The purchase price will be payable as follows:

At the initial closing, the investors will pay an aggregate of$4,000,000 (the Initial Amount).

Upon completion of the performance milestones set forth inExhibit A, the investors may in their discretion invest additionalamounts (the Commitment) as set forth inExhibit A.

If, in the sole and absolute judgment of the investors, a performancemilestone has not been satisfied, then the investors may either (i) waive thefailure and pay the amount, or a portion thereof, set forth opposite suchmilestone on Exhibit A, such payment to be conditioned upon the receiptby the investors of a written commitment by the Company to use its bestefforts to complete the applicable milestone by a specified date and tosatisfy such other conditions as the investors may require, (ii) elect not tomake such milestone payment but reserve the right to make subsequentmilestone payments, or (iii) terminate the Commitment without any furtherobligation or liability on the part of the investors.


10/19

10

TERMS OF THE PREFERRED

Dividends: Dividend rate: 10%

Cumulation: Noncumulative

Priority:Pari passu with common.

Liquidation preference: Amount: Original purchase price plus accrued dividends.

Priority: Senior to common.

Participation: After payment of preferential liquidation proceeds, theSeries A Preferred participates in liquidation proceeds to the common.

Limit on participation: Cap on participation at 3 times the initial

liquidation preference.

Deemed liquidation: A sale of all or substantially all of the Companysassets or a merger or consolidation of the Company with any othercompany will be treated as a liquidation of the Company. A deemedliquidation may be waived upon the election of the holders of a majority ofthe outstanding shares of preferred stock.

Redemption: Outstanding shares of Series A Preferred will be redeemable at the electionof the Company Share Price X 3. The redemption price will be thepurchase price plus declared dividends, plus a 40% per annum return fromthe closing date.

Conversion: The Series A Preferred may be converted at any time, at the option of theholder, into shares of common stock. The conversion rate will initially be1:1, subject to anti-dilution and other customary adjustments.

Automatic conversion: Each share of preferred stock will automatically convert into commonstock, at the then applicable conversion rate, upon (i) the closing of afirmly underwritten public offering of common stock at a price per sharethat is at least $3.00 (a Qualified Public Offering), or (ii) the consent ofthe holders of a majority of the then outstanding shares of the Series APreferred.

Anti-dilution: Adjustments. The conversion price of the Series A Preferred will be subjectto adjustment, on a narrow-based weighted-average basis (based onoutstanding common and preferred only), if the Company issues additionalsecurities at a price per share less than the then applicable conversionprice.

Exceptions. There will be no adjustment to the conversion price for:

shares issued upon conversion of the Series A Preferred;


11/19

11

shares or options, warrants or other rights issued to employees,consultants or directors in accordance with plans, agreements orsimilar arrangements, but not to exceed a total of 2,000,000 shares

issued after the closing date;

shares issued upon exercise of options, warrants or convertiblesecurities;

shares issued as a dividend or distribution on the preferred stock orfor which adjustment is otherwise made pursuant to the articles ofincorporation (e.g., stock splits);

shares issued in connection with a Qualified Public Offering; 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 investorsshare holder vote by 66.67% approval);

shares issued or issuable to banks, equipment lessors or otherfinancial institutions pursuant to debt financing or commercialtransactions approved by the board (including at least two directorelected by the investorsshare holder vote by 66.67% approval);

shares issued or issuable in connection with any settlementapproved by the board (including at least two director elected by

the investorsshare holder vote by 66.67% approval);

shares issued or issuable in connection with sponsored research,collaboration, technology license, development, OEM, marketingor other similar arrangements or strategic partnerships approvedby the board (including at least two director elected by theinvestorsshare holder vote by 66.67% approval);

shares issued to suppliers of goods or services in connection withthe provision of goods or services pursuant to transactions

approved by the board (including at least two director elected bythe investorsshare holder vote by 66.67% approval);

shares issued pursuant to other transactions approved by the board(including at least two director elected by the investorsshare holder vote by 66.67% approval); and

shares that are otherwise excluded by consent of holders of amajority of the Series A Preferred.


12/19

12

Pay-to-play requirement: If a holder of preferred stock fails to participate in this financing or anyfuture Qualified Financing (as defined below) on a pro rata basis, thensuch holder will have all preferred stock that it owns converted to common

stock. If such holder participates in any such financing but not to the fullextent of itspro rata share, then the preceding will apply proportionally tothe extent of the failure to participate.

A Qualified Financing is that portion of any financing by the Companythat the board (including two directors elected by the investors and by66.67% board approval) determines in good faith must be purchased prorataamong the stockholders of the Company subject to the pay-to-playprovisions. Such determination will be made regardless of whether theprice is higher or lower than any series of preferred stock.

