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The Convertible Debenture Agreement is a sophisticated financing instrument used by German companies seeking growth capital while maintaining flexibility in their capital structure. Typically employed by scale-up companies and established businesses requiring significant investment, this agreement allows companies to secure funding initially as debt, with the potential for conversion to equity under specified conditions. The document must comply with German corporate and securities laws, particularly the Aktiengesetz (Stock Corporation Act) and Bürgerliches Gesetzbuch (Civil Code). It details the complete terms of the debenture issuance, including interest payments, conversion mechanisms, investor rights, and protection measures. This type of agreement is particularly valuable when companies want to defer equity dilution while providing investors with the security of debt and the upside potential of equity.

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 and Interpretation: Key terms used throughout the agreement, including financial definitions and technical terms

4. Issue and Status of the Debentures: Terms of issuance, face value, and ranking of the debentures

5. Interest: Interest rate, calculation method, payment dates, and default interest provisions

6. Conversion Rights: Terms and conditions under which the debentures may be converted into shares

7. Conversion Procedure: Detailed process for exercising conversion rights, including timing and documentation requirements

8. Adjustment of Conversion Terms: Mechanisms for adjusting conversion price/ratio in response to corporate actions

9. Representations and Warranties: Standard declarations by the issuer regarding legal status, authority, and financial condition

10. Covenants: Ongoing obligations of the issuer during the term of the debentures

11. Events of Default: Circumstances constituting default and consequences thereof

12. Meetings of Debenture Holders: Procedures for collective decision-making by debenture holders

13. Transfers and Transmission: Rules governing the transfer of debentures to other parties

14. Notices: Communication procedures between parties

15. Governing Law and Jurisdiction: Specification of German law application and jurisdiction