Draft for Discussion Purposes Only

Client – Attorney Privileged Communication

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TERM SHEET
Executed as on 10th February, 2024

The following indicative, non-binding term sheet (“Term Sheet”) contains a summary of the principal terms with
respect to the proposed series seed round of financing in [●] (“Company”) engaged in the business of [●].

This Term Sheet is not a commitment or binding contract to invest or consummate any transaction of such kind, and
is conditional on the internal approvals, receipt of all necessary corporate and regulatory approvals (if any),
completion of due diligence, legal review and documentation of Definitive Documents in such a manner that is
satisfactory to the Investor (as defined below).

S. No. Terms Details

1. Investor: Mr. ……. is a renowned professional in the field of ….. and an angel investor)

2. Founders: - Founder and CEO

Founder and COO
: - Co-founder

Founder salaries as on the date of the Term Sheet is INR 10 Lakh per month
for all Founders and the Founders’ salaries to be capped at INR 12 lakh per
month for all Founders. Any increase in the Founders’ salary beyond 8.33%
p.a. in the duration of the funding period shall be subject to Investor majority
approval.

3. Securities to be Seed Series compulsorily convertible preference shares (“Seed CCPS”).

06 issued:
[Each Seed series CCPS shall be convertible into 1 (one) equity share at any
time, at the option of the holder of such Seed CCPS.]

All terms relating to Seed series CCPS including dividend, conversion, voting
rights, will be set out in detail in the Definitive Documents.
4. Valuation: The Company will issue Seed series CCPS at a pre-money valuation of INR
100 crores.
5. Investment The Investor shall invest an aggregate amount of up to INR 200 Lacs
Amount: (“Investment Amount”).

The Investment Amount shall be disbursed in a single tranche subject to

fulfillment of conditions precedent to be set out in the Definitive Documents.

A certified capitalization table of the Company on a fully diluted basis prior to

the proposed investment is set forth in Annexure 1 hereunder.
6. Use of Funds: The Company shall utilize the Investment Amount as mutually agreed between
the Investor and the Company and in the manner set out in the Definitive
Documents.
7. Employee Stock The Company shall create a notional employee stock option pool (“ESOP
Option Pool: Pool”) prior to the closing of the proposed transaction, such that the ESOP
Pool is [5% (Five percent)] of the capital of the Company on a fully diluted
basis, at the closing of the proposed transaction.
8. Anti-dilution In the event that the Company issues additional securities at a price that is less
Protection: than the then prevailing conversion price of the Seed CCPS, then the Investor
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shall be entitled to anti-dilution protection following a broad based weighted

average method and the manner of giving effect to the same shall be as set out
in the Definitive Documents.
9. Pre-emptive Right: In case of a subsequent issuance (other than excluded issuance) of securities
by the Company, the Investor shall have the pre-emptive right to subscribe to
such new securities on a pro rata basis. The participating Investor shall have a
mop up right to subscribe to the unsubscribed portion of shares, if any.
For the purpose herein, Excluded Issuance means:

1. Issuance of any shares pursuant to an Investor Approved ESOP non-dilutive

to the Investors.

2. Any further round of investment up to 25% of the current round investment,

within 3 (Three) months from the closing date of current round on the terms &
conditions not superior to current round investment.

Alternatively, where the Company decides to raise subsequent rounds of

funding, the Investor, at his sole discretion, may decide to sell all or part of his
shares to the incoming investor, at a mutually agreeable price.

10. Founders Lock-in: The Founders shall rein in an executive capacity in the Company while the
Investor is shareholders in the Company. The Founders shall also not sell,
pledge, encumber or otherwise dispose of their shares in the Company while
the Investor is shareholder in the Company. Any exception to the aforesaid,
shall require the prior written consent from the Investor majority (defined
below) and ROFR and Tag Along Right. Further, in no event, shall the
Founders transfer the shares held by them to a competitor.

The Founders’ shares shall vest over a period of 4 (four) years from
disbursement of First Tranche Investment Amount, with 25% (twenty five
percent) of shares vesting at the end of 1 (one) year and the reining shares shall
be vesting equally in every quarter, at the end of each subsequent quarter.

