The CLA is intended for startups registered within the European Union (EU) and follows standard market conditions applicable to angel investments in the EU market. If the startup is registered in the United States (US) or plans to relocate there, we offer investments through a [[SAFE (Simple Agreement for Future Equity)|SAFE note]], which provides a simpler legal framework tailored to the US market. ## Terms & Conditions ### Parties Involved The agreement is between the **Investor** (Gluon Syndicate), the **Startup (Target Company)**, and the **Founders**. The Investor has the option to provide funding through a convertible loan, with the possibility of converting the loan into equity under specific conditions. The Investor has no obligation to invest and may choose to proceed at their discretion. ### Loan Amount & Purpose The **Startup** sets two funding targets: an **initial target** and an **additional second target**. The second target serves as an **investment cap**, meaning it defines the maximum amount the startup is willing to raise and cannot exceed **twice the initial target amount**. If the startup fails to meet the initial target or fulfill the outlined conditions, the CLA becomes **void**, and no investment occurs. If the total commitments exceed the **initial target**, the startup will receive an investment equal to the **total amount of commitments raised**, up to the second target. ### Interest & Repayment The loan carries a **simple interest rate of 0.01% per year**. The loan will **convert into equity** upon a conversion event (explained below) and is not repaid in cash. ### Conversion Events The loan converts into equity under specific events, including: - A **significant investment** from a third party. - A **change of control** in the company. - A **non-significant investment** from a third party (if the Investor approves). - The **final maturity date** of **three years from the investment** without any other conversion event. In the event of maturity, the conversion will happen at a **valuation equal to half of the valuation cap**. ### Valuation Cap & Discount The **valuation cap** for conversion triggered by significant investment, non-significant investment, and change of control is calculated as **10x the amount of the loan provided by the Investor under the CLA.** If the conversion triggered by significant investment, non-significant investment, or change of control **occurs within one year** of receiving the loan from Gluon Syndicate, the **conversion discount will be 20%**. If such conversion occurs after 12 months, the discount remains at **30%** off the company’s valuation at the next qualified investment round. ### Conditions for Loan Drawdown Before the loan is disbursed, the following conditions must be met: - The startup must raise commitments equal to or greater than the **initial target**. - The startup must successfully pass a due diligence process. - The startup must submit a business plan for approval by the Investor. - The Investor must complete a successful capital call. #### Due Diligence Costs The company will cover all costs associated with the Investor’s due diligence and legal process (up to a maximum of 2,500 EUR), payable from the investment proceeds. ### Supervisory Board A **Supervisory Board** of three members will oversee the company’s governance and key decisions (including reserved matters). The **Founders** appoint **one member**, while the **Investor** (Gluon Syndicate) appoints **two members**, with one serving as the **Chairperson (with no casting vote)**. The Supervisory Board makes decisions by a **two-thirds majority** and oversees important matters including: - Approving the **annual budget** and **business plan**. - Supervising **key financial transactions**, including investments and loans over certain amounts. - Hiring or dismissing **key employees**. - Approving significant changes in company structure, such as mergers or new business ventures. ### Warranties & Representations The Founders and the company must ensure that all given warranties are **true and not misleading**. If any warranties are found to be false, the Investor can claim damages. ### Investor Rights The Investor has the right to **approve or veto major decisions (reserved matters)**, such as changes to the company’s structure, financial commitments beyond budget, or raising new investments. The Supervisory Board also helps enforce these rights. ### Confidentiality Both parties must maintain the confidentiality of the terms and sensitive information related to the company. ### Legal & Compliance The agreement is governed by the laws of Slovakia. Any disputes will be resolved through negotiation or arbitration if necessary.