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The Convertible Loan Note Agreement is commonly used in New Zealand by growing companies seeking flexible financing solutions, particularly during bridge funding rounds or when traditional equity valuations are challenging to determine. This document type is especially valuable for startups and scale-ups that need immediate capital but prefer to defer equity valuations to a future funding round. The agreement details the loan amount, interest terms, conversion mechanisms, and investor rights, all while ensuring compliance with New Zealand's financial markets legislation and securities regulations. It provides a balanced approach to protecting both the company's and investors' interests, including specific provisions for conversion triggers such as qualified financing rounds, exits, or maturity events. The document is structured to accommodate New Zealand's unique legal and regulatory requirements while following international best practices in convertible note financing.

1. Parties: Identifies the issuer (company), the noteholder(s), and any guarantors

2. Background: Sets out the context of the agreement, including the company's intention to borrow and the noteholder's intention to lend with conversion rights

3. Definitions and Interpretation: Defines key terms and establishes rules for interpreting the agreement

4. Subscription and Issue: Details the loan amount, issuance process, and conditions precedent to drawdown

5. Interest: Specifies interest rate, calculation method, and payment terms

6. Conversion Rights: Details when and how notes can be converted to shares, including conversion price and mechanics

7. Repayment and Redemption: Specifies maturity date, repayment terms, and early redemption provisions

8. Company Covenants: Sets out company obligations including information rights and operational restrictions

9. Events of Default: Lists circumstances constituting default and consequences

10. Noteholder Rights and Obligations: Specifies rights and obligations of noteholders, including voting and transfer rights

11. Security: Details any security arrangements for the notes

12. Representations and Warranties: Contains standard company representations and warranties

13. Confidentiality: Governs treatment of confidential information

14. Notices: Specifies how formal communications between parties should be made

15. General Provisions: Contains standard boilerplate provisions including governing law, dispute resolution, and amendment procedures