The Termsheet Anatomy

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SAMPLE TERM SHEET

SUMMARY OF TERMS FOR SERIES A PREFERENCE SHARES FINANCING

Issuer

KCS Software Private Limited (the Company).
Investors

Insane Venture Partners (IVP) and Reasonable Investment Partners
(RIP) referred to as Investors, collectively.

Founders

Simple Jack and Plain Jane (collectively referred to as the
Founders).

It is understood that neither IVP nor RIP shall be deemed to be, or
referred to, as a Founder for the purpose of any IPO or any issuance
by the Company.

Type of Security

Series A Fully Compulsory Convertible Preference Shares (Series A
FCCPS) and equity shares.

Investment Amount IVP and RIP shall jointly invest USD XXXX(US Dollars eX eX eX eX only)
i.e., USD YYYY (US Dollars y y y y only) each, as on the date of closing,
in the Company.

Use of Proceeds

Company is a pioneer in <SPECIFIC> industry in India, through
www.superexit.com, an internet / mobile / ecommerce / telecom /
services / business platform for providing unique & useful services to
users.

The proceeds of the investment will be primarily used for expansion
of the Companys operations, user acquisition deeply into several
cities in India, to aggressively promote the SuperExit brand through
traditional/social media/buzz marketing and ramp up sales,
operations, technology team [& blah blah blah blah... ]

Pre-money valuation The investment in the Company will be at a pre-money valuation of
the Indian Rupee equivalent of USD ZZZZZ (US Dollars zee zee zee
only) (on an assumption that the Founders earn the Founder
Incentive Shares, (defined hereinafter) with a value of the Indian
Rupee equivalent of USD XY.Z0 (US Dollars eX y and zee cents only)
per share (Original Purchase Price). The Company will issue 12,345
Series A FCCPS and 10 equity shares each to IVP and RIP respectively.
The above issue of Series A FCCPS and equity shares to the Investors
shall constitute XX % of the total shareholding (on a fully diluted
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basis) of the Company.
Post Closing Shareholding
pattern
The shareholding pattern of the Company post closing (funding by
both IVP and RIP) is attached as Exhibit A hereto.

Participatory Liquidation
Preference
In the event of any Liquidation of the Company, the Investor Shares
shall be entitled to receive in preference to the holders of the Equity
Shares and any other class of shares of the Company a per share
amount equal to 1.0 times (1.0X) the Subscription Price paid by the
Investor plus any declared but unpaid dividends (the Series A
Liquidation Preference).

After the payment of the Series A Liquidation Preference to the
holders of the Investor Shares, the remaining assets shall be
distributed ratably to the holders of the Equity Shares and the
Investor Shares on a pari passu basis on an as-if-converted basis.

Dividend The holders of Series A FCCPS shall be entitled to receive non-
cumulative dividend at an annual rate of 8 % as and when declared
by the Company.

In addition, no dividends shall be paid upon any class of capital stock
of the Company unless the holders of the Companys Series A FCCPS
shall be paid the dividends to which they are entitled as aforesaid
and such Series A FCCPS shall receive such additional dividend on a
pari passu basis.

Conversion Series A FCCPS will be compulsorily convertible into ordinary equity
shares of the Company on the occurrence of the following events (i)
filing of prospectus for the purpose of registration by the Company
which by its terms will qualify as a;or (ii) completion of XX years from
closure of Series A investment.

Each Series A FCCPS shall be convertible into ordinary equity shares
of the Company with a conversion ratio of 1:1. The conversion shall
be in accordance with the Anti-Dilution provisions and subject to
proportionate adjustments for share splits, bonus, dividends,
recapitalization, reclassification, reorganization, and similar events.

Reserved Matters The written approval of each of the Investors shall be required for
the following with respect to the Company (whether resolution/s
passed in a general meeting or at a meeting of the Board of Directors
of the Company (Board) or a committee thereof),

