Company

[company name]
[company address]
Company reg no. [company reg. no.]
(the “Company”)

Founders

[founder 1 name]
[founder 1 address]
(“Founder 1”)

[founder 2 name]
[founder 2 address]
(“Founder 2”)

(each a “Founder” and collectively, the “Founders”)

Founder Company

Founder 1 holds his or her shares in the Company through the following personal holding company:

[founder 1 company name]
[founder 1 company address]
Company reg. no. [founder 1 company reg. no.]
(the “Founder 1 Company”)

Founder 2 holds his/her shares in the Company through the following personal holding company:

[founder 2 company name]
[founder 2 company address]
Company reg. no. [founder 2 company reg. no.]
(the “Founder 2 Company”)

(each a “Founder Company” and collectively, the “Founder Companies”)

Share Capital

The share capital of the Company is allocated as follows:

Pre-Money Valuation

The investment in the Company (the “Investment”) is based on a pre-money valuation of the Company of DKK [pre-money valuation] (on a fully diluted basis, which includes [incentive program shares] shares that may later be subscribed for pursuant to the incentive program described below) equal to a subscription price of DKK [subscription price] per share of nominally DKK 1.00 (the “Subscription Price”).

Investor

[investor name]
[investor address]
Company reg. no. [investor reg. no.]
(the “Investor”)

Investment Amount

DKK [investment amount] (the “Investment Amount”).

The Investment Amount will be paid in one tranche at closing.

Share Capital

Following closing of the Investment, the share capital of the Company will be allocated as follows:

Share Classes and Distribution of Proceeds

The new shares shall be preference shares (“New Shares”). In case of a sale of shares, liquidation, dividend payment, other payments from the Company to its shareholders, dissolution or winding up of the Company (each a “Liquidation Event”), the proceeds (cash, shares or other consideration) shall be distributed as follows:

Firstly, proceeds corresponding to the higher of (a) the subscription price paid for each of the New Shares and (b) the amount payable on each of the New Shares had the New Shares been converted into common shares immediately prior to the Liquidation Event, shall be paid on each of the New Shares;

Secondly, any remaining proceeds shall be distributed pro rata among all holders of common shares (according to nominal share values).

Conversion

The New Shares shall be convertible at any time into common shares at the option of the holder of New Shares at a ratio of 1:1.

Signing Deliveries

At signing, the following shall be delivered in a form and substance satisfactory to the Investor:

The Company shall deliver duly signed employment agreements with each of the Founders and other key employees.

The Company shall deliver documentation evidencing the transfer of all relevant intellectual property rights used by the Company from the Founders (and others) to the Company.

Voting Rights

Each share in the Company shall carry one vote.

Board

The board of directors (the “Board”) shall consist of 3 to 5 board members.

Amend the number of board members above as applicable.

The board members shall be elected at the general meeting of the Company as follows:

the Founders shall be entitled to nominate [number of founder board members] board members for election,

the Investor shall be entitled to nominate [number of investor board members] board members for election.

The remaining board members, if any, shall be elected by simple majority vote.

Material Decisions - Shareholder Level

Material decisions at shareholder level shall be subject to prior approval by Qualified Shareholder Majority. Material decisions include changes to the articles of association (except for capital increases with pro rata participation rights for all shareholders), changes to the number of board members, merger, license or sale of all or substantially all assets or other corporate reorganization or acquisition of the Company and similar material decisions.

For the purpose hereof, Qualified Shareholder Majority shall mean the consent of shareholders representing more than 50 percent of the share capital, including the Investor.

Material Decisions – Board Level

Material decisions at board level shall require a Qualified Board Majority. Material decisions include licensing, purchase, divestment or pledge of intellectual property rights, which has a material effect on the Company’s business, entering into contracts or material commitments, which lie outside the Company’s ordinary course of business, approval of and amendments to the business plan and annual budget of the Company, entering into related party contracts and any changes in such contracts, issuance of warrants, incurrence of any material unbudgeted costs and similar material decisions.

For the purpose hereof, Qualified Board Majority shall mean the consent of a majority of the board members, including the board member(s) appointed by the Investor.

Incentive Program

The management and the key employees of the Company (excluding the Founders) shall as part of an incentive program be offered warrants to subscribe for ordinary shares in the Company. The warrants shall in no event exceed [maximum warrant share %] percent of the outstanding share capital (on a fully diluted basis) from time to time. This incentive program is included in the calculation of the Subscription Price.

Information Rights

Management shall deliver to the Investor:

Monthly, quarterly and yearly financial statements as soon as possible after the close of the relevant period but in no event more than 30 days after the close of the relevant period.

Notice of any material adverse change or the commencement or threat of any material litigation or dispute, immediately upon the management becoming aware of such change, commencement or threat.

Participation in Future Financing Rounds

All shareholders shall, with customary exemptions, have the right to participate in future financing rounds, based on their pro-rata ownership of shares in the Company, including the right to subscribe for any unsubscribed shares of other shareholders.

Right of First Refusal

Any transfer of shares shall, with customary exemptions, be subject to a right of first refusal, including a right for the shareholders to purchase any unpurchased shares of the transferring shareholders.

Tag-Along Right

All shareholders shall, with customary exemptions, be entitled to participate in any sale of shares in the Company in the same proportion and on the same terms and conditions as offered to a selling shareholder. If the sale of shares leads to the acquiring party holding or controlling more than 50 percent of the Company’s share capital, the other shareholders shall, however, be entitled to co-sell all shares held by them.

