3.2.3: Subordinated Promissory Note (Priced Off Next Round Valuation)

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Abstract

With the rapidity in which rounds of financing have been recently occurring, a growing number of financings are being priced contingently, meaning the price of the derived security (the conversion or option stock) is not fixed until the investors in the next succeeding round come to terms. Herewith, an exemplar of a bridge note designed to convert at the next round price. This document is reprinted with the permission of my former partner, Tom Chase, of Hill & Barlow. NEWCO, INC. SUBORDINATED PROMISSORY NOTE (PRICED OFF THE NEXT ROUND) $[_____] [DATE] [CITY], [STATE] NEWCO, Inc., a corporation duly organized and existing under the laws of the State of Delaware (the "Company"), for value received, hereby promises to pay to [__________], or registered assigns (the "Holder"), the principal sum of [__________] Dollars ($[_____]), with interest at the rate of [__________] percent ([_____]%)