Notwithstanding anything contained above, each Founder shall be permitted to

freely transfer up to 5% of each of the Share Capital held by him / her, as of
the
the date of allotment of the Investor Shares to the Investor, to any Person
except Competitor without being subject to Investor’s consent, Right of First
Refusal and Tag-along restrictions set out below and Restricted Period
mentioned under clause 15 of this term sheet.

In case any Founder ceases to be in employment of the Company before the

above-mentioned timeframe for reasons of death/ disability, then, the vested
securities will be transferred to the next of his/her kin. In case any Founder
ceases to be in employment of the Company due to any other reason (including
Cause), the securities of said Founder shall be treated in the manner set out in
the Definitive Documents, including being required to sell their vested and
unvested securities to the reining Founder and/or the Investors and/or ESOP
trust at pro-rata at par value.
11. Right of First The Investor will have the right of first refusal to purchase all or any securities
Draft for Discussion Purposes Only

Refusal: proposed to be sold by any Founder or other shareholders at the same price
and terms as offered to a proposed purchaser (“ROFR”).
12. Tag Along Right: If any of the Founders wishes to dispose of any of their shares in the
Company, the Investor shall have the right to exercise a pro-rata tag along
right (“Tag Along Right”) in the event they do not exercise the ROFR. Such
Tag Along Right shall be exercisable on the same terms and price offered by
the proposed purchaser to the relevant Founder. Notwithstanding anything
aforesaid, in case there is change of control in the Company, the Investor shall
have a right to sell up to all of their securities before transfer of any shares by
the Founders.
13. Exit Rights: At any time prior to the expiry of [5] years from the date of investment (“ Exit
Period”), the Company and Founders will be required to provide an exit to the
Investors including but not limited through initial public offer, third party sale,
strategic sale, buy back by the Company, purchase of shares by Founders, or
any combination of some or all of the above options (“Exit”) provided that
such Exit shall give the Investors [the higher of an IRR of 25% on their
investment amounts or the fair market value of the securities held by the
Investors].
14. Drag Along Right: If the Investors have not been provided with an exit in the Exit Period, the
Investors shall be entitled to sell their securities to any third party (excluding a
competitor), and shall also have the right, but not the obligation, to drag along
all or part, at its discretion, the securities held by the other shareholders
(including Founders), to facilitate an exit for the Investors, on such price and
terms as the Investors deem appropriate.
15. Board of Directors: All the Investors of this round shall, collectively, be entitled to nominate 1
(one) director on the board of the Company (“Investors Director”). The
Founders shall themselves also be directors on the Board. [The Investor
Director and Founders shall also jointly nominate an independent director on
the board.]

Detailed provisions relating to corporate governance, including quorum, shall

be set out in the Definitive Documents.
16. Information & The Company shall deliver to the Investors the monthly, quarterly, annual
Inspection rights: information and information upon request as are customary for transactions of
this nature and as set out in the Definitive Documents.

In addition to the above, the Investors shall also have the standard inspection
rights in the Company. The cost of audit shall be borne by the Company.
17. Transfer by At any time, there will be no restriction on the ability of the Investors to
Investors: transfer all or part of securities held by the Investors, along with rights
attached to such securities, and the Founders and the Company will do all such
acts and deeds as y be necessary to give effect to such transfer.
18. Event of Default: The Definitive Documents will set out customary provisions pertaining to
event of default and its consequences. The events of default will include, but
shall not be limited to, Cause, breach of any representations, warranties,
covenant or obligations by the Founders or the Company. The consequences of
event of default shall be detailed in the Definitive Documents and shall include
acceleration of exit rights of the Investors.
19. Definitive In order to record the detailed terms and conditions pertaining to the proposed
Draft for Discussion Purposes Only

Documents: transaction, the parties will enter into the Share Subscription and Shareholders’
agreement (SSHA) and such other documents as may be incidental or ancillary
to the transactions referred herein and/or as may be required by the Investors
(collectively, “Definitive Documents”).
20. Conditions The Definitive Documents will contain conditions precedent, conditions
Precedent, Closing subsequent and standstill provisions between execution and closing as are
and Conditions customary and standard for a transaction of this nature and as y be required by
Subsequent: the Investors based on the diligence findings. Closing of the proposed
transaction shall be subject to the conditions precedent as set forth in the
Definitive Documents.