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 conversionof each such share of preferred stock. The preferred stock will vote withthe common stock on all matters except as specifically provided in thearticles of incorporation or as otherwise required by law.

Voting for directors: So long as at least 4,000,000 shares of Series A Preferred are outstanding,the holders of Series A Preferred will be entitled to elect two directors. Theholders of common stock will be entitled to elect three directors. Anyadditional directors will be elected by the holders of preferred stock andcommon stock voting together.

Protective provisions: So long as there are at least 1,000,000 shares of Series A Preferredoutstanding, consent of the holders of at least 65% of the Series APreferred will be required to:

alter any provision of the articles of incorporation or the bylaws ifit would alter the rights, preferences, privileges or powers of orrestrictions on the preferred stock or any series of preferred;

increase or decrease the authorized number of shares of preferredstock or any series of preferred;

authorize or create (by reclassification or otherwise) any new classor series of shares having rights, preferences or privileges withrespect to dividends or liquidation senior to or on a parity with theSeries A Preferred or having voting rights other than those grantedto the preferred stock generally;

approve any transaction or series of transactions deemed to be aliquidation of the company;

approve any merger, sale of assets or other corporatereorganization or acquisition;

approve the voluntary liquidation or dissolution of the Company;


13/19

13

increase the size of the board; encumber or grant a security interest in all or substantially all of

the assets of the Company in connection with an indebtedness ofthe Company;

declare or pay any dividend or distribution or approve anyrepurchase with respect to the preferred stock (except as otherwiseprovided in the articles of incorporation) or the common stock(subject to customary exceptions); or

increase the number of shares authorized for issuance under anyexisting stock or option plan or create any new stock or optionplan.

INVESTOR RIGHTS

Registration rights: Registrable securities. The common stock issued or issuable uponconversion of the preferred stock will be Registrable Securities.

Demand registration. Subject to customary exceptions, holders of at least50% of the Registrable Securities will be entitled to demand that theCompany effect up to three firmly underwritten registrations (providedthat each such registration has an offering price of at least $5.00 per shareand has aggregate proceeds of at least $10,000,000) at any time followingthe earlier of (i) three years following the closing of the financing and(ii) 365 days following the Companys initial public offering. TheCompany will have the right to delay such registration under certaincircumstances for up to four periods of up to 180 days each in any twelvemonth period.

Piggyback registration. The holders of Registrable Securities will beentitled to piggyback registration rights on any registered offering by theCompany on its own behalf or on behalf of selling stockholders, subject tocustomary exceptions. In an underwritten offering, the managingunderwriters will have the right, in the event of marketing limitations, tolimit the number of Registrable Securities included in the offering,provided that, in an offering other than the initial public offering, theRegistrable Securities may not be limited to less than 15% of the totaloffering. In the event of such marketing limitations, each holder ofRegistrable Securities will have the right to include shares on a pro ratabasis as among all such holders and to include shares in preference to anyother holders of common stock.

S-3 rights. Subject to customary exceptions, holders of RegistrableSecurities will be entitled to demand registrations on Form S-3 (ifavailable to the Company) so long as the offering is for common stockhaving an aggregate offering price of not less than $5,000,000. TheCompany will not be required to file more than two such Form S-3registration statements in any twelve month period.


14/19

14

The Company may defer an S-3 filing four times during any twelve monthperiod for up to 180 days.

Expenses. Subject to customary exceptions, the Company will bear theregistration expenses (exclusive of underwriting discounts andcommissions) of all demand, piggyback and S-3 registrations, providedthat the Company will not be required to pay the fees of more than onecounsel to all holders of Registrable Securities.

Termination. The registration rights of a holder of Registrable Securitieswill terminate on the earlier of (i) such date, on or after the Companysinitial public offering, on which such holder may immediately sell allshares of its Registrable Securities under Rule 144 during any three-monthperiod and (ii) two years after the initial public offering.

Transfer. Registration rights may be transferred by a holder of RegistrableSecurities to current and former partners and members, and affiliates ofthat holder and to other persons acquiring at least 500,000 shares of theCompanys outstanding capital stock, provided the Company is givenwritten notice.

Market stand-off. Holders of Registrable Securities will agree not to effectany transactions with respect to any of the Companys securities within365 days following the initial public offering by the Company, providedthat all officers and directors of the Company and all holders of at least 1%of the Companys voting securities are similarly bound.

Other provisions. The Investor Rights Agreement will contain such otherprovisions with respect to registration rights as are customary, includingwith respect to indemnification, underwriting arrangements andrestrictions on the grant of future registration rights.

