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Convertible Note Purchase Agreement
"I need a Convertible Note Purchase Agreement for my Riyadh-based technology startup to secure SAR 2 million in funding from a UAE-based venture capital firm, with a valuation cap of SAR 20 million and planned conversion by March 2025."
1. Parties: Identification of the Company (Issuer) and the Purchaser(s) of the convertible note
2. Background: Context of the transaction, including company status and purpose of the financing
3. Definitions: Definitions of key terms used throughout the agreement, including Shariah-compliant financing terms
4. Purchase and Sale of Notes: Terms of the note purchase, including purchase price and closing mechanics
5. Profit Rate and Payment: Shariah-compliant profit rate structure and payment terms (avoiding conventional interest)
6. Conversion Rights: Terms and conditions for converting the notes into equity, including conversion price and mechanics
7. Conversion Mechanics: Detailed procedures for executing the conversion of notes to equity
8. Company Representations and Warranties: Company's declarations regarding its legal status, authority, and business condition
9. Purchaser Representations and Warranties: Purchaser's declarations regarding authority, investment intent, and compliance with laws
10. Covenants: Ongoing obligations of the Company during the term of the notes
11. Events of Default: Circumstances constituting default and consequences thereof
12. Shariah Compliance: Provisions ensuring the agreement complies with Islamic finance principles
13. Miscellaneous: Standard legal provisions including notices, amendments, governing law, and dispute resolution
1. Information Rights: Additional information and inspection rights for noteholders, typically included for larger investments
2. Board Observer Rights: Rights of noteholders to appoint board observers, included for strategic investors
3. Pre-emptive Rights: Rights of noteholders to participate in future financing rounds, optional for larger investors
4. Most Favored Nation Provision: Protection ensuring noteholders receive the benefit of better terms offered to future investors
5. Anti-dilution Protection: Additional protection against dilution beyond standard conversion adjustments
6. Registration Rights: Rights related to future public offerings, included if an IPO is contemplated
7. Tag-Along Rights: Rights to participate in future share sales, included for significant investments
8. Foreign Investment Provisions: Additional provisions required when the purchaser is a foreign investor
1. Schedule A - Form of Note: The formal promissory note document
2. Schedule B - Capitalization Table: Current and pro-forma capitalization of the Company
3. Schedule C - Corporate Documents: Key corporate documents including registration certificates and licenses
4. Schedule D - Disclosure Schedule: Exceptions to representations and warranties
5. Schedule E - Shariah Compliance Certificate: Certificate from recognized Shariah advisor confirming compliance
6. Appendix 1 - Conversion Notice: Form of notice to be used when exercising conversion rights
7. Appendix 2 - Regulatory Compliance Checklist: Checklist ensuring compliance with Saudi Arabian regulations
8. Appendix 3 - Required Consents: List of required governmental and third-party consents
Authors
Technology
E-commerce
Financial Services
Healthcare
Education Technology
Clean Energy
Manufacturing
Logistics
Real Estate Technology
Food and Beverage
Digital Media
Software Development
Biotechnology
Agricultural Technology
Islamic Financial Services
Legal
Finance
Corporate Development
Treasury
Compliance
Executive Leadership
Investment
Corporate Governance
Risk Management
Islamic Finance
Strategic Planning
Chief Executive Officer
Chief Financial Officer
Chief Legal Officer
Investment Manager
Corporate Lawyer
Shariah Compliance Officer
Venture Capital Associate
Investment Director
Company Secretary
Finance Director
Legal Counsel
Corporate Development Manager
Treasury Manager
Board Member
Startup Founder
Managing Partner
Investment Analyst
Compliance Officer
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