Convertible Debt Agreement Template for Germany

The Convertible Debt Agreement is commonly used in German startup and growth company financing as a bridge between financing rounds or as an initial investment vehicle. This document type is particularly valuable when the company's valuation is uncertain or when parties wish to defer valuation discussions to a future date. Under German law, specific formal requirements must be met, including notarization of certain corporate actions and compliance with the German Civil Code (BGB) and corporate laws. The agreement typically includes detailed provisions on conversion triggers, price calculations, and investor protections, while addressing specific German legal requirements regarding debt instruments and shareholder rights. It serves as a crucial tool for companies seeking flexible financing options while providing investors with potential equity upside.

1. Parties: Identification of the issuing company and the investor(s)

2. Background: Context of the agreement and purpose of the convertible debt issuance

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Issuance: Details of the principal amount, issuance date, and disbursement terms

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

6. Maturity and Repayment: Maturity date and repayment terms of the loan

7. Conversion Rights: Terms and conditions under which the debt can be converted into equity

8. Conversion Price and Mechanics: Detailed mechanics of how conversion price is calculated and conversion process

9. Company Representations and Warranties: Company's representations regarding its status, authority, and business

10. Investor Representations and Warranties: Investor's representations regarding investment capacity and understanding

11. Information Rights: Investor's rights to receive company information and financial statements

12. Events of Default: Circumstances constituting default and consequences

13. Transferability: Terms governing transfer of the convertible debt instrument

14. Amendments and Waivers: Procedures for modifying the agreement or waiving rights

15. Notices: Communication requirements and contact details

16. Governing Law and Jurisdiction: Specification of German law application and jurisdiction

17. Miscellaneous: Standard boilerplate provisions including severability and entire agreement