neptune
NEPTUNE MINERALS
CONFIDENTIAL
TERM SHEET
PRIVATE OFFERING OF SERIES A PREFERRED OF NEPTUNE MINERALS, INC.
STOCK
Dated: March 4, 2014 This Confidential Term Sheet summarizes the principal terms of an offering (the "Offering") of shares of Series A Preferred Stock Neptune Minerals, Inc., a Nevada corporation (the "Company"). This Term Sheet is for discussion purposes only and does not create any binding legal obligations, rights, or duties with respect to the parties referred to herein. Any such binding obligations will be set forth, if at all, in definitive transaction documents relating to the Offering. Amount of Offering:
$5,000,000 (which may be increased at the discretion of the Company without further notice)
Type of Security and Amount Raised:
Up to 50,000 shares (the "Shares") of a newly created series of preferred stock of the Company to be designated as "Series A Preferred Stock" (the "Series A Preferred"). The number of Shares sold in the Offering may be increased at the discretion of the Company without further notice.
Investors:
One or more "accredited investors" or "qualified institutional buyers" selected by the Company.
Price Per Share:
$100.00 per Share (the "Original Purchase Price").
Minimum Offering Amount:
The completion of the offering will be subject to the receipt of the minimum aggregate proceeds of $2.0 million.
Closing Date; Expiration:
The Company may hold closings on a rolling basis as it receives subscriptions, subject to the minimum offering amount of $2.0 million. The Offering will expire on March 31, 2014, although the Company may in its discretion terminate the Offering earlier or extend the expiration date without further notice.
Warrant Coverage:
Purchasers of the Shares will also be granted, for each Share purchased in the Offering, a warrant (the "Warrants") to purchase one share of Class B Nonvoting Common Stock of the Company ("Class B Common Stock"). The Warrants will have an exercise price of$IO.OO per share of Class B Common Stock and will expire upon the third (3rd) anniversary of the initial closing of the Offering.
Terms of Series A Preferred:
The Series A Preferred will have the designations, rights, and preferences set forth in a Certificate of Designation containing the terms and conditions set forth below in this Term Sheet.
Optional Conversion Right:
The Serier A Preferred will be convertible into shares of Class B Common ~tock at any time at option of holder at a conversion price of $1 0.00 per share, subject to adjustments for stock dividends, splits, combinations and similar events. Accrued but unpaid dividends on any Series A Preferred being converted will also be converted at the apPlicablel conversion price.
Mandatory Conversion:
Each shar, of Series A Preferred (together with all accrued but unpaid dividends) will automatically be converted into Common Stock at the then-applicable conversion rate in the event of the closing of a underwritten public offering with a price of at least two times the conversior Price (subject to adjustments for stock dividends, splits, combinati?ns and similar events) (a "QPO"), or (ii) upon the written consent oilthe holders of a majority of the then-outstanding Series A Preferred.
Pre-Offering Capitalization:
As of the I date of this Term Sheet and before giving effect to the Offering, te Company had 24,403,597 fully diluted shares, which is comprisedl of (i) 1,200,000 shares of Class A Voting Common Stock ("Class AI Common Stock"), (ii) 19,706,795 shares of Class B Common ~tock, (iii) 2,500,000 shares of Class B Common Stock reserved for issuance under the Company's 2011 Equity Incentive Plan, of~hich 1,149,000 shares are subject to outstanding options, (iv) warrants exercisable to purchase 763,344 shares of Class B Common IStock, (v) 147,492 shares of Class B Common Stock issuable u~on the. conversion of outstanding convertible notes of the Company land (vi) 85,966 shares of Class A Clammon Stock automatically issuable at maturity pursuant to outstanding convertible bridge notes unless the Company chooses to repay prlior to maturity (includes 1ccrued but unpaid interest as of the date of this Term Sheet). Although the foregoing numbers do not include the issuance of any Shares in the Offering, the numbers have been adjusted to reflect the effect of anti-dilution rights in outstanding warrants that will be triggered by the Offering.
Dividends:
The serie~~ A Preferred will carry an annual 10.0% cumulative dividend payable in cash upon a liquidation, conversion, or redemption of the Series A Preferred. No dividends shall be paid on the Company's Class A Common Stock or Class B Common Stock until all accrued but unpaid dividends are first paid On the Series A Preferred.
