PVPL CH2 — Termsheet of Preseed and startups seeking investment and advisory
This Term Sheet Privileged & Confidential
Draft for Internal Discussion executed on the date on which the last party hereto affixed it’s signature hereto (“Effective Date”) summarizes the principal terms and conditions in relation to the assistance of Preseed Venture Private Limited CIN U74900UP2014PTC062407 (“Advisor”) for providing the Advisor Services (as defined hereinafter) to Garhganga Jaivik Ann Private Limited with CIN U01820DL2017PTC326711 (“Company”) (“Proposed Transaction”). The Advisor, the Company and the Promoter (as defined hereinafter) may be individually be referred to the “Party” and shall collectively be referred to as the “Parties”. This Term Sheet is legally binding on all Parties. The Parties agree that this Term Sheet is not an agreement to agree or an agreement in principle. This Term Sheet shall be governed in all respects by the laws of India.
1. Purpose:
The Company is engaged in the business of organic farming (“Business”) and the Promoter has expertise in the farming sector. The Parties agree to avail the Advisor’s services for the Business according to the terms and conditions outlined in this Agreement.
2. Definitive Agreement(s):
The Parties will enter into Definitive agreement(s) within 7 (Seven) days from the Effective Date, unless mutually extended. The Parties shall negotiate in good faith. Failure to agree upon the Definitive agreement(s) will not void this Term Sheet, which will then be implemented in good faith. The Term Sheet and Definitive agreement(s) will be subject to applicable laws of India.
3. Advisor Services:
The Advisor shall assist the Company with the following:
- Conceptualizing the vision and marketing strategy for the Business.
- Obtaining investment from a Potential Investor referred to by the Advisor.
- Preparation of a presentation for obtaining investment.
- Providing business services as required for the Business, specified under the official website of the Advisor.
4. Valuation:
An independent appraiser, suggested by the Advisor and agreed upon by the Parties, will provide an independent valuation of the business and the Company’s shares (“Valuation”). The Company will bear the expenses related to the Valuation.
5. Investment/Investor Shares:
The Company requires an investment of INR 50,00,000 (Indian Rupees Fifty Lakhs) (“Investment Amount”) from a Potential Investor in exchange for equity shares of the Company (“Investor Shares”) based on the Valuation.
6. Consideration — Total Advisor Shares:
As consideration for the Advisor Services, the Company will transfer/issue the Total Advisor Shares to the Advisor as follows:
- Ten Per cent. (10%) of equity shares of the Company (“Initial Advisor Shares”) within 10 (Ten) days from the Effective Date.
- Ten Per cent. (10%) of equity shares of the Company (“Additional Advisor Shares”) upon successful investment from a Potential Investor.
The Initial Advisor Shares and Additional Advisor Shares together will be referred to as the “Total Advisor Shares.”
7. Preseed Commission:
If the Potential Investor agrees to subscribe to the Investor Shares for any amount above the Investment Amount (“Higher Investment Amount”), the Advisor will be paid a Preseed Commission equal to the difference between the Higher Investment Amount and the Investment Amount.
8. Shareholding Pattern:
The current shareholding pattern of the Company will be confirmed separately.
Upon issuance of the Initial Advisor Shares, the shareholding pattern will be as follows: [xxxxx]
Upon issuance of the Total Advisor Shares, the shareholding pattern will be as follows: [xxxxx]
9. Covenants:
The Parties agree and acknowledge that:
- The Promoter and/or the Company will not enter into any commercial agreement, transfer shares, or finalize any arrangement with a Potential Investor or any Potential Client without the Advisor’s prior written approval.
- The Advisor may assist the Company in obtaining the Investment Amount directly or indirectly through a third-party Preseed Agent.
- The Total Advisor Shares or any part thereof will not be discussed or disclosed to any Potential Investor or Potential Client without the Advisor’s written approval.
- The Promoter and/or the Company will negotiate with Potential Investors and Potential Clients according to the terms provided by the Advisor and as finalized by the Advisor in writing.
- The Advisor may participate in negotiations between the Parties and Potential Investors/Clients at its discretion.
- The Promoter and/or the Company will not seek financial or non-monetary gains with Potential Investors or Potential Clients without the Advisor’s written approval.
- The Company will implement market strategies advised by the Advisor and pay for related costs/expenses.
- A representative of the Advisor will be appointed as a key managerial personnel in the Company.
10. Escrow:
An escrow account will be established by the Parties. The Potential Investor will be instructed to wire any funds related to the Investor Shares to the escrow account. The appointed KMP will act as the escrow agent.
11. Relationship:
This Agreement does not constitute a partnership between the Parties. Each Party is independent, and no Party has authority to enter into contracts or make representations on behalf of another.
12. Non-Compete:
The Promoter agrees to work with the Company for a minimum period of 5 years. During the employment term and for one year after termination, the Promoter will not engage in any competitive business activities.
13. Confidential Information:
Each Party will keep all information relating to each other, the Proposed Transactions, Potential Investors, Total Advisor Shares, and this Agreement confidential, without disclosing to third parties without prior written approval.
14. IPR:
Intellectual property used by the Company will be held under the Company’s name. The Company will apply for registration of intellectual property related to the Business. Each Party will retain ownership of its respective intellectual property.
15. Right of First Refusal:
If either Party intends to transfer any Company shares, they must first offer the shares to the other Party through a written notice. If the other Party does not exercise the Right of First Refusal within 30 days, the shares may be transferred to an Identified Transferee on the terms stated in the notice.
16. Tag Along Right:
If the Advisor does not exercise the Right of First Refusal, they have the right to require the Promoter to arrange for the Identified Transferee to purchase the Advisor’s shares along with the Promoter’s shares.
17. Deemed Rights of the Advisor:
If any investment or commercial arrangement is made without the Advisor’s information and approval, the Advisor’s rights under this Agreement will automatically be effective, valid, and enforceable.
18. Exclusivity:
The Company shall not engage in discussions or negotiations inconsistent with this Agreement. If similar services are required in the future, the Company shall approach the Advisor before seeking services from any third party.
19. Specific Relief:
The Parties’ rights and obligations may be specifically enforced against a defaulting Party, to the extent permitted by applicable law.
20. Binding:
This Agreement is binding on the Parties and their respective legal heirs, successors, representatives, and assigns, regardless of changes in shareholding or ownership.
21. Severability:
If any provision of this Agreement is deemed invalid or unenforceable, it will not affect the validity of the remaining provisions.
22. Counterpart:
This Agreement may be executed in two or more counterparts, each of which will be deemed an original and together will constitute one instrument.
IN WITNESS WHEREOF, the Parties have executed this Term Sheet as of the date first above mentioned.
For the ADVISOR:
Signature: _____________________________
Name: ________________________________
Designation: ___________________________
Date: _________________________________
For the COMPANY:
Signature: _____________________________
Name: ________________________________
Designation: ___________________________
Date: _________________________________
For the PROMOTER:
Signature: _____________________________
Name: ________________________________
Date:
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