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Altering the rights of the holders of Series A FCCPS or any
class of securities of the Company, any issuance of fresh
equity at a price lower than the Original Purchase Price, or
the creation of an additional class of shares;
Initial Public Offering (IPO)/QIPO of the Company;
Amendments to the Companys Memorandum and Articles of
Association;
Re-classifications of the existing equity on recapitalization of
the Company;
Approving the Annual Budget (and any material deviation
there from). It is however understood, that the approval by
the Investors would not be unreasonably withheld. It is also
understood that the definitive agreements will define a
material deviation in a way, so as to not adversely impact the
day-to-day operational management of the Company;
Changing the composition of the Board;
Transfer of shares by the Founders except when the
transferee is another Founder and/or a relative of any of the
Founders (provided that such shares will still be treated as
Founder shares);
Paying, setting aside on declaring dividends and/or
redeeming/buying back shares;
Any action that results in the increase, decrease, buy-back or
other alteration or modification in the authorized or issued
share capital or any other securities of the Company or of the
securities of any of its subsidiaries, including Employee Stock
Option Plan (ESOP);
Any further issuance of capital and /or approve or disapprove
any transfer of shares or the creation, by reclassification or
otherwise, of any new class or series of shares or any other
securities in the Company;
Any action that results in the redemption or buy-back of any
shares or other securities of the Company;
Mergers, acquisitions, restructurings, amalgamations,
consolidations, spin-offs, sale of material assets, bankruptcy,
voluntary liquidation, divestments, winding up,
arrangements, composition with creditors, other similar or
related actions resulting in change in control, either in
relation to the Company or any of its subsidiaries;
Approval of an exit transaction or execution of any
transaction that is not an exit transaction including without
limitation a buy-back of the shares held by the Investors or
the delisting of any listed shares or other securities of the
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Company;
The commencement of any winding-up proceedings resulting
from insolvency or bankruptcy of the Company;
Conversion of the Company from a private limited company
to a public limited company;
Taking any action with regard to the listing of the shares or
other securities of the Company in connection with IPO,
including without limitation, determining the timing, pricing,
and place/stock exchange of an IPO;
Declaration or payment of any dividends or other
distributions on any shares or any other securities of the
Company;
Any transfer of, or the creation of, any encumbrance over,
any assets of the Company or any subsidiary of the Company
other than in the ordinary course of business e.g. creating a
charge on assets of the company for bank loans etc, to any
person other than a wholly-owned subsidiary of the
Company;
Commencing any new line of business, or changing the nature
of the business, or the acquisition of material assets outside
the ordinary course of business;
The formulation, adoption or modification of the business
plan or business projections of the Company;
Changes in the constitution of the Board or the authorized
number of directors, or the appointment or removal of any
directors;
Delegation of any authority or power of the Board to any
person or any committee of the Board;
(i) The formation of any subsidiary, (ii) entering into any joint
venture, partnership or similar arrangement by the Company,
(iii) acquisition of other businesses involving investment
(other than short term investments in bank deposits/money
market mutual funds in the ordinary course of business to
park short term surplus funds as treasure operations);
Any strategic alliance with a third party which results in
investments in the Company or by the Company in such third
party, or exclusive rights other than rights granted in the
ordinary course of business;
Any termination of existing joint ventures or collaborations
outside the ordinary course of business;
Acquisition or sale of shares, securities, debentures, and
bonds in or of any other company other than in the ordinary
course of business as treasury operations and other than in
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collective investment vehicles like money market mutual
funds etc;
Appointment of the statutory and/or internal auditors of the
Company;
Changing the remuneration and compensation payable to the
managing director, directors, the chairman, chief executive
officer and other key employees (will be defined in the
definitive agreements) of the Company;
Changing the location of the registered office of the Company
out of the state of Delhi ;
Authorizing / Undertaking any financial indebtedness by the
Company in excess of the Indian Rupee equivalent of USD
50,000 (US Dollars Fifty thousand only) over and above the
limits contemplated in the approved business plan;
Entering into any related party transactions , or any
transactions with any affiliate, shareholder or director of the
Company, or by the Company or any directors (in their
capacity as a director);
Any change in the financial year for preparation of audited
accounts;
Changes to the accounting or tax policies or practices;
Capital expenditures or acquisitions of assets in excess of the
Indian Rupee equivalent of USD 25,000 (US Dollars twenty
five thousand only), on a cumulative basis, in any financial
year, over and above that provided for in the business plan;
Except as contemplated by the approved business plan , entry
into, amendment or termination of any agreement or
commitment that imposes or is likely to impose obligations
on the Company to pay amounts equivalent to USD 50,000
(US Dollars fifty thousand only) or more in a single transaction
or on a cumulative basis, that is, in more than 1 (one)
transaction in any financial year, or impose, or is likely to
impose on the Company, any liability in excess of the
equivalent of USD 100,000 (US Dollars one hundred thousand
only) or imposes or is likely to impose on the Company, any
obligation or liability, which is not capable of being quantified
in monetary terms;
Other than as contemplated by the approved business plan,
creating any lien or charges that is more than the Indian
Rupee equivalent of USD 100,000 (US Dollars one hundred
thousand only) or, proposing the acquisition, transfer or in
any other way proposing to dispose of any assets or
undertaking of the Company or substantially all of the assets
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or undertaking of the Company;
Any material settlement of any litigation, investigation, or
other legal proceeding by or against the Company;
Approval of the annual financial statements; and
Any allocation or transfer of any employee stock options in
the Company to any person.

