EFTA01202791.pdf

ADFIN SOLUTIONS, INC. CONVERTIBLE PROMISSORY NOTE FINANCING TERM SHEET August 11, 2014 This is a summary of the principal terms of a convertible promissory note financing (the "Financing") of AdFin Solutions, Inc., a Delaware corporation (the "Company") by one or more lenders. This term sheet is an expression of intent only, does not express the agreement of the parties, is not meant to be binding on the parties, and is meant to be used as a negotiation aid by the parties. The parties do not intend to be bound until they enter into definitive agreements regarding the subject matter of this term sheet. Financing Terms Issuer: The Company Lenders: Current Preferred Stockholders of the Company and other lenders (the "Lenders") Financing Amount: Up to $2,000,000 (the "Financing Amount") Closings: Initial closing on or before August 27, 2014 of not less than $750,000 (the "Initial Closing"). Remaining funds to be invested in a second closing on October I, 2014 (the "Second Closing"). Use ofProceeds: General corporate purposes and working capital Rights Offering: Each existing Preferred Stockholder of the Company will be offered the opportunity to participate up to or above its Pro Rata Share of the Financing. Each Preferred Stockholder's "Pro Rata Share" will be equal to (x) $2,000,000, multiplied by (y) such stockholder's ownership percentage of the Company's Series A Preferred Stock. The Rights Offering will expire on September 30, 2014. Terms ofLoan Unsecured Convertible The Company shall issue Notes to the Lenders in exchange Promissory Notes ("Notes'): for amounts loaned by the Lenders. The Notes will be unsecured and will be on substantially the same terms (as described below) as the existing $2,000,000 of unsecured convertible debt issued to Cantor Ventures in December 2013 (the "Cantor Debt"); provided that the Lenders will not be entitled to elect a member to the Board upon conversion WEST248711415.6 EFTA01202791  of the Notes as Cantor Ventures is entitled to upon conversion of the Cantor Debt. Payment on the Notes will be pan passu with payment on the Cantor Debt. Loans to the Company recently made by David J. Mitchell and Jonathan Leitersdorf (in the amounts of $25,000 and $100,000 respectively) will be treated as part of the Financing and count toward such Lender's Pro Rata Share at the Initial Closing. Warrant Coverage: (i) For all amounts up to a Lender's Pro Rata Share 20% coverage, and (ii) for any amounts in excess of a Lender's Pro Rata Share 60% coverage with warrants ("Warrants") to purchase shares of that series of Preferred Stock into which the Notes are converted at a purchase price per share equal to the price at which the Notes are converted, exercisable for seven (7) years from the Closing of the Financing. The right to exercise the Warrant shall terminate upon a Change of Control. If a Change of Control occurs prior to the conversion of the Notes, then in connection with the Change of Control the Warrants will be exercisable for Series A Preferred Stock of the Company at a purchase price per share of $0.65625. Warrants to be allocated and issued following the Second Closing. Warrants will also be issued to Cantor Ventures at the Initial Closing for the existing Cantor Debt with the same warrant coverage and terms, based upon Cantor Ventures' $301,266 pro rata share and $2,000,000 participation of the $2,000,000 December 2013 debt financing. Maturity: Principal and unpaid accrued interest on the Notes shall be due and payable on the earliest of (i) June 30, 2015, (ii) a Change of Control, (iii) an Event of Default or (iv) the bankruptcy or insolvency of the Company. "Change of Control" means (i) the acquisition of 33% or more of the capital stock of the issuer, by merger, consolidation, stock purchase or otherwise; (ii) a sale of all or substantially all of the assets of the Company or (iii) another party obtains the power to elect a majority of the Board of Directors of the Company. "Event of Default" means (i) the Company's failure to timely WEST248711415.6 EFTA01202792  pay under the Notes, (ii) the Company's breach of covenants, (iii) the sale of securities by either of Jonathan Leitersdorf or David Mitchell or their respective affiliates or (iv) the termination by the Company without cause of the employment of Milosz Tanski. The maturity date of the Cantor Debt will be amended to be the same as the Notes. Interest: Interest shall accrue on an annual basis at the simple rate of 8% per annum. Pre-howler. The principal and any unpaid accrued interest may not be prepaid (in whole or in part) without the approval of a majority in interest of the Lenders and the holder of the Cantor Debt combined (the "Lender Majority"). Conversion: The principal amount of the Notes and any accrued but unpaid interest will be convertible at any time, at the option of the Lender Majority, into a new series of the Company's Preferred Stock to