EFTA00822273.pdf

From: "jeffrey E." <[email protected]> To: Jeffrey Epstein <[email protected]> Subject: Fwd: Privileged and Confidential Date: Sat, 06 Aug 2016 10:47:41 +0000 Forwarded message ----- From: Jeffrey E. <[email protected]> Date: Wed, Aug 3, 2016 at 4:59 PM Subject: Fwd: Privileged and Confidential To: Jeffrey Epstein <[email protected]> Fon% a Med messa e From: Darien Indyke Date: Tue, Aug 2, 2016 at 7:03 PM Subject: Re: Privileged and Confidential To: Jeffrey Epstein <[email protected]> I will summarize any changes I find in the transaction docs when I get back to house tonight but to refresh your memory the term sheet terms are outlined in my email below. Thanks. Sent from my iPhone On Jun 22, 2016, at 4:43 PM, Darren Indyke c > wrote: In broad strokes, the Reporty deal was a $1.5MM investment total for not less than $25% of a Company with a pit-money valuation of $4.5MM. It included the issuance of Warrants to purchase additional preferred shares exercisable for 4 years after the initial closing, with one set of warrants exercisable for up to $1.5 MM at 150% of the initial purchase price per share and the second set exercisable for up to $2.5 MM at 175% of the initial purchase price per share. The liquidation preference on the Reporty preferred shares was based on an interest rate of 8% per year, compounded annually. Quick summary of Levitection based on current docs: Pre-Money Valuation: $2,715,584 Securities Offered: Series A Preferred Stock convertible into common on a 1-for-1 basis (subject to adjustment - see below) at the election of the holder or mandatorily in the event of an IPO with a company valuation of $50MM and netting at least $10MM Amount to be Invested: $1,020,000 at $2.19 per share for approximately 27.3% of Company; 9 months later if certain milestones (which are not described in the documents sent to me) are met, another $680K at $2.19 per share which would bring total ownership up to 38.5%. EFTA00822273 Warrants: $1.5 MM of warrants to purchase Preferred Shares exercisable for 3 years at 150% (subject to increase - see below) of the initial price per share $2.0MM of warrants to purchase Preferred Shares exercisable for 4 years at 225% (subject to increase - see below) of the initial price per share Exercise price per share of each of the above warrants increases by 25% every 12 months. If all warrants were exercised before the end of the first year post closing, EB's ownership of the company would increase to just under 57% of the Company. Cashless exercise of the warrants would be permitted immediately prior to a deemed liquidation event - e.g., company acquisition by or merger with an unaffiliated entity, asset sale, stock sale, tech license of substantially all assets, or transfer of at least 50% voting control of the company Preferred Shares have a liquidation preference based on an interest rate of 6% per annum, compounded annually. In the event of a liquidation where that preference would yield a return equal to or greater than 2x the initial investment, then the preference would be terminated and all shareholders would be paid pro rata, pan passu Conversion Price of Preferred Shares is subject to full-ratchet anti dilution in the event of issuance of New Securities at a price per share less than the then adjusted conversion price of the Preferred Shares, with exception for certain issuances pursuant to option plans, recapitalizations, credit line financing (so long as less than 3% of issued share capital at the time of issuance), and issuance of not more than 5% of issued share capital to a Board Approved Strategic Investor Rigorous Voting Rights to Preferred Shareholders - through heightened share voting rights as to certain significant matters and through requirement of EB Board representative approval for other significant matters. These remain in effect so long as EB owns 15% of the Company Reporting Rights, including Annual audited statements, unaudited quarterly statements, monthly reports and advance annual budgets and operating reports so long as EB owns 5% of the Company Pre-Emptive Rights as to New Issuances Pro Rata Right of First refusal for transfers Tag Along Rights Demand and Piggy-back Registration Rights Bring Along Rights when 60% of shareholders agree to a transaction where the pre-money valuation of the company is at least $50MM Restrictions on Gordon Levita's ability to sell his holdings - no sales for 2 years and only 15% per share for the next two years. Founders Shares are subject to Reverse Vesting of 75% of their current shares Anticipated consulting agreement with EB for marketing purposes - an agreement has been drafted but was not attached to the documents sent to me Non-competition, assignment of IP, non-solicitation and confidentiality provisions with Founders and Key Employees under discussion. DARREN K. INDYKE DARREN K. INDYKE, PLLC EFTA00822274 575 Lexington Avenue, 4th Floor New York, New York 10022 Telephone: Telecopier: Mobile: email: The information contained in this communication is confidential, may be attorney-client privileged, and is intended only for the use of the addressee. It is the property of Darren K. Indyke, PLLC. Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail, and destroy this communication and all copies thereof, including all attachments. Copyright of Darren K. Indyke, PLLC - O 2016 Darren K. Indyke, PLLC — All rights reserved. please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected], and destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved please note The information contained in this communication is confidential, may be attorney-client privileged, may constitute inside information, and is intended only for the use of the addressee. It is the property of JEE Unauthorized use, disclosure or copying of this communication or any part thereof is strictly prohibited and may be unlawful. If you have received this communication in error, please notify us immediately by return e-mail or by e-mail to [email protected], and EFTA00822275 destroy this communication and all copies thereof, including all attachments. copyright -all rights reserved EFTA00822276