Capital Waters convertible loan agreement 2.
1 (UK) 30-05-2016 | powered by Benvalor
TERM SHEET CAPITAL WATERS CONVERTIBLE LOAN AGREEMENT
Loan Amount € [ __ ].
Interest [5%] per annum.
Repayment At once, following expiry of the term or, following an event of default,
unless a conversion event occurs.
Term [3] years.
Discount [15%].
Conversion Cap € [2,500,000].
Conversion events I. Automatically in the event of a qualified financing, meaning an issue
of shares against payment of an amount of at least [€ 250,000]; and
II. Upon request of the majority of the lenders, following expiry of the
term.
Take-Over In the event of a take-over of the Borrower, the Lender will receive a cash
amount equal to [2] times the Loan Amount plus accrued interest.
Shareholders Agreement Following conversion a shareholders agreement will be concluded
containing at least such rights for the benefit of the lender as contained in
the Capital Waters Subscription- and shareholders agreement Extended
version Preferred shares which is available on www.capitalwaters.nl.
Covenants The prior approval of the majority of the lenders will be required for certain
material decisions and the lenders need to be provided with important
information by the borrower.
Page 1 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
CAPITAL WATERS CONVERTIBLE LOAN AGREEMENT
THIS AGREEMENT is made as of this day [ __ ] by and between:
(1) [BORROWER] B.V., a private company with limited liability organized and existing under the laws
of the Netherlands, having its corporate seat in [ __ ] and its official address at [ __ ], registered
with the Trade Register of the Chamber of Commerce under number [ __ ] and with e-mail address
[ __ ] (“Borrower”); and
(2) ______________ (“Lender”),
Borrower and Lender hereinafter together also to be referred to as “Parties” and each a “Party”
WHEREAS:
(A) The Borrower conducts a business in the field of [ __ ].
(B) The Borrower is in need of funding in order to finance its business and the Lender is willing to
provide the Borrower with a convertible loan subject to the terms and conditions of this agreement
(“Agreement”).
(C) This Agreement is one of a series of convertible loan agreements entered or to be entered into by
the Borrower with lenders with identical terms and on the same form as set forth herein, except
that the loan amount and date of issuance may differ.
THE PARTIES HAVE AGREED AS FOLLOWS:
1. DEFINITIONS
1.1 Unless stated otherwise, the following defined terms shall have the following meaning in this
Agreement:
Co [€ 2,500,000].
nv
ers
ion
Ca
p:
Co (i) with respect to a conversion pursuant to a Qualified Financing, the same as the most
nv senior class of Shares as issued in the Qualified Financing; and
ers
ion (ii) with respect to a conversion pursuant to Article 4.2, the most senior class of shares
Sh outstanding prior to the moment of conversion;
are
s:
Dis [15%];
co
unt
:
Ev
the following situations result in an event of default:
ent
Page 2 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
of (i) if the Borrower fails to properly or timely perform one or more of its obligations
Def pursuant to this Agreement vis-à-vis the Lender and – following being summoned
aul and given a term of at least 7 days to remedy such failure – has not cured such
t: failure;
(ii) if the Borrower is declared bankrupt (faillissement), files a petition for the suspension
of payment (surséance van betaling), files for its own bankruptcy or is subject to
other insolvency proceedings; or
(iii) in the event of a transfer of a – at the sole determination of the Lender – material
part of the assets of the Borrower.
Ful the number of Shares on a fully-diluted basis, including (i) conversion or exercise of all
ly securities convertible into or exercisable for Shares, and (ii) exercise of all outstanding
Dil options to purchase Shares under a stock option plan or otherwise, but excluding, for this
ute purpose, the conversion contemplated by any Permitted Convertibles;
d
Ca
pit
aliz
ati
on:
Le one or more lenders that alone or together represent the majority of the loan amounts of
nd all Permitted Convertibles;
er
Maj
orit
y:
Ma the date [3 years] following the date of signing of this Agreement;
turi
ty
Dat
e:
Per the convertible loan agreements entered or to be entered into by the Borrower with
mit lenders with identical terms and on the same form as set forth herein, except that the loan
ted amount and date of issuance may differ and up to an aggregate maximum loan amount
Co – including the loan amount pursuant to this Agreement – of € [250,000];
nv
erti
ble
s:
Qu issue of Shares in the Borrower, against payment of an amount of at least [€ 250,000], in
alif one or more instalments (excluding the aggregate amount of any Permitted Convertibles
ied converted in connection with such share issue);
Fin
an
Page 3 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
cin
g:
Sh shares in the share capital of the Borrower, regardless of their class;
are
s:
Ta a (i) liquidation of the Borrower, or (ii) legal merger, legal division, sale of Shares as a
ke- result of which the shareholders immediately prior to such transaction no longer hold the
Ov majority of the voting power of the share capital of the Borrower, or (iii) listing of Shares
er: on the stock market, or (iv) transaction pursuant to which all or substantially all of the
assets of the Borrower are transferred;
2. THE LOAN
2.1 The Lender hereby agrees with the Borrower to grant the Borrower a loan in the amount of € [ __ ]
(“Loan”).
