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The Convertible Debt Agreement is a sophisticated financing instrument used primarily in the Philippine business context when companies, particularly startups and growth-stage businesses, seek to raise capital without immediately setting a firm equity valuation. This document is crucial when traditional debt or straight equity financing may not be optimal, offering investors the security of debt with the upside potential of equity. The agreement must comply with Philippine securities laws, including the Securities Regulation Code (RA 8799) and relevant SEC regulations. It typically includes detailed provisions on conversion triggers (such as qualified financing rounds, exits, or maturity), interest rates, valuation caps, and discount rates, while ensuring adherence to local corporate law requirements. This financing tool bridges the gap between debt and equity financing, providing flexibility for both investors and companies in the Philippine market.

1. Parties: Identification of the Lender(s) and the Company (Borrower), including complete legal names and addresses

2. Background: Context of the agreement, including the Company's business and purpose of the convertible debt financing

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

4. Loan Amount and Issuance: Details of the principal amount, issuance date, and disbursement terms

5. Interest: Interest rate, calculation method, payment schedule, and default interest provisions

6. Maturity and Repayment: Maturity date, repayment terms, and early repayment provisions

7. Conversion Rights: Terms and conditions for converting the debt into equity, including conversion price and timing

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

9. Company Representations and Warranties: Standard company representations regarding authority, compliance, and financial condition

10. Lender Representations and Warranties: Representations from the lender regarding investment capacity and understanding of risks

11. Covenants: Ongoing obligations of the Company, including information rights and operational restrictions

12. Events of Default: Circumstances constituting default and consequences thereof

13. Transferability: Provisions governing the transfer of the convertible debt instrument

14. Notices: Process and requirements for formal communications between parties

15. Governing Law and Jurisdiction: Specification of Philippine law as governing law and jurisdiction for disputes

16. General Provisions: Standard boilerplate provisions including amendments, waivers, and severability