Term Sheet for Series A Round of Financing

Company Letterhead

{{company_name}}

{{company_address}}

{{phone}}

{{email}}

{{website}}

1. Introduction

This Non-Binding Term Sheet (“Term Sheet”) summarises the principal terms and conditions of a proposed Series A equity financing round (the “Investment”) in {{company_name}} (the “Company”) by the investors listed herein (the “Investors”). This Term Sheet does not create any legally binding obligations on any party, except for the provisions regarding confidentiality, exclusivity, and governing law, until definitive agreements are executed by all parties.

2. Investment Structure

**2.1. Investment Amount:** The Investors propose to invest an aggregate amount of {{total_investment_amount}} ZAR ({{total_investment_amount_words}} South African Rands) in the Company.

**2.2. Type of Security:** The Investment will be made in newly issued Series A Preferred Shares of the Company (the “Series A Shares”).

**2.3. Pre-Money Valuation:** The Company’s pre-money valuation is agreed at {{pre_money_valuation}} ZAR ({{pre_money_valuation_words}} South African Rands).

**2.4. Post-Money Valuation:** The Company’s post-money valuation will be {{post_money_valuation}} ZAR ({{post_money_valuation_words}} South African Rands).

**2.5. Price Per Share:** The Series A Shares will be issued at a price of {{price_per_share}} ZAR per share.

3. Key Terms of Series A Preferred Shares

**3.1. Liquidation Preference:** In the event of any liquidation, dissolution, or winding up of the Company, the holders of Series A Shares shall be entitled to receive, in preference to the holders of Ordinary Shares, the greater of (i) {{liquidation_preference_multiple}} times their original investment amount, plus any declared but unpaid dividends, or (ii) the amount they would receive if they converted their Series A Shares into Ordinary Shares prior to such event.

**3.2. Conversion:** Each Series A Share shall be convertible, at the option of the holder, at any time into one Ordinary Share, subject to customary anti-dilution adjustments. The Series A Shares shall automatically convert into Ordinary Shares immediately prior to the closing of a qualified initial public offering (IPO) with a price per share of at least {{ipo_conversion_price}} ZAR, or upon the affirmative vote of the holders of a majority of the Series A Shares.

**3.3. Anti-Dilution Protection:** The Series A Shares shall be protected from dilutive issuances through a broad-based weighted average anti-dilution provision.

**3.4. Dividends:** Non-cumulative dividends may be declared at the discretion of the Board of Directors, preferentially to Series A shareholders at an annual rate of {{dividend_rate}}% of their original investment.

**3.5. Voting Rights:** Each Series A Share shall carry voting rights equivalent to the number of Ordinary Shares into which it is convertible.

4. Investor Rights

**4.1. Board Representation:** The Investors shall have the right to appoint {{number_of_investor_directors}} director(s) to the Company’s Board of Directors.

**4.2. Information Rights:** The Company shall provide the Investors with customary information rights, including quarterly financial statements, annual audited financial statements, and annual budgets.

**4.3. Protective Provisions:** Certain actions by the Company, including but not limited to, amending the Company’s constating documents, issuing new shares, incurring significant debt, or selling substantially all of its assets, shall require the consent of a majority of the Series A Shareholders.

**4.4. Pre-emptive Rights:** Series A Shareholders shall have a right of first refusal to participate pro-rata in any future equity financings of the Company.

**4.5. Co-Sale Rights (Tag-Along):** In the event that any founder or Ordinary Shareholder proposes to sell or transfer their shares, the Series A Shareholders shall have the right to participate in such sale on a pro-rata basis.

**4.6. Right of First Refusal (ROFR) and Co-Sale:** The investors and the Company shall have a right of first refusal over any proposed transfer of shares by the founders, and co-sale rights in the event such ROFR is not exercised.

5. Closing Conditions

The closing of the Investment shall be subject to the satisfaction of customary conditions, including, but not limited to: (i) satisfactory legal and financial due diligence; (ii) execution of definitive transaction documents (Share Subscription Agreement, Shareholders’ Agreement, Amended_and_Restated Memorandum of Incorporation); (iii) receipt of all necessary corporate and regulatory approvals; and (iv) no material adverse change in the business, assets, operations, or prospects of the Company.

6. Confidentiality and Exclusivity

**6.1. Confidentiality:** All parties agree to keep the terms of this Term Sheet and any information exchanged during the due diligence process strictly confidential.

**6.2. Exclusivity:** The Company agrees to negotiate exclusively with the Investors for a period of {{exclusivity_period_days}} days from the date of this Term Sheet and shall not solicit or entertain any other offers for equity financing during this period.

7. Governing Law and Dispute Resolution

This Term Sheet shall be governed by and construed in accordance with the laws of South Africa. Any disputes arising out of or in connection with this Term Sheet shall be resolved through good faith negotiations, failing which they shall be submitted to arbitration in accordance with the rules of the Arbitration Foundation of Southern Africa (AFSA).

8. Expenses

The Company shall be responsible for all reasonable legal expenses incurred by the Investors in connection with the preparation and negotiation of the definitive transaction documents, up to a maximum of {{legal_expense_cap}} ZAR.

9. Acknowledgment and Acceptance

The undersigned parties acknowledge and accept the terms and conditions outlined in this Term Sheet as a basis for further negotiation and preparation of definitive legal documentation.

Signature Block

**For the Company:**

___________________________

Name: {{company_signatory_name}}

Title: {{company_signatory_title}}

Date: {{date}}

**For the Investors:**

___________________________

Name: {{investor_representative_name}}

Title: {{investor_representative_title}}

Date: {{date}}