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Liquidation Preference:
In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be used to first pay the sum of (i) 1.5 times the Original Purchase Price plus (ii) all accrued but unpaid dividends on each share of Series A Preferred (the "Liquidation Preference"), and the balance of any proceeds shall be distributed pro rata to holders of Common Stock. Upon a liquidating event, the holders of the Series A Preferred will be provided notice of such event and be given an opportunity to convert their shares of Series A Preferred. A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event (a "Deemed Liquidation Event"), thereby triggering payment of the liquidation preferences described above unless the holders of a majority or more of the Series A Preferred elect otherwise.
Right to Participate Pro Rata in Future Rounds:
All investors in the Offering will have a pro rata right, based on their percentage equity ownership in the Company (assuming the conversion of all outstanding Series A Preferred Stock into Class B Common Stock Common Stock and the exercise of all outstanding options and warrants), to participate in subsequent issuances of equity securities of the Company, subject to customary exceptions. In addition, should any investor choose not to purchase its full pro rata share, the remaining investors in the Offering shall have the right to purchase the remaining pro rata shares.
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Protective Provisions:
So long as 25% of the Series A Preferred shares remain outstanding, the Company will not, without the written consent of the holders of at least a majority of the Company's Series A Preferred, either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the affairs of the Company, or effect any merger or consolidation or any other Deemed Liquidation Event, unless the Liquidation Preference would be paid in full as a result of such event; (ii) make any amendment, alteration, or repeal of any provision of the of the Company's Articles of Incorporation to adversely change the rights, preferences, or privileges of the Series A Preferred; (iii) create or authorize the creation of or issue any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior to or pari passu with the Series A Preferred with respect to liquidation preferences, distribution preferences, or redemption rights; or (iv) purchase or redeem or pay any dividend on any capital stock prior to the Series A Preferred, other than Pari Passu Stock (as defined below) and other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value or cost. The term "Pari Passu Stock" refers to any series or class of equity security of the Company that has distribution or redemption rights, preferences, or privileges that are pari passu with, but not senior to, the Series A Preferred.
Investor Redemption Right:
Unless prohibited by Nevada law governing distributions to stockholders, the Series A Preferred shall be redeemable at the option of holders of more than 50% of the Series A Preferred commencing any time after the third (3rd) anniversary of the original issuance of the Series A Preferred at a price equal to the Original Purchase Price plus all accrued but unpaid dividends thereon. Redemption shall occur in three equal annual portions. Upon a redemption request from the holders of the required percentage of the Series A Preferred, all Series A Preferred shares shall be redeemed.
Company Redemption Right:
The Series A Preferred shall be redeemable at the option of the Company at any time, either in whole in in part, upon written notice to the holders thereof, for a purchase price equal 130% of the Original Purchase Price of the Series A Preferred being redeemed plus all accrued but unpaid dividends thereon. The closing of such redemption shall occur on a date selected by the Company that is no
later than forty five (45) days after date of the Company's notice of redemption, and the purchase price for the redeemed Series A Preferred shall be paid in immediately available funds at such closing. Holders of the Series A Preferred will have the right to convert such shares into Class B Common Stock as described above at any time prior to the closing of the redemption.
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Voting Rights:
Except as set forth above under "Protective Provisions" and except as required by law, the Series A Preferred will be nonvoting shares.
Definitive Offering Documents:
The purchase and sale of the Series A Preferred will be made pursuant to definitive subscription or purchase agreements agreeable to the Company and Investors.
Counsel and Expenses:
Company counsel to draft closing documents. Company to pay reasonable legal fees of counsel to investors up to an aggregate of $25,000 and limited to one counsel for all investors.
Use of Placement Agent:
The Company will be permitted, at its option, to engage one or more placement agents in connection with the Offering and to pay such placement agents a fee or commission.
Confidential Offering Memorandum:
The terms of set forth in this Confidential Term Sheet will be subject to a Confidential Offering Memorandum to be prepared with respect to the Offering. Prospective investors in the Offering are urged to closely review the Confidential Offering Memorandum when it becomes available.
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CONFIDENTIAL
TERM SHEET
PRIVATE OFFERING OF SERIES A PREFERRED OF NEPTUNE MINERALS, INC.