Righttomaintainproportionateownership: 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,subject to customary exceptions. The pro rata share will be based on theratio of (x) the number of shares of Series A Preferred held by such holder(on an as-converted basis) to (y) the Companys outstanding securities (onan as-converted and as-exercised basis). Participating holders will have theright to purchase, on a pro rata basis, any shares as to which eligible

holders do not exercise their rights. This right will terminate immediatelyprior to the Companys initial public offering.

Right of first refusal: In the event Ryan Friedlinghaus proposes to transfer any common stock orother securities convertible into or exercisable for common stock, theCompany will have a right of first refusal to purchase any or all the shareson the same terms as the proposed transfer.


15/19

15

If the Company does not exercise its right of first refusal, holders of atleast 1,000,000 shares of Series A Preferred will have a right of firstrefusal (on apro rata basis based on the total shares of Series A Preferred

then outstanding) with respect to the proposed transfer. Rights to purchaseany unsubscribed shares will be reallocated pro rata among the othereligible holders of Series A Preferred.

The rights of first refusal will be subject to customary exceptions and willterminate on an initial public offering.

Voting agreement: The principal stockholders of the Company will agree to elect to the board:

Two Series A designees as the Series A directors. The firstSeries A designee will be chosen by investors holding at least 662/3% of the Series A Preferred held by all investors. The second

Series A designee will be chosen by investors holding at least 662/3% of the Series A Preferred held by all investors. The Series Adesignees will initially be TBA and TBA.

Three common stock designees as the common stock directors.The first common stock designee will be chosen by RyanFriedlinghaus. The second common stock designee will be chosenby founders holding at least 66 2/3% of the common stock held byall founders. The third common stock designee will be chosen byfounders holding at least 66 2/3% of the common stock held by allfounders. One of the common stock designees will be theCompanys CEO. The common stock designees will initially beTBA, TBA and TBA.

Five mutual designees, as approved by (i) founders holding amajority of the common stock held by all founders and(ii) investors holding a majority of the shares held by all investors.The mutual designees will initially be TBA, TBA, TBA, TBA andTBA.

Director liability: The directors will be entitled to customary indemnification from theCompany and reimbursement of reasonable costs of attendance at boardmeetings. The Company will also obtain D&O insurance reasonablysatisfactory to the Company and its directors.

Information rights: The Company will deliver to each holder of at least 1,000,000 shares ofSeries A Preferred:

unaudited annual financial statements within 120 days followingyear-end;

unaudited quarterly financial statements within 60 days followingquarter-end; and

annual operating plans 45 days before each fiscal year.


16/19

16

The information rights will terminate upon an initial public offering.

EMPLOYEE MATTERS

Proprietary informationagreements: The Company will have all employees and consultants enter into

proprietary information and inventions agreements.

Key person life insurance: The Company will obtain a key person life insurance policy on RyanFriedlinghaus in the amount of $4,000,000, with proceeds payable to theCompany.

OTHER MATTERS

Purchase agreement: The investment will be made pursuant to a stock purchase agreementwhich will contain, among other things, appropriate representations andwarranties of the Company and the investors and appropriate conditions ofclosing.

Finders: The Company and the investors will each indemnify the other for anyfinders fees for which they are respectively responsible.

Legal fees and expenses: The Company will pay the reasonable fees and expenses of a singlecounsel to the investors, up to a maximum of $25,000, if the financingcloses.

Confidentiality: Until the initial closing of the financing contemplated by thisMemorandum of Terms, the existence and terms of this Memorandum of

Terms and the fact that negotiations may be ongoing with the investorsshall not be disclosed to any third party without the consent of theCompany and the lead investor(s), except as may be (i) reasonablyrequired to consummate the transactions contemplated hereby (providedthat any persons receiving the information agree to the confidentialityrestrictions contained herein or are otherwise subject to confidentialityobligations) or (ii) required by law.

Conditions precedent: The investment will be subject to customary conditions, including but notlimited to:

completion of due diligence to the satisfaction of the investors; negotiation and execution of definitive agreements customary in

transactions of this nature;

receipt of all required authorizations, approvals and consents; delivery of customary closing certificates and an opinion of

counsel for the Company; and

the absence of material adverse changes with respect to theCompany.


17/19

17

(Signature page follows)


18/19

This Memorandum of Terms may be executed in counterparts, which together will constitute onedocument. 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, without regard to conflicts-of-lawprinciples.

WEST COAST CUSTOMS PARTNERS, LLC

Signature Signature

Print name Print name

Print title Print title

Date Date


19/19

Exhibit A

Performance Milestones

TBD

Confidential Term Sheet

Documents

Transcript of Confidential Term Sheet