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The Convertible Note Purchase Agreement is a crucial financing instrument in the South African market, particularly for early-stage companies seeking to raise capital without immediately setting a valuation. This document is typically used when a company needs interim financing before a larger equity round, or when parties prefer to defer valuation discussions. It details the terms under which investors provide funding to the company in the form of convertible notes, including conversion triggers, interest rates, maturity dates, and investor rights. The agreement must comply with South African corporate and securities laws, including the Companies Act 71 of 2008, Financial Advisory and Intermediary Services Act, and relevant tax regulations. It's particularly valuable for startups and growth companies as it offers flexibility while providing necessary legal protections for both the company and investors.

1. Parties: Identification of the Company and the Investor(s)

2. Background: Context of the transaction and purpose of the agreement

3. Definitions and Interpretation: Key terms used throughout the agreement and rules of interpretation

4. Purchase and Sale of Notes: Core transaction terms including purchase price, closing conditions, and mechanics

5. The Notes: Detailed terms of the notes including interest rate, maturity date, and ranking

6. Conversion Rights: Terms and conditions for converting notes to equity, including conversion price and mechanisms

7. Conversion Mechanics: Procedural requirements and timing for conversion

8. Representations and Warranties of the Company: Company's statements about its legal status, authority, and business condition

9. Representations and Warranties of the Investors: Investors' statements about their investment capacity and eligibility

10. Covenants: Ongoing obligations of the company and restrictions on its activities

11. Events of Default: Circumstances constituting default and consequences

12. Information Rights: Investor rights to receive company information and financial statements

13. Confidentiality: Provisions regarding confidential information protection

14. Notices: Communication requirements and contact details

15. General Provisions: Boilerplate clauses including governing law, assignment, and amendments

16. Execution: Signature blocks and execution requirements