Information Rights The Company will share with the Investors the following
Audited annual financial statements within 90 days after the
end of each fiscal year.
Unaudited monthly financial statements within 30 days of the
end of each month end.
An annual budget 30 days prior to the end of each fiscal year
for the following fiscal year.
Annual business plan (including monthly budget containing an
income statement, a statement of cash flow, a balance sheet
and detailed breakdown of working capital) and headcount,
no later than 30 days prior to the beginning of the fiscal year.
Any material information including resignation of any
member of the senior management within a maximum period
of 3 days.
Other information reasonably requested by the Investor or
itsRepresentative Director(s).

The Investors shall have customary inspection rights.

Anti Dilution In the event that the Company issues additional securities at a
purchase price less than the Original Purchase Price, then the holders
of the Series A FCCPS will have broad based weighted average anti-
dilution protection for the investment. The anti-dilution protection
shall be subject to proportionate adjustments for share splits, bonus,
dividends, recapitalization, reclassification, reorganization and
similar other events to maintain the proportion of the shares held
between the Investors and the other shareholders of the Company.
Anti-dilution will not apply in the case of a board approved issue of
equity shares to persons of strategic importance to the Company.

Voting rights
Each holder of Series A FCCPS will vote along with the equity
shareholders and shall represent such number of equity shares into
which it is convertible. Holders of Series A FCCPS shall vote together
with holders of equity shares on all matters on which the equity
shareholders are entitled to vote.
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Transfer Subject to the applicable provisions of the term sheet, IVP and RIP
shall be entitled, at their option, to transfer the Series A FCCPS to any
third party/ies

Right of First Refusal

If the Company proposes to offer Equity Shares or any convertible
securities to any person (excluding options to purchase Equity Shares
issued pursuant to the Company's employee stock option plan
approved by the Board and Investor any securities issued in
connection with any stock split, stock dividend or recapitalization by
the Company), then the Investors will have the right to purchase the
Companys fully-diluted pro rata portion of such Equity Shares or any
convertible securities, on the same terms as being offered to such
person. The Investors will have 30 calendar days after delivery of a
notice from the Company describing such offering to elect to
purchase their pro rata portion.

Drag - along In the event IVP and RIP (only when acting jointly), accept an offer to
sell all of their shares to a third party/ies, and such sale is
conditioned upon the sale of all of the remaining shares of the
Company (including Founders share and ESOP holders) to such third
party, then the Series A Investors will have the right to drag along
the entire of the shareholding of the Company to effect a sale to
such third party/ies. The terms of sale offered to the shareholders of
the Company will be the same as those offered to the Series A
Investors.

Tag along The Investors will have customary pro-rata tag along rights in relation
to any proposed sale or transfer of Equity Shares held by the
Founders (excluding for transfer to affiliates, immediate family
members and family trusts). In the event there is a change in control
of the Company as a result of the tag along rights, the Investor shall
be entitled to mandate the purchaser to acquire their entire
shareholding in the Company. The Investors shall also have
customary pro-rata tag-along rights in relation to any proposed sale
or transfer of Equity Shares or convertible securities by the other
Investors.

Pre-emptive rights In the event that the Company offers equity shares or any other
equity securities or securities that are convertible into, or exercisable
or exchangeable for, equity securities (including compulsory
convertible debentures), Investors shall have a pre-emptive right to
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purchase their pro-rata share of such securities in the new offering
based on their percentage ownership in the Company as if the Series
A FCCPS held by them were fully converted.

