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Convertible Note Agreement

Series-A Pre-Money Valuation 8,000,000Series A Investment 2,000,000Convertible Main Note Plus rocket Interest 1,000,000Discount rate for 30%Cap bond conversion for convertible bonds 7.0 I hope, that it opened your eyes to some of the challenges hidden in the notes, some terms of convertible bonds that you didn`t know about, and now you`re not facing those financial constraints. Let`s go through the “Convertible Note Preference Overhang” section in the model. Mandatory conversion. This rating is transformed into equity as defined below, issued by the Company at the time this note reaches maturity (as defined below), at a price equal to the “conversion price” described in subsection B. Sometimes note holders insist on things such as board seats, information rights, agreements against the issuance of shares or other debts and/or other conditions that are typically related to share transactions. In this case, these contractual agreements between the company and the bondholders are usually written in a separate agreement with a title such as Note Holders` Agreement or Voting Agreement. A note purchase contract (sometimes called a subscription contract – see below) is a contractual wrapper that makes note financing a little more formal and a little more like equity financing. It usually outlines the mechanics of the conclusion (in order to ensure that no single bondholder is caught red-handed), it adds in certain representations and guarantees on the part of the company around the validity and authorization, it adds some bondholders and guarantees around the authorization as an accredited investor, and in a few rare cases it can be used to cover some of the most important provisions you can expect in a negotiating note or voting agreement. For experienced and experienced founders, they can work with their lawyers to create conversion documents that leave considerable room for interpretation and negotiation with Series A investors. But it`s a lot for the trained hands that I don`t think there are many. Therefore, for the great 99% unwashed among us, you need to know to be in knowledge. The terms of conversion of convertible bonds into equity under a convertible note subscription agreement are eligible financing in the event of a liquidity event or on a maturity date. Each of the parties to this note is fully responsible for all legal and other costs associated with this agreement.

Sometimes debt subordination (see above) is done in a stand-alone agreement.

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