The Renegades DART of Term Sheet Case Jon ZemelDian Guan Changjie Liu Wei-Jie KongZihuan Wee Ben Kenigsberg.

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The Renegades DART of Term Sheet Case Jon ZemelDian Guan Changjie Liu Wei-Jie KongZihuan Wee Ben Kenigsberg

Major Goals  Retain control of the company  Prevent dilution after venture capital  Satisfy investors’ interest

Major Redflags  Antidilution preferences  Drag along agreement  Payment of “cumulative” dividends  Special conditions for second closing  Liquidation preferences

Proposed Changes in Order of Priority  Adjust the Antidilution provision full ratchet adjustment ---> “pay per play” adjustment encourage future dilutive financing prevent unnecessary dilution of the founders  Eliminate the Drag along agreement clause future merger, sale of voting control or company assets should be subject to voting of all the shareholders instead of Series A Preferred.  Payment of “cumulative” dividends cumulative -  non-cumulative prevent adverse effects to the company’s cash flow

Proposed Changes in Order of Priority  Condition for second closing Eliminate some conditions for second closing OR Extend 9 month period to 18 month period  Liquidation preferences Negotiate for original purchase price + all accrued and unpaid dividends

Factors affecting the proposed changes  Infinite Wisdom: company growth and development  Gandhi Ventures: maximizing shareholders’ benefit E.g. Cumulative dividends, Drag-along agreement  Investors’ confidence in the CEO and management team  Present market conditions  Performance of the company’s product  Retention of Des Cartes as the principal scientist Conflict of Interests between the Company and VC

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