Registration and Piggyback
Rights
The Company agrees to provide registration and piggyback rights to
the Investors if the Company issues American depository receipts,
global depository receipts or such other similar instruments. The
registration and piggyback rights will be more fully described in the
definitive agreements.
ESOP


As a condition precedent to the proposed investment, the number of
Equity Shares authorized by the board of the Company for issuance
under various incentive plans shall be adjusted to ensure that XX%
(Typically in the range of 10% - 20%) of the fully diluted share capital
of the Company shall be reserved for issue of the Companys
employees or advisors. The Board or any committee formed by the
Board shall formulate, determine and implement the incentive plan
and shall be responsible for the constitution, administration and
management of the incentive plan of the Company.

Board Representation The Board of Directors shall comprise of X members (always an odd
number; in this case 5):
(i) Founders as representatives of the common equity
shareholders of the Company;
(ii) one nominee each of IVP and RIP; and
(iii) one independent director nominated by the Investors with
the consent of the Founders
One Board Observer nominated by each of IVP and RIP.

Each Director shall have one vote. Except as set forth in this Term
Sheet or as required by the Company's Articles of Association (which
shall include the voting requirements set out in this Term Sheet) or
as otherwise required by law, decisions of the Board will be by
simple majority.

The quorum for a meeting of the Board of Directors is 3 (three)
Directors (both Investors' Designees and one Founder) or such
number as agreed by the Investors and set forth in the definitive
documents and incorporated in the Articles of Association. If quorum
is not present, meeting shall stand adjourned by fifteen days on
which day the meeting shall be held irrespective of whether quorum
is present except in the case of Reserved Matters.
The Board shall hold regular meetings at the registered office of the
Company or at such other place as is acceptable to the Investors at
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least once every [month / quarter]. Each Director must receive at
least 15-Business Day's notice of a meeting unless all directors agree
otherwise.

The Company shall reimburse reasonable out-of-pocket expenses to
the Board members for attending the Board Meetings.

The Chairman shall not have any casting vote.

Buy Back Post best efforts by the Company at giving exit opportunities to
Investors by ways of IPO or trade sale, the Company shall, subject to
applicable regulatory/legal requirements, buy back some or all
outstanding FCCPS after converting into equity shares, held by the
Investors after the completion of 5 (five) years from the date of
investment by Investors at FMV or two-and-a-half times the Original
Purchase Price, whichever is higher. All such buy back shall be
subject to proportionate adjustments for stock splits, bonus,
dividends, recapitalization, reclassification, reorganization and
similar events.

Exit Clause The Company will provide an exit to IVP and RIP via a listing on the
public market, merger, acquisition, QIPO or any such other
transaction on or before 5 (five) years from the closure of Series A
investment. If the Company hasnt achieved listing of its shares,
merger, acquisition, QIPO or any such transaction providing an exit
to IVP and RIP on or before 5 (five) years from the closure of Series A
Investment, at the option of IVP and RIP (acting jointly), (a) IVP and
RIP (acting jointly) will have the right to compel/require the
Company for an IPO and the Company shall be obligated to do so; OR
(b) the Company will be obligated to buy back the Series A FCCPS of
IVP and RIP (as defined under the Buy Back Clause); OR (c) IVP and
RIP (acting jointly) will have the right to drag along the entire or
part of the shareholding of the Company (as defined under the Drag
Along clause).
Founder Shares Founder Shares shall mean those shares other than Incentive
Shares (as defined below) held by the Founders.
Vesting of Founder Shares
Founder Shares shall vest proportionately, on a yearly basis over the
next four years from the date of closing. In the event of occurrence
of a Liquidation Event, the entire unvested Founder Shares will be
vested on an accelerated basis.
The definitive agreements would detail the manner of vesting and
also address the consequences of termination of the Founders
employment with the Company either with or without cause.
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Lock-in period
The entire shareholding of the Founders (vested and unvested) in the
Company as and when received shall be locked in an escrow account
till the IPO of the Company or exit by the Investors (as defined under
the Exit clause).
Indemnity, covenants and
representations and
warranties

The Company and Founders will give indemnities and covenants and
make representations and warranties customary in transactions of
this type.

The Investors will provide such representations and warranties as is
customary for investors in transactions of this kind.

Non- Compete, Non
Solicitation and Non -
Disclosure

The Founders and their affiliates will not directly or indirectly
compete with the Company.

The Founders and key employees of the Company (to be identified)
will enter into a separate non-compete, non - solicitation and non -
disclosure agreement in a form acceptable to the Investors.