STOCK
Dated: March 4, 2014 This Confidential Term Sheet summarizes the principal terms of an offering (the "Offering") of shares of Series A Preferred Stock Neptune Minerals, Inc., a Nevada corporation (the "Company"). This Term Sheet is for discussion purposes only and does not create any binding legal obligations, rights, or duties with respect to the parties referred to herein. Any such binding obligations will be set forth, if at all, in definitive transaction documents relating to the Offering. Amount of Offering:
$5,000,000 (which may be increased at the discretion of the Company without further notice)
Type of Security and Amount Raised:
Up to 50,000 shares (the "Shares") of a newly created series of preferred stock of the Company to be designated as "Series A Preferred Stock" (the "Series A Preferred"). The number of Shares sold in the Offering may be increased at the discretion of the Company without further notice.
Investors:
One or more "accredited investors" or "qualified institutional buyers" selected by the Company.
Price Per Share:
$100.00 per Share (the "Original Purchase Price").
Minimum Offering Amount:
The completion of the offering will be subject to the receipt of the minimum aggregate proceeds of $2.0 million.
Closing Date; Expiration:
The Company may hold closings on a rolling basis as it receives subscriptions, subject to the minimum offering amount of $2.0 million. The Offering will expire on March 31, 2014, although the Company may in its discretion terminate the Offering earlier or extend the expiration date without further notice.
Warrant Coverage:
Purchasers of the Shares will also be granted, for each Share purchased in the Offering, a warrant (the "Warrants") to purchase one share of Class B Nonvoting Common Stock of the Company ("Class B Common Stock"). The Warrants will have an exercise price of$IO.OO per share of Class B Common Stock and will expire upon the third (3rd) anniversary of the initial closing of the Offering.
Terms of Series A Preferred:
The Series A Preferred will have the designations, rights, and preferences set forth in a Certificate of Designation containing the terms and conditions set forth below in this Term Sheet.
Optional Conversion Right:
The Serier A Preferred will be convertible into shares of Class B Common ~tock at any time at option of holder at a conversion price of $1 0.00 per share, subject to adjustments for stock dividends, splits, combinations and similar events. Accrued but unpaid dividends on any Series A Preferred being converted will also be converted at the apPlicablel conversion price.
Mandatory Conversion:
Each shar, of Series A Preferred (together with all accrued but unpaid dividends) will automatically be converted into Common Stock at the then-applicable conversion rate in the event of the closing of a underwritten public offering with a price of at least two times the conversior Price (subject to adjustments for stock dividends, splits, combinati?ns and similar events) (a "QPO"), or (ii) upon the written consent oilthe holders of a majority of the then-outstanding Series A Preferred.
Pre-Offering Capitalization:
As of the I date of this Term Sheet and before giving effect to the Offering, te Company had 24,403,597 fully diluted shares, which is comprisedl of (i) 1,200,000 shares of Class A Voting Common Stock ("Class AI Common Stock"), (ii) 19,706,795 shares of Class B Common ~tock, (iii) 2,500,000 shares of Class B Common Stock reserved for issuance under the Company's 2011 Equity Incentive Plan, of~hich 1,149,000 shares are subject to outstanding options, (iv) warrants exercisable to purchase 763,344 shares of Class B Common IStock, (v) 147,492 shares of Class B Common Stock issuable u~on the. conversion of outstanding convertible notes of the Company land (vi) 85,966 shares of Class A Clammon Stock automatically issuable at maturity pursuant to outstanding convertible bridge notes unless the Company chooses to repay prlior to maturity (includes 1ccrued but unpaid interest as of the date of this Term Sheet). Although the foregoing numbers do not include the issuance of any Shares in the Offering, the numbers have been adjusted to reflect the effect of anti-dilution rights in outstanding warrants that will be triggered by the Offering.
Dividends:
The serie~~ A Preferred will carry an annual 10.0% cumulative dividend payable in cash upon a liquidation, conversion, or redemption of the Series A Preferred. No dividends shall be paid on the Company's Class A Common Stock or Class B Common Stock until all accrued but unpaid dividends are first paid On the Series A Preferred.
