Confidential
Tasty FoodsServices Pvt. Ltd
Private Placement of Series A Convertible Preferred Stock
Company:
Tasty FoodsServices Pvt. Ltd (the “Company”).
Founders:
Mr A and Mr B (“Founders”)
Investors:
Whimzi Capital India, LLC or its affiliates (WCI”, or the “Investor”).
Investment format:
Series A Compulsorily Convertible Preferred Stock.
Amount:
Total investment of Indian Rupees Twenty Crores made in twotranches as below
i)
First tranche of Rs. 100,000,000 at a pre-money valuationof Rs. 300,000,000 at closing (“First Closing”)
ii)
Second tranche of Rs. 100,000,000 at a pre-moneyvaluation of Rs. 300,000,000 no later than 12 months fromthe date of closing of this round (“Second Closing”)The second tranche is automatic at the end of this period providedthe following criteria is met:
a)
One Restaurant in Mumbai Achieves a sale of Rs. 10 lacsper month, and breaks even operationally.Investors, at their sole election, can invest the Second trancheanytime before the 12 month period from First Closing. After Second Closing, Investors will have a total of 40% in the companyon a fully diluted basis
Pre-Money Valuation:
Indian Rs. 300,000,000 (Indian Rupees Three hundred Milliononly)
ESOP Pool:
ESOP pool of 10,200 shares included in the pre-money valuation;ESOP for employees shall vest uniformly over a 4 year period fromthe date of grant
Shareholding Table :
See Exhibit 1
Managmentcontracts:
Top management employees (defined as the Top 5 by compensationand ESOP) will enter into employment contracts that are agreeableto Investors which address the following:a)Vesting schedules for founders
b)
Compensation for founders commensurate to role andresponsibility
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Confidential
Board of Directors:
Investors will have the option to nominate upto 2 Investor directorson the board of the company. The second director will be nominatedonly after Second Closing.
Minority ProtectionRights:
WCI will have standard approval rights over the following major corporate decisions:
Altering Rights of any class of investors if such alterationwould lead to grant of superior rights and any issuance of fresh equity
M&A, IPO and sale/merger of the Company
Any decision to hire/fire the top management employeesChanging the size of the employee option pool and employeeoption grants
Annual Budget and any related party transaction
Getting into new business and Creating / Winding up anysubsidiary of the Company
Changing the number/structure of the board
Transfer of stock by Founders
Declaring Dividends and redeeming / buying back shares
Raising any debt of more than $1 million
Any future rounds of fund raise
Rights of other investors:
Investors shall get rights similar to that of existing investors in thecompany, if existing investors have any better rights than WCI
LiquidationPreference:
In the event of the liquidation of the Company, the holders of theSeries A Convertible Preferred Stock will have liquidation rightssenior to all other outstanding securities of the Company. TheInvestors will be entitled to receive, in preference to holders of Ordinary Shares, an amount in US$ equal to 100% of the purchaseprice paid per share in US$ plus any accrued or declared but unpaiddividends.
Pre-emptive Rights:
Investors shall have
pro rata
rights to maintain their percentageownership with respect to any offering of equity by the Company.
First Right of Refusal:
Investors will have first right of refusal on any sale or transfer of stockheld by promoters and on any new issue of shares and this right canbe exercised within 15 days of notice.
Anti-DilutionProtection:
The Investors will have broad based weighted average anti-dilutionprotection against all subsequent investments in the company.
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Confidential
Redemption:
The company will provide exit to the investors via a listing on thepublic market or through a trade sale in a period of five years fromthe date of Second Closing. If the company has not achieved alisting or a trade sale before 5 years, then at the end of five yearsfrom the date of closing and at the election of Investors, theCompany shall redeem the investors outstanding Series A Preferredshares.
Co-Sale:
The Investors will have proportionate rights of co-sale.
Voting Rights:
The Investors shall have the right to vote pro-rata to their shareholding on an “as if converted basis”.
Information Rights:
Investors will have standard information rights relating to receipt of audited and un-audited financial statements.
Representations &Warranties:
The Company will make reasonable representations and warrantiescustomary in transactions of this type.
Closing Conditions:
Closing of the purchase transaction will be subject to (i) satisfactorycompletion of business & legal diligence, (ii) satisfactory completionof legal documentation, (iii) reference checks, and (iv) no materialadverse change and governing law. If the purchase transaction is notcompleted within 6 weeks from the date of signing of this term sheetby the parties, then it shall automatically lapse and no party shallhave any rights or obligations enforceable against each other.
Confidentiality:
All the parties agree to keep all negotiations with the Investor on aconfidential basis, including this term sheet.
Auditors:
Company will retain a reputed auditor to the satisfaction of WCIwithin a period of 12 months of closing
Fees:
The Company agrees to reimburse expenses up to a maximum of Rs. 5 lacs incurred by WCI for closing of this investment.
Exclusivity:
The Company agrees to negotiate the above contemplated purchasetransaction with WCI on an exclusive basis for a period of 1 monthfrom the date of this term sheet.
O
THER
THAN
THE
OBLIGATIONS
“E
XCLUSIVITY
”
AND
“C
ONFIDENTIALITY
”,
THIS
TERM
SHEET
DOES
NOT
CONSTITUTE
OR
EVIDENCE
A
BINDING
OFFER
OR
AGREEMENT
A
BINDING
AGREEMENT
WITH
RESPECT
TO
THE
PROPOSED
TRANSACTION
WILL
ARISE
ONLY
AFTER
THE
I
NVESTORS
HAVE
COMPLETED
THEIR
DUE
DILIGENCE
TO
SATISFACTION
AND
MUTUALLY
SATISFACTORY
DEFINITIVE
AGREEMENTS
HAVE
BEEN
NEGOTIATED
AND
EXECUTED
.
AGREED BYWhimzyCapital India Advisors Pvt Ltd
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