tiktok³ÉÈË°æ

The Convertible Debt Agreement serves as a crucial financing instrument for companies seeking growth capital in Pakistan, particularly suitable for startups and early-stage businesses where traditional equity valuation may be challenging. This document establishes a debt investment that can convert into equity upon specific trigger events, such as a qualified financing round or exit event. The agreement must comply with Pakistani corporate law, including the Companies Act 2017 and Securities Act 2015, while addressing foreign investment regulations if international investors are involved. It typically includes detailed provisions for interest payments, conversion mechanisms, investor rights, and company obligations. The document bridges the gap between debt and equity financing, offering investors potential upside through equity participation while providing companies with more flexible terms than traditional financing options.

1. Parties: Identification of the Company (Issuer) and the Investor(s) (Note holder)

2. Background: Context of the investment and purpose of the convertible debt arrangement

3. Definitions: Key terms used throughout the agreement including Maturity Date, Conversion Price, Qualified Financing, etc.

4. Subscription and Issue: Details of the principal amount, subscription process, and issuance of the convertible note

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

6. Maturity and Repayment: Maturity date and repayment obligations if conversion has not occurred

7. Conversion Rights: Conditions and mechanisms for converting the debt into equity, including conversion price calculations

8. Conversion Mechanics: Detailed process for executing the conversion, including notices and documentation requirements

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

10. Investor Representations and Warranties: Investor's confirmations regarding investment capacity and understanding of risks

11. Company Covenants: Ongoing obligations of the company during the term of the note

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

13. Confidentiality: Provisions regarding the confidential treatment of agreement terms and company information

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

15. General Provisions: Standard boilerplate clauses including amendments, assignments, governing law, etc.