The Convertible Note Agreement serves as a crucial financing instrument for companies seeking interim funding before a priced equity round. This document, governed by Maltese law, provides a framework for companies to secure immediate capital while deferring company valuation discussions. It's particularly valuable for startups and growth companies where traditional equity valuation might be challenging or premature. The agreement encompasses essential elements including the principal amount, interest rate, conversion mechanisms, maturity date, and various investor protections. It must comply with Maltese corporate law requirements, particularly regarding debt instruments and share issuance. The document is structured to protect both the company's and investors' interests while maintaining flexibility for future financing rounds.

1. Parties: Identification of the Company (Issuer) and the Noteholder(s), including their full legal names and registered addresses

2. Background: Recitals explaining the purpose of the convertible note issuance and the company's business context

3. Definitions and Interpretation: Defined terms used throughout the agreement, including financial terms, conversion mechanisms, and technical definitions

4. Subscription and Issuance: Terms of the note subscription, including principal amount, closing conditions, and issuance procedures

5. Interest: Interest rate, calculation method, payment periods, and treatment of accrued interest upon conversion

6. Maturity and Repayment: Maturity date, repayment terms, and conditions for early repayment

7. Conversion Rights: Conversion triggers, pricing mechanisms, and procedures for converting the note into equity

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

9. Company Representations and Warranties: Company's statements regarding its legal status, authority, and business condition

10. Noteholder Representations and Warranties: Noteholder's statements regarding investment capacity and regulatory compliance

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

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

13. Transferability: Restrictions and conditions for transferring the note

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Specification of Maltese law governance and jurisdiction for disputes