A Convertible Note is a simple promissory note, usually bearing interest and payable at some future date. The unique aspects of a convertible note are:
A. It converts into equity in the company so long as certain agreed metrics are achieved;
B. Conversion rather than repayment is the usual intention of the parties
C. The usual events for conversion (a conversion event) could be some or all of:
1. Later financing acquired of an agreed minimum level;
2. Developmental milestones reached by the company; and/or
3. Strategic partnerships concluded with important companies;
The conversion into equity is usually at a valuation that is consistent with the valuation agreed to with investors in an investment round that occurs at a later time.
A San Diego California Convertible Promissory Note by Corporation is a legal document that outlines the terms and conditions of a loan agreement between a corporation based in San Diego, California, and a lender. This specific type of promissory note is part of a series of notes that are issued pursuant to a Convertible Note Purchase Agreement. A convertible promissory note is a unique type of loan agreement that allows the lender to convert the loan amount into shares of the corporation's stock at a later date. This means that the lender has the option to convert their loan into equity ownership in the corporation rather than being repaid solely in cash. The San Diego California Corporation issues a series of convertible promissory notes to raise capital for various purposes, such as expanding operations, investing in new technologies, or funding acquisitions. Each note has its own set of terms and conditions, including the loan amount, interest rate, maturity date, conversion price, and conversion mechanism. It is important to note that there may be different types of convertible promissory notes within this series, depending on the specific terms agreed upon by the corporation and the lender. Some variations may include: 1. Fixed Conversion Price Notes: These notes specify a predetermined conversion price at which the loan amount can be converted into shares of stock. The conversion price remains constant throughout the term of the note. 2. Variable Conversion Price Notes: These notes have a conversion price that is determined based on a formula tied to the company's valuation or other predetermined factors. This type of note provides flexibility in determining the conversion terms. 3. Interest-Only Convertible Notes: These notes require the corporation to make regular interest payments to the lender during the loan term, with the principal amount repayable at maturity or convertible into equity. 4. Discounted Convertible Notes: These notes offer a discount to the conversion price, incentivizing early conversion for the lender. This helps the lender obtain more shares for a lower investment. 5. Participation Convertible Notes: These notes provide the lender with the opportunity to participate in future funding rounds or investment opportunities by providing additional capital or converting their notes into equity at a discounted rate. The Convertible Note Purchase Agreement serves as the contract between the corporation and the lender, governing the issuance and terms of the series of convertible promissory notes. It outlines the rights and responsibilities of both parties, including the conversion terms, representations and warranties, default provisions, and any security or collateral provided to secure the loan.A San Diego California Convertible Promissory Note by Corporation is a legal document that outlines the terms and conditions of a loan agreement between a corporation based in San Diego, California, and a lender. This specific type of promissory note is part of a series of notes that are issued pursuant to a Convertible Note Purchase Agreement. A convertible promissory note is a unique type of loan agreement that allows the lender to convert the loan amount into shares of the corporation's stock at a later date. This means that the lender has the option to convert their loan into equity ownership in the corporation rather than being repaid solely in cash. The San Diego California Corporation issues a series of convertible promissory notes to raise capital for various purposes, such as expanding operations, investing in new technologies, or funding acquisitions. Each note has its own set of terms and conditions, including the loan amount, interest rate, maturity date, conversion price, and conversion mechanism. It is important to note that there may be different types of convertible promissory notes within this series, depending on the specific terms agreed upon by the corporation and the lender. Some variations may include: 1. Fixed Conversion Price Notes: These notes specify a predetermined conversion price at which the loan amount can be converted into shares of stock. The conversion price remains constant throughout the term of the note. 2. Variable Conversion Price Notes: These notes have a conversion price that is determined based on a formula tied to the company's valuation or other predetermined factors. This type of note provides flexibility in determining the conversion terms. 3. Interest-Only Convertible Notes: These notes require the corporation to make regular interest payments to the lender during the loan term, with the principal amount repayable at maturity or convertible into equity. 4. Discounted Convertible Notes: These notes offer a discount to the conversion price, incentivizing early conversion for the lender. This helps the lender obtain more shares for a lower investment. 5. Participation Convertible Notes: These notes provide the lender with the opportunity to participate in future funding rounds or investment opportunities by providing additional capital or converting their notes into equity at a discounted rate. The Convertible Note Purchase Agreement serves as the contract between the corporation and the lender, governing the issuance and terms of the series of convertible promissory notes. It outlines the rights and responsibilities of both parties, including the conversion terms, representations and warranties, default provisions, and any security or collateral provided to secure the loan.
Para su conveniencia, debajo del texto en español le brindamos la versión completa de este formulario en inglés. For your convenience, the complete English version of this form is attached below the Spanish version.