2.2 The Lender shall make the Loan available to the Borrower ultimately 7 days after the signing of
this Agreement by payment into the Borrower’s bank account with [ __ ] bank and account number:
[ __ ], or such other bank account as specified by the Borrower to Lender.
3. INTEREST
3.1 Interest shall be due on the outstanding sum of the principal amount and interest accrued thereon
at a rate of [5%] per annum.
3.2 The interest shall accrue on a daily basis as per the date of signing of this Agreement and shall be
calculated on the basis of the actual number of days elapsed and a year of 365 days.
3.3 Interest shall only become due upon repayment of the Loan.
4. CONVERSION
4.1 Upon closing of a Qualified Financing, the Loan plus accrued interest (“Conversion Amount”) will
be converted into that number of Conversion Shares equal to the quotient obtained by dividing the
Conversion Amount by the lower of (A) the price paid per Share in the Qualified Financing minus
the Discount, and (B) the Conversion Cap divided by the Fully Diluted Capitalization immediately
prior to the closing of the Qualified Financing.
4.2 Unless earlier converted pursuant to Clause 4.1, at the election of the Lender Majority at any time
on or after the Maturity Date, the Conversion Amount will be converted into that number of
Conversion Shares equal to the quotient obtained by dividing the Conversion Amount by the higher
of (a) two times the aggregate amount of all concluded Permitted Convertibles or (b) [€ 250,000],
in each event divided by the Fully Diluted Capitalization immediately prior to the conversion.
4.3 The Borrower shall as soon as possible but no later than 15 days after the event that triggered the
conversion, procure that by execution of a notarial deed of issue the relevant Conversion Shares
will be issued to the Lender.
4.4 The number of Conversion Shares shall be rounded down to the nearest whole number. The part
of the Conversion Amount that will not be converted into Shares because of the aforementioned
rounding off, will be paid in cash by the Borrower to the Lender before issuing the Shares to the
Lender.
Page 4 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
4.5 The applicable price per Share shall be paid by way of set-off against the Conversion Amount. In
the event such payment by way of set-off is higher than the nominal value of the Conversion
Shares, the remainder shall be considered share premium.
5. TAKE-OVER
5.1 Notwithstanding any provisions of this Agreement to the contrary, upon closing of a Take-Over
prior to the conversion pursuant to Article 4, in lieu of the Loan plus accrued interest that would
otherwise be payable pursuant to Article 7, the Borrower will ultimately at the closing of the Take-
Over pay the Lender an aggregate amount equal to [2] times the aggregate amount of the Loan
and interest then outstanding under this Agreement.
5.2 Upon payment of the amount referred to in Article 5.1 to the Lender, this Agreement will terminate.
6. SHAREHOLDERS AGREEMENT
6.1 The Borrower shall ensure and the Lender understands and agrees that prior to or coinciding with
the moment of conversion a shareholders agreement shall be concluded between the Lender and
the other holders of Shares, containing an adequate protection for minority shareholders. The
shareholders agreement shall in any event contain such rights for the benefit of the Lender as are
contained in the then latest version of the Capital Waters Participation- and Shareholders
agreement Extended version Preferred shares which is available on www.capitalwaters.nl and the
Lender agrees to execute such agreement.
7. REPAYMENT
7.1 In the event that the Lender Majority has not decided to exercise its conversion option following
the Maturity Date as described in Article 4.2 within 6 months from the Maturity Date, at the election
of the Lender, the Borrower shall repay the Loan plus accrued interest.