21. Representations, The Definitive Documents shall contain customary representations, warranties,
Warranties and indemnities and covenants for transactions of this nature to be provided by the
Indemnities: Founders and the Company.
22. Parity of Rights: Without the consent of the Investors, the Company and Founders shall not
provide to any other investor participating in this round of investment with any
rights that are more favorable than the rights available to the Investor.
23. Voting Rights In addition to any voting requirement under law, certain matters that will be
(Affirmative detailed in the Definitive Documents will require the prior affirmative written
rights): consent of the Investors majority, before the Company and/or Founders take
any action in respect of such matters, whether at a board meeting or a
shareholders’ meeting or through any other medium.

“Investor majority” means Investors that collectively invested 75% (seventy-

five percent) or more of the amounts invested in the Company inter-se
amongst the Investors.
24. Other Provisions: The Definitive Documents shall contain such other provisions as are standard
or customary and are agreed to by the Parties.
25. Binding Terms: The following and paragraph 30 (Governing Law) are the only legally binding
terms in this Terms Sheet –
(i) Without the consent of the Investors, the Company will not disclose
either the existence of this Term Sheet or the terms contained therein to
any party other than the current directors of the Company.
(ii) For a period of 60 (Sixty) days from the signing of this Term Sheet
(“Exclusivity Period”), the Company agrees not to solicit offers from
other parties for any financing.
26. Non-compete and The Founders will also provide customary non-compete and non-solicit
non-solicit: undertakings in respect of themselves and key employees in the Definitive
Documents.
27. General matters: All Founders and employees shall have assigned all relevant intellectual
property, trademarks, websites, domains names etc. related in any way to the
Company/business to the Company prior to closing.

28. Expenses: The Company shall bear all costs and expenses in connection with the
transaction including without limitation, cost and expenses in relation to due
diligence, legal / accounting reviews, preparation and review of the Definitive
Documents and the like.
29. Amendment: The Parties may amend the terms of this Term Sheet by mutual consent in
writing.
30. Governing Law: This Term Sheet and the Definitive Documents shall be governed by the laws
of India, without regards to conflict of law principles.
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The Parties agree that any disputes arising out of or in connection with the
binding terms of this Term Sheet or the Definitive Documents shall be
submitted to binding arbitration under the Indian Arbitration & Conciliation
Act, 1996. The venue of arbitration shall be [Mumbai, India].
31. Validity: The offer in this Term Sheet is valid till 30 days from the date of its issuance,
unless extended mutually.
32. Confidentiality The information regarding negotiation and execution of this term sheet, the
transactions contemplated herein, and any information exchanged between the
parties (which is not, on the date of such exchange, already in the public
domain) for the negotiation or execution of the term sheet shall be confidential
(“Confidential Information”).
33. Termination: This Term Sheet shall automatically terminate with the execution of the
Definitive Documents; or upon the expiry of the Exclusivity Period if no
Definitive Documents are executed (which time period may be extendable as
agreed between the Parties).

Notwithstanding anything to the aforesaid, the Parties may mutually terminate

this Term Sheet at any point of time.

[Signature page to follow]

SIGNATURE PAGE

For and on behalf of

By [Founder 1]

Signature:

Authorized Signatory: Ritesh Arora

Place: Ludhiana
Date: 31-01-2024
By [Founder 2]

Signature:

Name:
Place: Ludhiana
Date: 31-01-2024
By [Founder 3]

Signature:

Name:
Place: Ludhiana
Date: 31-01-2024
For and on behalf of Investor
Draft for Discussion Purposes Only

Authorized Signatory:
Signature:
Place:
Date:
 Draft for Discussion Purposes Only

Annexure 1

Pre-Investment Cap Table

1. Authorized Share Capital (Face Value of Rs. 10/- each): Rs 20,00,000/-

a. Authorized Equity Share Capital: 10,00,000
b. Authorized Seed series CCPS: Rs. 10,00,000

2. Paid-up Share Capital (Face Value of Rs. 10/- each): Rs. – 4,00,000 /-
a. Paid-up Equity Share Capital: 4,00,000
b. Paid-up Seed series CCPS: Rs. 0

Share No. of %age of

Sr. No. Shareholder's Name Category shares Holding
1
2
3
Total 100.00%

Annexure 2

External Investors for the pre money valuation who would participate in the current round as co investors

1. Investor 1
2. Other Angel Investors

Annexure 3

Disclosures

Disclosure related litigation obligation on the founder / company or liaising of shares by promoter/ key
managerial person

No such Items