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Liquidation Preference:
In the event of any liquidation, dissolution or winding up of the Company, the proceeds shall be used to first pay the sum of (i) 1.5 times the Original Purchase Price plus (ii) all accrued but unpaid dividends on each share of Series A Preferred (the "Liquidation Preference"), and the balance of any proceeds shall be distributed pro rata to holders of Common Stock. Upon a liquidating event, the holders of the Series A Preferred will be provided notice of such event and be given an opportunity to convert their shares of Series A Preferred. A merger or consolidation (other than one in which stockholders of the Company own a majority by voting power of the outstanding shares of the surviving or acquiring corporation) and a sale, lease, transfer, exclusive license or other disposition of all or substantially all of the assets of the Company will be treated as a liquidation event (a "Deemed Liquidation Event"), thereby triggering payment of the liquidation preferences described above unless the holders of a majority or more of the Series A Preferred elect otherwise.
Right to Participate Pro Rata in Future Rounds:
All investors in the Offering will have a pro rata right, based on their percentage equity ownership in the Company (assuming the conversion of all outstanding Series A Preferred Stock into Class B Common Stock Common Stock and the exercise of all outstanding options and warrants), to participate in subsequent issuances of equity securities of the Company, subject to customary exceptions. In addition, should any investor choose not to purchase its full pro rata share, the remaining investors in the Offering shall have the right to purchase the remaining pro rata shares.
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Protective Provisions:
So long as 25% of the Series A Preferred shares remain outstanding, the Company will not, without the written consent of the holders of at least a majority of the Company's Series A Preferred, either directly or by amendment, merger, consolidation, or otherwise: (i) liquidate, dissolve or wind-up the affairs of the Company, or effect any merger or consolidation or any other Deemed Liquidation Event, unless the Liquidation Preference would be paid in full as a result of such event; (ii) make any amendment, alteration, or repeal of any provision of the of the Company's Articles of Incorporation to adversely change the rights, preferences, or privileges of the Series A Preferred; (iii) create or authorize the creation of or issue any other security convertible into or exercisable for any equity security, having rights, preferences or privileges senior to or pari passu with the Series A Preferred with respect to liquidation preferences, distribution preferences, or redemption rights; or (iv) purchase or redeem or pay any dividend on any capital stock prior to the Series A Preferred, other than Pari Passu Stock (as defined below) and other than stock repurchased from former employees or consultants in connection with the cessation of their employment/services, at the lower of fair market value or cost. The term "Pari Passu Stock" refers to any series or class of equity security of the Company that has distribution or redemption rights, preferences, or privileges that are pari passu with, but not senior to, the Series A Preferred.
Investor Redemption Right:
Unless prohibited by Nevada law governing distributions to stockholders, the Series A Preferred shall be redeemable at the option of holders of more than 50% of the Series A Preferred commencing any time after the third (3rd) anniversary of the original issuance of the Series A Preferred at a price equal to the Original Purchase Price plus all accrued but unpaid dividends thereon. Redemption shall occur in three equal annual portions. Upon a redemption request from the holders of the required percentage of the Series A Preferred, all Series A Preferred shares shall be redeemed.
Company Redemption Right:
The Series A Preferred shall be redeemable at the option of the Company at any time, either in whole in in part, upon written notice to the holders thereof, for a purchase price equal 130% of the Original Purchase Price of the Series A Preferred being redeemed plus all accrued but unpaid dividends thereon. The closing of such redemption shall occur on a date selected by the Company that is no
later than forty five (45) days after date of the Company's notice of redemption, and the purchase price for the redeemed Series A Preferred shall be paid in immediately available funds at such closing. Holders of the Series A Preferred will have the right to convert such shares into Class B Common Stock as described above at any time prior to the closing of the redemption.
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Voting Rights:
Except as set forth above under "Protective Provisions" and except as required by law, the Series A Preferred will be nonvoting shares.
Definitive Offering Documents:
The purchase and sale of the Series A Preferred will be made pursuant to definitive subscription or purchase agreements agreeable to the Company and Investors.
Counsel and Expenses:
Company counsel to draft closing documents. Company to pay reasonable legal fees of counsel to investors up to an aggregate of $25,000 and limited to one counsel for all investors.
Use of Placement Agent:
The Company will be permitted, at its option, to engage one or more placement agents in connection with the Offering and to pay such placement agents a fee or commission.
Confidential Offering Memorandum:
The terms of set forth in this Confidential Term Sheet will be subject to a Confidential Offering Memorandum to be prepared with respect to the Offering. Prospective investors in the Offering are urged to closely review the Confidential Offering Memorandum when it becomes available.
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