be designated "Series A-1 Preferred Stock" at a price of $0.6525 per share (the "A-1 Purchase Price"). The rights, preferences and privileges of the Series A-1 Preferred Stock will be as set forth on Exhibit A hereto. In connection with the first issuance and sale of preferred stock of the Company subsequent to the Closing, in which the Company receives gross proceeds of at least $2M in one closing, excluding conversion of the Notes and the Cantor Debt (the "Qualified Financing"), the Notes will automatically be converted into either: (i) the shares of preferred stock issued in the Qualified Financing, at a price per share equal to the lower of (x) the original issuance price per share of such preferred stock or (y) the A-1 Purchase Price; or (ii) the Series A-1 Preferred Stock at the A-1 Purchase Price. The determination of which series of preferred stock to convert the Notes into shall be made by the Lender Majority at least 10 business days prior to the closing of the Qualified Financing. If the Company issues preferred stock prior to the Qualified Financing, with any superior rights, preferences or privileges than the Series A-1 Preferred Stock, the terms of the Series A-1 Preferred Stock will be modified to match any such WEST248711415.6 EFTA01202793  superior right. If, while the Notes are outstanding, the Company issues any equity at a price per share lower than the A-1 Purchase Price then the A-1 Purchase Price shall be lowered to equal such price, excluding (i) equity issued upon exercise or conversion of outstanding securities or (ii) options issued under the current reserve under Company's equity incentive plans plus an additional 1,041,689 shares which may be added to such reserve (collectively, "Excluded Securities"). In connection with any conversion of the Notes, the Lenders shall enter into a stock purchase agreement, the investors' rights agreement, the right of first refusal and co-sale agreement, the voting agreement or such other documentation relating to the conversion of the Notes as are customary for transactions of such type. Restrictive Covenants: The Company will not, without the consent of the Lender Majority: (i) issue any debt senior to the Notes and the Cantor Debt; (ii) issue any equity securities other than (i) Excluded Securities or (ii) equity issued in a bona fide equity financing; (iii) purchase or redeem or pay or declare any dividend or make any distribution on any stock of the Company; (iv) make any payment in respect of that certain unsecured promissory note dated 11/15/13 in principal amount $280,084.56 payable to Jonathan Leitersdorf; or (v) make any payment to David Mitchell with respect to the Company's current reimbursement obligation to Mr. Mitchell ($56,192 as of the time of the Cantor Debt, and as such amount may have increased since December 2013) Other Matters Confidentiality: The Company and the Lenders will keep the terms and existence of this Term Sheet confidential, except as otherwise required by law or regulatory authority. Expenses: The Company and the Lenders will each bear their own legal and other expenses with respect to the Financing and this WEST248711415.6 EFTA01202794  term sheet. Approvals: Company to obtain all necessary corporate approvals for the Note financing and all required waivers of debt or equity holders. Board and Stockholders covenant to approve authorization and issuance of Series A-I Preferred Stock prior to conversion of Notes into Series A-I Preferred Stock including as such Series A-1 Preferred Stock may be modified as set forth herein. WEST248711415.6 EFTA01202795  Exhibit A Rights, Preferences and Privileges of Series A-1 Preferred Stock Purchase Price Per Share: $0.65625 per share (150% of Series A Preferred Stock purchase price) Dividends: 8% cumulative, part-passu with the Series A Preferred Liquidation Preference: Same terms as the Series A Preferred (lx the original purchase price), pan passu with the Series A Preferred Conversion: Optional 1:1 conversion at any time Automatic conversion upon Qualified IPO (as defined in current Certificate of Incorporation) or vote of at least a majority of all Preferred Stockholders Antidilution: Broad-based weighted average adjustment for issuances below Series A-1 Purchase Price, on same terms as Series A Preferred Redemption: Redeemable at liquidation preference, pan passu with the Series A Preferred on same time frame as Series A Preferred Voting Rights: Series A-1 votes together with Common Stock on an as-converted basis. Series A-1 and Series A will vote together on current Series A protective provisions in the Certificate of Incorporation, modifying the current 66% supermajority threshold to a simple majority Other Rights: Equivalent rights as Series A Preferred, as set forth in the Series A Preferred financing documents, related to registration, financial information, inspection, co-sale and the like. WEST248711415.6 EFTA01202796