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Convertible Note Agreement

Convertible Note Agreement Template for New Zealand

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Key Requirements PROMPT example:

Convertible Note Agreement

"I need a Convertible Note Agreement for my New Zealand technology startup to secure a $500,000 investment, with a 20% discount rate on conversion, 8% annual interest rate, and a valuation cap of $5 million, with the note maturing in March 2025."

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Document background
This Convertible Note Agreement is designed for use in New Zealand business contexts where companies seek flexible financing options that combine immediate debt funding with future equity potential. It is particularly suitable for early-stage companies and startups that need capital but may find it challenging to establish a firm valuation for traditional equity investment. The agreement details the loan amount, interest rate, conversion mechanisms, triggers for conversion (such as qualified financing rounds or company sale), and valuation caps. It ensures compliance with New Zealand's financial markets regulations and corporate law requirements while providing both parties with clear rights and obligations. The document includes essential investor protections and company safeguards, making it a balanced instrument for bridge financing or initial investment rounds.
Suggested Sections

1. Parties: Identification of the issuing company and the note holder(s)

2. Background: Context of the agreement, including the company's intention to raise funds and the investor's intention to provide financing

3. Definitions: Key terms used throughout the agreement, including financial and technical terms

4. Subscription and Issue: Details of the note subscription, including principal amount, issue date, and payment terms

5. Interest: Interest rate, calculation method, and payment terms

6. Conversion Rights: Conditions and mechanisms for converting the note to equity, including conversion price and timing

7. Conversion Mechanics: Detailed process for executing the conversion, including notice requirements and share issuance

8. Maturity and Repayment: Terms regarding maturity date and repayment obligations if conversion hasn't occurred

9. Company Representations and Warranties: Company's statements regarding its legal status, authority, and business condition

10. Noteholder Representations and Warranties: Investor's statements regarding investment capacity and eligibility

11. Events of Default: Circumstances constituting default and consequent remedies

12. General Provisions: Standard contract terms including notices, amendments, governing law, and dispute resolution

Optional Sections

1. Security: Terms regarding any security or collateral for the note - include if the note is secured

2. Pre-emptive Rights: Rights of first refusal on future financing rounds - include if negotiated with investors

3. Board Observer Rights: Investor's right to attend board meetings - include for larger investments

4. Information Rights: Investor's rights to receive financial and operational information - include based on investor requirements

5. Most Favored Nation Clause: Protection ensuring the noteholder receives the best terms offered to other investors - include if requested

6. Tag-Along Rights: Right to participate in sale of company shares - include for significant investments

7. Anti-dilution Protection: Protection against dilution from future rounds - include based on negotiation

Suggested Schedules

1. Schedule 1: Note Certificate: Form of convertible note certificate

2. Schedule 2: Conversion Notice: Form of notice to be used when exercising conversion rights

3. Schedule 3: Company Cap Table: Current capitalization table of the company

4. Schedule 4: Calculation Methods: Detailed formulas for conversion price, interest calculations, and other numerical terms

5. Schedule 5: Company Information: Key company details including corporate structure and existing security interests

6. Appendix A: Shareholders' Agreement Terms: Key terms to be included in shareholders' agreement upon conversion

7. Appendix B: Constitutional Amendments: Required amendments to company constitution upon conversion

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓƵ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

alex.den.21@genieai.co
Relevant legal definitions










































Clauses






























Relevant Industries

Technology

Software

Biotechnology

Fintech

Clean Energy

E-commerce

Healthcare

Manufacturing

Professional Services

Media and Entertainment

Agritech

Education Technology

Real Estate Technology

Consumer Products

Relevant Teams

Legal

Finance

Executive Management

Corporate Development

Investment

Treasury

Compliance

Company Secretariat

Business Development

Relevant Roles

Chief Executive Officer

Chief Financial Officer

Company Director

Investment Manager

Corporate Lawyer

Legal Counsel

Finance Director

Startup Founder

Investment Banker

Venture Capital Partner

Company Secretary

Financial Controller

Business Development Manager

Investment Analyst

Corporate Development Manager

Industries







Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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