Drag-Along Right

Shareholders acting with a Qualified Shareholder Majority shall have the right to require the other shareholders in the Company to (i) sell their shares in the Company to an independent, third party on the same terms as those obtained by the shareholders acting with Qualified Shareholder Majority, provided that an offer is made for all issued and outstanding shares, or (ii) approve an offer to acquire all or substantially all of the assets of the Company with subsequent dissolution of the Company and distribution of the proceeds to the shareholders.

No right of first refusal shall apply in the event of a drag-along sale.

Anti-dilution

The Investor shall have a broad-based weighted average anti-dilution subject to customary carve-out.

Founder Lock-Up

Each Founder undertakes not to, directly or indirectly, sell or transfer any of his/her shares in the Company for a period of [lock-in period] months from closing. This obligation shall terminate upon an IPO.

Key Man Clause

A key man clause shall apply to the Founders based on the following main principles:

The Founders shall be subject to a key man clause for a period of [key man clause period] months from Closing. During the term of the key man clause the Shares of a Founder shall vest as follows:

Vesting for the first [initial vesting period] months from Closing (“Cliff Period”) shall take place in one portion upon expiry of the Cliff Period.

The remaining Shares shall vest linearly on a monthly basis over the remaining part of the term of the key man clause.

In the event of an Exit, all Shares shall vest.

In case of a Founder leaving, the following shall apply:

(i) In the event that (a) a Founder terminates his or her employment with the Company without the Company being in material breach of his or her terms of employment and such termination is not caused by the death, permanent incapacity for work or critical disease of such Founder or (b) the Company terminates a Founder's employment with the Company due to such Founder's breach of his or her terms of employment (“Bad Leaver Event”), the leaving Founder shall be obligated to offer all of his or her Shares for sale at par value (DKK 1 for each Share of nominally DKK 1) to the Company or, if so decided by the Board, to the other shareholders on a pro rata basis.

(ii) In the event that a Founder terminates his/her employment with the Company without the Company being in material breach of his/her terms of employment and such termination is not cause by the death, permanent incapacity for work or illness of such Founder or any of his/her spouse or children (“No Cause Leaver Event”), the leaving Founder shall upon request from the Board be obligated to offer all of his/her unvested shares for sale at par value and his/her vested shares at Fair Market Value to the Company or to the other shareholders on a pro rata basis.

(iii) In the event that a Founder leaves the Company for other reasons than a Bad Leaver Event or a No Cause Leaver Event (“Good Leaver Event”), the leaving Founder shall be obligated to offer his/her unvested shares for sale at par value to the Company or to the other shareholders on a pro rata basis. For the avoidance of doubt, the leaving founder shall be entitled to keep vested shares in a Good Leaver Event.

Founder Restrictions

Each Founder shall be subject to non-competition and non-solicitation (customers and suppliers) clauses for as long as such Founder holds shares in the Company and for a period of [non-competition and non-solicitation period] months thereafter. Breach of a non-competition or non-solicitation clause shall be subject to a customary contractual penalty to be determined and included in the investment documentation.

Warranties

Each of the Founder Companies and the Company (the “Providers”) shall provide customary warranties as per signing and closing to the Investor concerning the Company.

The Investor’s right to make a claim for breach of a warranty shall expire [breach of warranty claim expiry period] months after closing, except for liability with respect to (a) a Founder’s/Founder Company’s title to shares in the Company, which shall be unlimited in time, and (b) taxes, which shall expire [tax claim period] months after the end of the applicable statutory limitation period.

Indemnification

The Providers shall indemnify the Investor for any loss suffered by the Investor relating to a breach of the warranties.

Any claim for breach of a warranty shall first be directed against the Company and only if and to the extent that the Company does not honour a claim, the claim may be directed against the Founder Companies.

Except for cases of gross negligence, fraud or wilful misconduct (i) the aggregate liability of the Company towards the Investor cannot exceed [maximum company liability] percent of the amount invested by the Investor and (ii) the aggregate liability of a Founder Company towards the Investor cannot exceed DKK [maximum founder company liability]. Claims will be subject to customary de minimis and basket provisions.

Validity

This term sheet is solely an expression of the parties’ intentions and shall not constitute any legally binding obligations for the parties with exception of the provisions below regarding confidentiality, exclusivity and governing law and venue.

Confidentiality

Except as already disclosed or as required by applicable law, none of the parties hereto shall make any public disclosure or announcement concerning the fact that discussions are taking place or concerning the existence of this term sheet, its contents or the status of the negotiations between the parties without obtaining the prior written consent of the other parties.

Exclusivity

The Company and the Founders agree to an exclusivity period of [exclusivity period] weeks from the signing of this term sheet, during which the Company and the Founders undertake not to solicit, encourage and/or otherwise work actively with any third party or to initiate or proceed with any sale of shares or investments of any kind whether by way of issuing shares or other securities in the Company or by way of raising of loan capital (except in the ordinary course of business).

Law and venue

The laws of Denmark shall govern this term sheet and all other documents and agreements to be concluded with respect to the Investment, and disputes that cannot be settled amicably shall be finally settled by simplified arbitration in accordance with the Rules of Procedure of the Danish Institute of Arbitration.