Beanstock - Publisher Convertible Note Term Sheet

STRICTLY CONFIDENTIAL
FOR DISCUSSION PURPOSES ONLY
CONVERTIBLE NOTE TERM SHEET

TERM SHEET
This Term Sheet is non-binding, is not intended to give rise to any legal obligations, and does not
constitute an offer which may be accepted. No binding agreement between or among any party with
respect to the matters referenced herein is intended to be created unless and until definitive agreements
with respect thereto have been executed and delivered by such parties.
Issuer
Beanstock Media, Inc. (Beanstock).
Publishers
Existing Beanstock publishers with trade receivables more than 5 days past due
from Beanstock (Trade Debt).
Convertible Notes
Convertible non-transferrable subordinated notes (the Notes) issued to certain

Publishers in a principal amount equal to the amount of the outstanding Trade
Debt owed by Beanstock to each such Publisher.
Purchase Price
Cancellation of the related Trade Debt of the Publisher.
Maturity
The Notes will mature 10 years following the initial date of issuance (or the first
business day thereafter).
Interest
The Notes will not bear interest initially. To the extent that any Note has not
been re-paid or converted in full within 3 years following the initial date of
issuance, such Note will begin to bear interest at a rate of 5% per annum on the
principal amount thereof calculated on the basis of a 360-day year consisting of
twelve 30-day months (Interest). All accrued Interest shall only become due
and payable upon the earlier of maturity of the Note or conversion of the Note
as set forth below.
Voluntary
Prepayments
The Notes, together with any accrued Interest, will be prepayable in cash in
whole or in part at any time and from time to time prior to maturity.
Mandatory
Prepayments
Beanstock will set aside a cash amount equal to 20% of its annual after tax net
income (if any) in each fiscal year, which amount will be used to make partial
pre-payments with respect to all then outstanding Notes on a pro rata basis
within 120 days following the end of the applicable fiscal year.
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Mandatory
Conversion
At the sole election of Beanstock, each Note will convert in full into common
stock of Beanstock (Common Stock) immediately prior to any of (a) the
consummation of a firm commitment underwritten public offering of Common
Stock (an Initial Public Offering), (b) a Change of Control (as defined below)
or (c) maturity of the Note.
In the event of a conversion of a Note pursuant to clause (a) or (b) above, such
Note shall convert into a number shares of Common Stock equal to the quotient
of (i) the then remaining principal amount of the Note plus any accrued Interest,
and (ii)(x) 90% multiplied by (y) in the case of clause (a), the mid-point of the
proposed offering range for shares of Common Stock set forth on the cover of
the definitive preliminary prospectus for such Initial Public Offering or, in the
case of clause (b), the value of the proceeds to be received by (or that would be
allocable in a liquidation of the Company to) holders of shares of Common
Stock with respect to each share of Common Stock in such Change of Control
(subject to the conversion of the Notes).
In the event of a conversion of a Note pursuant to clause (c) above, such Note
shall convert into a number shares of Common Stock equal to the quotient of (i)
the remaining principal amount of the Note plus any accrued Interest, and (ii)(x)
80% multiplied by (y) the last 409A valuation for the Common Stock obtained
by Beanstock (which, in any event, shall have been obtained within the 12
month period prior to such conversion).
Change of Control means (a) any transaction pursuant to which a third party
or group acquires beneficial ownership of equity securities of Beanstock
constituting at least a majority of Beanstocks outstanding voting securities
(whether by reorganization; merger, consolidation or transfer), (b) any
reorganization, merger or consolidation of Beanstock with respect to which the
persons who were beneficial owners of voting securities of Beanstock
immediately prior to such transaction do not, following such transaction, own a
majority of the aggregate voting power of the surviving or acquiring entity, or
(c) the direct or indirect sale or exclusive license of all or substantially all of
Beanstocks assets in one or a series of related transactions.
SAAS Agreement;
Trade Credit
Simultaneously with execution of the Note, each Publisher shall enter into
Beanstocks customary SAAS License Agreement with respect to the Helix
Publisher Trading Platform and the Onswipe Mobile Publishing Platform (a
SAAS Agreement). Publishers may, at their election, either pay license fees
due under the SAAS Agreement in cash or offset such fees against any
remaining principal amount of the Note and accrued Interest. Selected
Publishers may also receive offset credit for media buying under the terms of
their SAAS Agreement.
Source Code
In the event of certain bankruptcy or insolvency events involving Beanstock,

Publishers will be entitled to receive a copy of the source code for Beanstocks
Helix and Onswipe platforms, together with non-exclusive rights to use such
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SV\1601058.1
source code only in order to maintain the applicable software platforms and host
the applicable software platforms for their own internal use, in any such case
until either (a) all of the outstanding obligations under the Note are paid in full
in cash or (b) all remaining principal amounts and accrued interest under the
Note has been credited in full as described above under SAAS Agreement;
Trade Credit.
Financial Statements
Publishers will be entitled to annual financial statements of Beanstock within

120 days following the end of each fiscal year.
Governing Law
New York.
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STRICTLY CONFIDENTIAL

FOR DISCUSSION PURPOSES ONLY

CONVERTIBLE NOTE TERM SHEET

Beanstock Media, Inc. (Beanstock).

Convertible non-transferrable subordinated notes (the Notes) issued to certain

Cancellation of the related Trade Debt of the Publisher.

In the event of certain bankruptcy or insolvency events involving Beanstock,

Publishers will be entitled to annual financial statements of Beanstock within

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