I think u r missing something. It is worded to trick u. Read the entire, very long, agreement.
It converts to common at the lower of 2.50 or 75% of the lowest Vwap... Then see "Alternative Conversion Price" which is 60% of the lowest traded price over a 30 day period (ie. 60% of the 30 day low)!!!!
So yea it's just toxic debt. And if by some miracle the stock skyrockets the funders get to lock in the low price of 2.50... Pretty sweet deal if u ask me!