The Convertible Promissory Note Purchase Agreement is a critical financing instrument in the Philippine business landscape, particularly utilized by startups and growth-stage companies seeking bridge financing or initial investment rounds. This document is employed when a company needs to raise capital quickly while deferring complex valuation discussions to a future funding round. The agreement, structured under Philippine law and compliant with local securities regulations, outlines the terms of the investment, including the principal amount, interest rate, maturity date, conversion mechanics, and investor protections. It's particularly valuable when traditional equity financing might be premature or when parties want to align investor returns with future company performance. The document must comply with Philippine securities laws, corporate regulations, and financial sector requirements, especially those set forth by the Securities and Exchange Commission.
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1. Parties: Identifies the parties to the agreement - typically the Company (Issuer) and the Purchaser(s) of the note
2. Background: Explains the context of the agreement, including the Company's desire to raise funds and the Purchaser's willingness to provide funding
3. Definitions: Defines key terms used throughout the agreement, including financial terms, conversion mechanisms, and corporate events
4. Purchase and Sale of Notes: Details the principal amount, purchase price, and closing mechanics of the note purchase
5. The Notes: Describes the terms of the notes, including interest rate, maturity date, and repayment provisions
6. Conversion Rights: Specifies the conditions and mechanics for converting the notes into equity, including conversion price and timing
7. Company Representations and Warranties: Company's statements about its legal status, authority, and business condition
8. Purchaser Representations and Warranties: Purchaser's statements about their investment capacity and compliance with securities laws
9. Covenants: Ongoing obligations of the Company during the term of the notes
10. Events of Default: Circumstances that constitute default and remedies available to note holders
11. General Provisions: Standard legal provisions including notices, amendments, governing law, and dispute resolution
1. Information Rights: Grants investors rights to receive financial and operational information - include when dealing with sophisticated investors
2. Board Observer Rights: Gives investors the right to attend board meetings - include for larger investments
3. Pre-emptive Rights: Allows note holders to participate in future financing rounds - include for strategic investors
4. Most Favored Nation Provision: Ensures investors get the benefit of better terms offered in future note issuances - include for early-stage investments
5. Foreign Investment Provisions: Additional provisions required for foreign investors under Philippine law - include when there are foreign investors
6. Tax Provisions: Detailed tax handling and withholding provisions - include when tax implications are complex
7. Anti-dilution Protection: Protects investors from dilution in specific scenarios - include for sophisticated investment rounds
1. Schedule A - Form of Promissory Note: The actual form of the convertible promissory note to be issued
2. Schedule B - Capitalization Table: Current capital structure of the Company and pro forma post-conversion scenarios
3. Schedule C - Company Disclosure Schedule: Detailed disclosures and exceptions to Company representations and warranties
4. Schedule D - Corporate Resolutions: Copies of relevant corporate approvals for the note issuance
5. Schedule E - Investment Amounts: List of investors and their respective investment amounts (if multiple investors)
6. Appendix 1 - Conversion Mechanics: Detailed procedures and calculations for note conversion
7. Appendix 2 - Registration Rights: Details of any registration rights granted to note holders upon conversion
Relevant legal definitions
Clauses
Relevant Industries
Technology
Fintech
E-commerce
Healthcare
Renewable Energy
Software Development
Manufacturing
Biotechnology
Agriculture Technology
Real Estate Technology
Educational Technology
Digital Services
Consumer Products
Professional Services
Relevant Teams
Legal
Finance
Corporate Secretariat
Compliance
Executive Leadership
Investment
Business Development
Corporate Development
Treasury
Risk Management
Relevant Roles
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Corporate Secretary
Investment Manager
Legal Counsel
Corporate Lawyer
Finance Director
Investment Analyst
Venture Capital Associate
Startup Founder
Managing Director
Business Development Manager
Company Director
Compliance Officer
Financial Controller
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