7.2 The Borrower is not entitled to prepay all or part of the Loan and accrued interest before the
Maturity Date without prior approval of the Lender.
7.3 In addition, the Loan plus accrued interest shall become fully and immediately due and payable
upon request of the Lender, without any warning, default notice or legal intervention being required,
upon the occurrence of an Event of Default.
8. WARRANTIES
8.1 In connection with the transactions provided for herein, the Borrower hereby represents and
warrants to the Lender that:
(a) the Borrower is a corporation duly organized and validly existing under the laws of the
Netherlands and has all requisite corporate power and authority to carry on its business as
now conducted;
(b) all corporate action has been taken on the part of the Borrower, its directors and
shareholders necessary for the authorization, execution and issuance of this Loan, which
shall constitute the valid and legally binding obligation of the Borrower, enforceable against
the Borrower in accordance with its terms;
(c) the Borrower has provided to the Lender any information which is material to a lender
granting a (convertible) loan to the Borrower, and that this information is true, accurate and
not misleading;
(d) all intellectual property rights which are, or are likely to be, material to the business of the
Page 5 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
Borrower are, comprehensively and free of encumbrances, vested in the Borrower.
9. COVENANTS
9.1 As long as Borrower has any outstanding obligations vis-a-vis the Lender pursuant to this
Agreement, the Borrower shall not directly or indirectly take any of the following actions without the
prior written consent of the Lender Majority:
(a) pay or declare any dividend or make any distribution on Shares or redeem any Shares;
(b) obtain any loans, issue securities convertible into or exercisable for Shares, other than
Permitted Convertibles;
(c) grant a right of pledge on, sell or otherwise transfer or encumber a material part of the assets
of Borrower other than pursuant to a Take-Over; or
(d) enter into a legal merger, de-merger, dissolution or liquidation, full cessation or cessation of
an essential part of the business of Borrower or the transfer thereof abroad.
9.2 As long as Borrower has any outstanding obligations vis-a-vis the Lender pursuant to this
Agreement:
(a) the Borrower shall as soon as these are available, and in any event within 6 months following
the end of the financial year, provide the Lender with a copy of its financial statements,
including a balance sheet, profit- and loss account and explanatory notes in respect of said
financial year;
(b) the Borrower shall inform the Lender immediately once an (i) amendment of its articles of
association or (ii) an issuance of Shares has been effectuated; and
(c) the Borrower shall upon request of the Lender provide the Lender with all information the
Lender reasonably requires from time to time.
10. OTHER PROVISIONS
10.1 This Agreement and the documents referred to or incorporated in it and the agreements resulting
therefrom constitute the whole agreement between the Parties relating to the Loan, and supersede
any previous arrangement, understanding or agreement between them relating to the subject
matter that they cover.
10.2 If any (or part of any) provision of this Agreement is found to be invalid, unenforceable or illegal by
a competent court, the other provisions shall remain in force. If any invalid, unenforceable or illegal
provision would be valid, enforceable or legal if some part of it were deleted or modified, that
provision shall apply with whatever modification is necessary to give effect to the intention of the
Parties.
10.3 This Agreement cannot be annulled (vernietigd) or terminated (ontbonden).
10.4 Any notice to be given by a Party pursuant to this Agreement shall be in writing (including by e-
mail) and shall be sent to the address of the applicable Party as set out in the preamble to this
Agreement. Each Party may change its address by giving notice to the other Parties.
11. GOVERNING LAW
11.1 This Agreement is governed by Dutch law. Any disputes arising from this Agreement shall
exclusively be referred to the competent court in Utrecht, the Netherlands.
Page 6 of 7
Capital Waters convertible loan agreement 2.1 (UK) 30-05-2016 | powered by Benvalor
This Agreement was signed on the date first written above.
on behalf of on behalf of
[ __ ] [ __ ]
_______________ _______________
[***] [***]
Neither of the founders of Capital Waters; Benvalor B.V. and Principe Management B.V., nor their directors
assumes any responsibility for any consequence of using the Capital Waters investment documents.
These documents are prepared for informational purposes only and are not intended to constitute legal
advice. Each situation is highly specific and requires legal advice of an attorney-at-law specialised in this
field of law. Any party should seek legal advice first before using the documents. The documents may not
be suitable for use in any other jurisdictions than the Netherlands.
Page 7 of 7
