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Convertible Debenture Agreement
"I need a Convertible Debenture Agreement under Canadian law for a CAD 5 million investment in my technology company, with a 8% interest rate and conversion rights exercisable after January 2025 at a 20% discount to the next qualified financing round."
1. Parties: Identification of the issuing company and the debenture holder(s)
2. Background: Context of the debenture issuance and purpose of the financing
3. Definitions: Key terms used throughout the agreement, including financial definitions and conversion-related terms
4. Debenture Details: Principal amount, interest rate, maturity date, and payment terms
5. Interest Calculations: Method and frequency of interest calculations and payments
6. Conversion Rights: Terms and conditions for converting the debenture into equity, including conversion price and timing
7. Conversion Mechanics: Detailed process for exercising conversion rights and issuance of shares
8. Security and Ranking: Details of any security provided and ranking of the debenture relative to other debt
9. Representations and Warranties: Standard representations by both issuer and holder
10. Covenants: Ongoing obligations of the issuer, including financial covenants and reporting requirements
11. Events of Default: Circumstances constituting default and consequences
12. Remedies: Rights and remedies available to the holder upon default
13. Notices: Communication requirements and contact details
14. Amendment and Waiver: Procedures for modifying the agreement or waiving rights
15. General Provisions: Standard boilerplate provisions including governing law, assignment, and severability
1. Anti-dilution Provisions: Protection for debenture holders against dilution of conversion rights, used when there's significant risk of share capital reorganization
2. Registration Rights: Rights of holders to register converted shares for public trading, included for convertible debentures in public companies
3. Subordination Provisions: Required when the debenture needs to be subordinated to other debt
4. Collateral Trust Provisions: Used when security is held by a trustee for multiple debenture holders
5. Forced Conversion: Company's right to force conversion under specific circumstances, included when desired by issuer
6. Redemption Rights: Early repayment provisions, included when early redemption is permitted
7. Observer Rights: Rights of debenture holders to observe board meetings, included for significant investments
8. Participation Rights: Rights to participate in future financings, included for strategic investors
1. Schedule A - Form of Conversion Notice: Standard form for exercising conversion rights
2. Schedule B - Conversion Calculations: Detailed methodology for calculating number of shares upon conversion
3. Schedule C - Certificate of Incumbency: Verification of corporate officers and their authority
4. Schedule D - Security Documents: Forms of security agreements and registrations if secured
5. Schedule E - Shareholder Rights: Details of rights attached to shares issuable upon conversion
6. Appendix 1 - Corporate Authorizations: Board and shareholder resolutions authorizing the debenture
7. Appendix 2 - Disclosure Schedule: Exceptions to representations and warranties
8. Appendix 3 - Financial Covenants Calculations: Methodology for calculating financial covenants
Authors
Technology
Mining and Resources
Clean Energy
Life Sciences
Real Estate
Manufacturing
Cannabis
Financial Services
Healthcare
Infrastructure
Telecommunications
Agriculture
Legal
Finance
Treasury
Corporate Development
Executive Leadership
Board of Directors
Compliance
Risk Management
Investor Relations
Corporate Secretary Office
Chief Financial Officer
Chief Executive Officer
Corporate Secretary
General Counsel
Finance Director
Investment Manager
Corporate Lawyer
Securities Lawyer
Treasury Manager
Controller
Board Director
Investment Banker
Compliance Officer
Risk Manager
Corporate Development Manager
Capital Markets Director
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