Closing Date The closing of the Investors investment in Series A FCCPS, if all
conditions are met, is expected to occur on or before DD-Month-
YYYY.

Closing Conditions Closing of the transaction will be subject to customary closing
conditions, including without limitation, (i) satisfactory completion of
financial and legal due diligence, (ii) no material adverse change; (iii)
obtaining permission from the existing shareholders for issue of
FCCPS; (iv) increase of share capital; and (v) signing escrow
agreement and depositing Founder lock-in shares in escrow. [And
any other condition which is

Expenses The Company shall bear its own fees and expenses and shall pay at
the Initial Closing the reasonable fees (not to exceed INR 1,000,000)
for expenses of Investors legal counsel, travel expenses for visiting
the Company, fees of auditors used during diligence process if any
transactions contemplated by this Term Sheet are actually
consummated.

It is expressly clarified that the Company would not be required to
pay the aforesaid fees in the event of the transaction contemplated
under this Term Sheet not being consummated.

The Company and the Investor shall each indemnify the other for any
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brokers or finders fees for which either is responsible

Exclusivity The Company and the Founders will not engage other investors or
engage in any discussions for the sale of equity, debt or the
Company/assets of the Company whether by merger or otherwise
until DD-Month-YYYY.. However the parties will use their good faith
efforts to close the transaction by DD-Month-YYYY..

Keyman, E&O and D&O
Insurance
The Company will have in place, suitable Keyman insurance for
Founders, D&O insurance for members of its Board of Directors
reasonably and E&O insurance as acceptable to the Investors.

Due Diligence After signing this term sheet and before signing the definitive
agreements, the Company will allow the Investors to conduct a
detailed legal and financial due diligence of the Company. The
Company will provide all necessary documents to the Investors or its
advisors, as may be necessary to conduct the legal and financial due
diligence.

Confidentiality The contents of this term sheet are confidential and neither the
contents nor the details of this term sheet may be shown or
disclosed by the Company or the Founders, except to those
individuals at the Company, and to its advisors, who have a need to
know as a result of being involved in the proposed transaction. After
signing this term sheet, the Company may disclose the contents to
other individuals who have a need to know as a result of being
involved in the proposed transaction or to other individuals or
entities for purposes of making such individuals or entities investors
in the Company's Series A FCCPS.

Governing Law and
Jurisdiction
This summary of terms and the definitive agreements shall be
governed by the laws of India and the courts in <CITY> will have
exclusive jurisdiction over any matters arising out of this term sheet
and the definitive agreements.

Dispute Resolution In case of any dispute arising at any time between the parties hereto
in connection with or arising out of this term sheet or the definitive
agreements, such dispute or difference shall be referred to
arbitration in accordance with the provisions of the Arbitration and
Conciliation Act, 1996. The arbitration proceedings shall be held in
<CITY>, India.

Nature of Document The closing of the investment contemplated by this summary of
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terms is subject to a number of conditions, including those set forth
above. Accordingly, this summary of terms does not constitute a
legally binding obligation on the Investors with the exception of the
Sections as provided under the caption Exclusivity,
Confidentiality, Governing Law and Jurisdiction and Dispute
Resolution. Except as set forth in the preceding sentence, no legally
binding obligations will be created unless and until the parties enter
into definitive agreements.


This term sheet will be valid till midnight IST Month, day, year unless otherwise agreed by parties. If
the foregoing accurately describes the basis on which the undersigned are willing to proceed with
regard to a transaction, please indicate your approval by signing the copy of this term sheet and
returning it to us.

For Insane Venture Partners For RIP Venture Partners

Signature: Signature:

Name: Name:
Designation: Designation:
Date: Date:

ACCEPTED AND AGREED

For KCS Software Private Limited

Signature:
Name:
Designation:
Date:

For Founder

Signature:
Name:
Date:

For Founder

Signature:
Name:
Date:
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Exhibit A

Shareholding pattern of the Company post-closing and allotment of the Founders Incentive Shares

Series A
Ordinary Equity Shares Shares Stake USD
Simple Jack
Plain Jane
Advisor
Angel Investors
ESOP Pool
Insane Venture Partners
Reasonable Investment Partners
Total Equity
Series A Investors
Insane Venture Partners
Reasonable Investment Partners
Total Series A Preference
TOTAL 100%