PARTIES

1.The Baker Street Man Private Limited (TBSM)

2.Sherlock Holmes (Promoter)

3.John Watson (New Investor)

BACKGROUND COMMERCIALS

Mr Sherlock Holmes is the Founder and promoter of The Baker Street Man Private Limited ("TBSM") and has been running this company since 2001 as a successful detective and inspection agency. The market cap of TBSM is INR 700 crore. The company has a good market in India and command a market share of 70% amongst similar kinds of industry. TBSM has more than 250 employees spread across 3 offices in India in Gurgaon, Bangalore and Hyderabad.

Sherlock happens to meet John at an exhibition where John tells Sherlock that he has been working and developing software, "Mind Mister", an online tool that measures the dilation of a subject's pupils during an interview for lie detection. Sherlock feels such software will benefit his company as it will help further expand and consolidate its market leadership position. Sherlock is also keen to expand the operation of TBSM beyond India and feels that such software and the technology attached to it will help in approaching off-shore clients outside India. Accordingly, he approaches John to evaluate if he would like to collaborate and monetize the software and join TBSM. Since John and Sherlock have been childhood friends, he readily agrees, and the following is proposed:

The Promoter, New Investor and TBSM shall incorporate a JV Company- JohnLock Private Limited under the Indian Companies Act, 2013 (the "Company") and take a 40:30:30 stake in the Company against the following considerations:

John will transfer all the IPR rights of Mind Mister to the Company

Sherlock will bring in INR 200 crore for the company

TBSM will transfer land, assets and labour located in Gurgaon to the Company

The new investor and the existing investor shall not be entitled to transfer to any person the shares held by them in the Company, directly or indirectly, for a period of 3 (three) years from the date of Closing.

If any of the investors intend to sell its shares, they must offer them to the other shareholders through a pre-emption process without identifying a potential third-party purchaser.

Any appointment or removal of key personnel; Anything concerning the issuance of capital; Any matter concerning the suspension of business activities; Appointment or removal of auditors such matters are first to receive the approval of both the investor at a Board meeting

Termination of the term sheet will be 140 (one hundred forty) days from its execution unless mutually extended by the Parties or mutually cancelled by the Parties.

For Sherlock to monitor the condition of his investment, it is essential that he is provided with specific regular updates concerning its financial situation and budgets and a general right to visit the company and examine its books and records.

The closing shall be conditioned upon completion of due diligence to the satisfaction of the investors in their sole discretion and receipt of all necessary governmental, board of directors, investment committee and third-party approvals

Exit opportunity to the investors will be via- an IPO (at any time after May 2023) or a through a Strategic Sale

Arbitration by a sole arbitrator under the SIAC (Singapore International Arbitration Centre) Rules. The seat - New Delhi, India

Closing date: On or before 23 November 2021

Parties have agreed to share responsibilities in running the Company and have agreed that Sherlock will be the first CEO of the Company.

Before making the final decision, John instructs Mary, his Legal Counsel to conduct initial due diligence, and the following issues have arisen:

1.Inter-Corporate Loans

TBSM has provided certain interest-free advances to other companies having the same business model. There is no proof of any written agreements for these amounts, and these have been in the balance sheet as interest free advances repayable on demand.

2.Rent Agreements

TBSM has executed a rent agreement dated May 3, 2020, with the owners of a property located in Greater Kailash, Delhi for its employees who couldn't go back to their hometowns during the lockdown for a term of 14 months. The said rent agreement has not been registered.

3.Pending Court Proceedings

It was noted that TBSM has pending litigation with respect to the non-payment of wages to its workers (Industrial Dispute No. 273 of 2018). TBSM signed a Memorandum of Understanding (MoU) with the Trade Union wherein the Union agreed to withdraw the case filed upon payment of pending wages. It was found that to date payments have not been made, and no settlement has been reached.

4.Related Party Transactions

TBSM has made a payment of Rs 1 Lakh to Mr Andrew, who happens to be Mr Sherlock's brother-in-law, for rendering advisory services TBSM in matters regarding audit and compliance as he is a well-reputed Chartered Accountant. It was noted there is no written contract of such advisory services between the TBSM and Mr Andrew. Since we were not provided with the minutes of the meetings, we cannot confirm whether such transaction has taken place with all the required approvals. It appears that such related party transactions were not disclosed to the Board.

Answer the following Clauses:

A.A condition precedent for issue 1

B.A condition precedent for issue 2

C.A condition precedent for issue 3

D.A condition precedent for issue 4

E.A dispute resolution clause

F.An inspection and information rights clause favouring both investors

G.A Right of First Refusal (ROFR) clause in favour of the Promoter in the event that the New Investor wishes to exit

H.An affirmative voting rights clause in favour of the favouring both the New Investors and Promoter

I.An exit clause in case the New Investor wishes to exit

J.A clause creating pre-emptive rights to subscribe to shares by the New Investor in case of further issue of capital

k.An anti-dilution clause favoring the New Investor and Promoter.

L.A clause allowing the New Investor to drag along the Promoter in case of an exit by the New Investor

Instruction :Your can do any of the 6 clauses