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The Convertible Equity Agreement is a crucial instrument in Nigeria's evolving startup and investment landscape, commonly used when companies seek early-stage funding but face challenges in immediate equity valuation. This document type is particularly relevant in the Nigerian context where traditional equity investment structures may be complex or premature for emerging businesses. The agreement provides a framework for investment that can later convert into equity, typically triggered by future funding rounds, specific milestones, or other predetermined events. It must comply with Nigerian corporate law, particularly CAMA 2020 and SEC regulations, while addressing specific local market conditions and investor protection requirements. The document includes essential provisions for investment terms, conversion rights, company obligations, and investor protections, making it suitable for both domestic and foreign investments in Nigerian companies.

1. Parties: Identification of the company and the investor(s), including their full legal names, registration details, and addresses

2. Background: Recitals explaining the context of the agreement, the company's business, and the investor's intention to invest

3. Definitions: Comprehensive definitions of terms used throughout the agreement, including financial terms, conversion-related terminology, and other key concepts

4. Investment Amount and Terms: Details of the investment amount, payment terms, and use of proceeds

5. Conversion Rights: Specific terms and conditions under which the investment converts to equity, including triggering events and conversion price mechanics

6. Company Representations and Warranties: Company's statements about its legal status, financial condition, and business operations

7. Investor Representations and Warranties: Investor's statements about their capacity and authority to enter into the agreement

8. Pre-Conversion Rights: Investor rights before conversion, including information rights and any governance participation

9. Post-Conversion Rights: Rights attached to the shares post-conversion, including voting and dividend rights

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

11. Events of Default: Circumstances constituting default and corresponding remedies

12. Confidentiality: Provisions regarding the protection and non-disclosure of confidential information

13. Governing Law and Jurisdiction: Specification of Nigerian law as governing law and jurisdiction for disputes

14. General Provisions: Standard boilerplate clauses including notices, amendments, and assignment restrictions

15. Execution: Signature blocks and execution formalities