Advance Notes Clause Samples
The Advance Notes clause outlines the terms under which a company issues promissory notes to investors in exchange for immediate funding, with the promise that these notes will convert into equity at a future financing event. Typically, this clause specifies the interest rate, maturity date, and the conversion mechanism, such as a discount or valuation cap, that determines how the notes convert into shares. Its core function is to provide a flexible and efficient way for startups to raise capital quickly before a formal equity round, while giving investors a structured path to future ownership.
Advance Notes. (a) All Advances made by CRC and each Secondary Lender to the Borrower shall be evidenced by separate Advance Notes, with appropriate insertions, which shall (i) be payable to the order of CRC and each Secondary Lender and provide for the payment of the unpaid principal amount of the Advances evidenced thereby on the Maturity Date for such Advances, and (ii) require that the Borrower pay Yield on the outstanding principal amount as provided in Section 2.06 hereof. The date and principal amount of each Advance and of each repayment of principal thereon shall be recorded by CRC or the Secondary Lenders, as the case may be, or their designee on Schedule I attached to CRC's or such Secondary Lender's Advance Note and the aggregate unpaid principal amount shown on such schedules shall be rebuttable presumptive evidence of the principal amount owing and unpaid on the Advances. The failure to record or any error in recording any such amount on such schedule shall not, however, limit or otherwise affect the obligations of the Borrower hereunder or under any Advance Note to repay the principal amount of the Advances together with all Yield thereon.
(b) The Borrower agrees that upon any Eligible Assignee becoming a Secondary Lender hereunder in accordance with Section 9.06, it shall, promptly upon the request of the Agent, execute and deliver an Advance Note payable to the order of such Secondary Lender and otherwise appropriately completed.
Advance Notes. Subject to the terms and conditions of this Agreement, each Investor that holds an Advance Note (an “Advance Note Investor”) agrees, effective upon the Initial Closing, that (i) each Advance Note shall be automatically deemed to be exchanged for a Note, with the principal balance of the Advance Note plus all accrued interest thereunder being credited towards such Investor’s Purchase Price on a dollar-for-dollar basis, which shall constitute full and complete satisfaction of all obligations of Target and Company, if any, under such Advance Note notwithstanding anything to the contrary set forth in such Advance Note, (ii) the Advance Note held by each Advance Note Investor shall be cancelled and terminated as of the Initial Closing and all obligations of Target and Company, if any, under the Advance Notes shall be satisfied in full, and (iii) to the extent there are any conflicts or disagreements with the terms hereof, the terms set forth in this Agreement shall control and govern the exchange and cancellation of the Advance Notes. It will be a condition of the receipt of the Note to be issued to each Advance Note Investor in exchange for the applicable Advance Note that such Advance Note Investor execute and deliver this Agreement and the Transaction Documents (as defined below). Notwithstanding the foregoing or anything to the contrary contained herein, the cancellation, release and extinguishment of each Advance Note shall be effective upon the Initial Closing whether or not such Advance Note is actually delivered to or marked cancelled by Target or the Company, as applicable. In the event that an Advance Note Investor is purchasing a Note with a principal balance in excess of the principal balance plus accrued interest of such Advance Note Investor’s Advance Note, the Schedule of Investors will list such Investor’s name only a single time, and the cash amount that such Investor shall be required to pay at the Initial Closing shall be the total Purchase Price for the Note listed opposite such Investor’s name, less the total principal amount of plus accrued interest under the Advance Note exchanged by such Investor (as listed on the Schedule of Investors, under the “Advance Investors” header, opposite such Investor’s name).
Advance Notes. Each Loan Advance shall be evidenced by a separate non-revolving