The Convertible Debenture Agreement is a crucial document for companies seeking to raise capital through debt that can later convert to equity. It's commonly used in Australia by growth companies, scale-ups, and established businesses looking for flexible financing options. The agreement must comply with Australian securities laws, particularly the Corporations Act 2001 (Cth) and ASIC regulations. It details the terms of the debenture issuance, including principal amount, interest rate, maturity date, conversion rights, and security (if any). The document is particularly valuable when companies want to defer equity dilution while providing investors with the security of debt and potential equity upside. It requires careful consideration of both debt and equity aspects, corporate governance requirements, and regulatory compliance.
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1. Parties: Identifies the issuer (company) and the debenture holder(s)
2. Background: Explains the context of the agreement, including the company's intention to issue debentures and the investor's intention to subscribe
3. Definitions and Interpretation: Defines key terms and establishes interpretation principles
4. Issue of Debentures: Details of the debenture issuance, including amount, price, and settlement
5. Interest: Interest rate, calculation method, payment dates, and interest payment terms
6. Conversion Rights: Terms and conditions for converting debentures to shares, including conversion price and ratio
7. Conversion Procedure: Process and requirements for exercising conversion rights
8. Maturity and Redemption: Maturity date, redemption terms, and early redemption provisions
9. Company Covenants: Company's obligations and undertakings to protect debenture holders
10. Events of Default: Circumstances constituting default and consequences
11. Representations and Warranties: Standard representations by both parties
12. Transfer and Assignment: Rules regarding transfer of debentures
13. Notices: Communication requirements and procedures
14. General Provisions: Standard boilerplate clauses including governing law, jurisdiction, and amendments
1. Security: Required if the debentures are secured against company assets
2. Ranking: Specifies priority ranking if company has multiple classes of debt or security
3. Trustee Provisions: Required if a trustee structure is used for debenture holders
4. Anti-dilution Provisions: Protections against share dilution, particularly relevant for listed companies
5. Tag-Along Rights: Optional protection for debenture holders in case of company sale
6. Information Rights: Additional reporting requirements, often included for private company issuers
7. Meeting Provisions: Required if debenture holders have collective decision-making rights
1. Debenture Certificate Form: Template for the physical or electronic debenture certificate
2. Conversion Notice Form: Template notice for exercising conversion rights
3. Calculation Methods: Detailed methods for calculating interest, conversion ratios, and adjustments
4. Security Details: Details of any security granted (if applicable)
5. Company Information: Key company details, share capital structure, and existing securities
6. Warranties Schedule: Detailed warranties given by the company
7. Prescribed Events: List of events triggering mandatory conversion or redemption
Relevant legal definitions
Aggregate Principal Amount
ASIC
Business Day
Certificate
Company
Completion
Completion Date
Conditions Precedent
Conversion Date
Conversion Notice
Conversion Period
Conversion Price
Conversion Rate
Conversion Rights
Converted Shares
Corporations Act
Default Event
Default Interest Rate
Debenture
Debenture Holder
Encumbrance
Event of Default
Exercise Date
Financial Indebtedness
Financial Year
Government Agency
Initial Public Offering
Interest Payment Date
Interest Period
Interest Rate
Issue Date
Issuer
Maturity Date
Material Adverse Effect
Ordinary Shares
Permitted Security Interest
Principal Amount
Redemption Amount
Redemption Date
Redemption Notice
Register
Related Body Corporate
Relevant Interest
Security
Security Interest
Shareholder
Share Capital
Subscription Amount
Subsidiary
Tax
Transaction Documents
Trust Deed
Trustee
Warranties
ASIC
Business Day
Certificate
Company
Completion
Completion Date
Conditions Precedent
Conversion Date
Conversion Notice
Conversion Period
Conversion Price
Conversion Rate
Conversion Rights
Converted Shares
Corporations Act
Default Event
Default Interest Rate
Debenture
Debenture Holder
Encumbrance
Event of Default
Exercise Date
Financial Indebtedness
Financial Year
Government Agency
Initial Public Offering
Interest Payment Date
Interest Period
Interest Rate
Issue Date
Issuer
Maturity Date
Material Adverse Effect
Ordinary Shares
Permitted Security Interest
Principal Amount
Redemption Amount
Redemption Date
Redemption Notice
Register
Related Body Corporate
Relevant Interest
Security
Security Interest
Shareholder
Share Capital
Subscription Amount
Subsidiary
Tax
Transaction Documents
Trust Deed
Trustee
Warranties
Clauses
Issue of Debentures
Subscription
Interest
Repayment
Conversion Rights
Security
Representations and Warranties
Company Covenants
Negative Pledge
Events of Default
Enforcement
Assignment and Transfer
Confidentiality
Anti-dilution
Share Rights
Information Rights
Security Enforcement
Indemnification
Notices
Amendments
Governing Law
Dispute Resolution
Force Majeure
Severability
Further Assurance
Costs and Expenses
Waiver
Entire Agreement
Counterparts
Time of Essence
Authority and Capacity
Registration Rights
Tag-Along Rights
Drag-Along Rights
Change of Control
Ranking of Securities
Subscription
Interest
Repayment
Conversion Rights
Security
Representations and Warranties
Company Covenants
Negative Pledge
Events of Default
Enforcement
Assignment and Transfer
Confidentiality
Anti-dilution
Share Rights
Information Rights
Security Enforcement
Indemnification
Notices
Amendments
Governing Law
Dispute Resolution
Force Majeure
Severability
Further Assurance
Costs and Expenses
Waiver
Entire Agreement
Counterparts
Time of Essence
Authority and Capacity
Registration Rights
Tag-Along Rights
Drag-Along Rights
Change of Control
Ranking of Securities
Relevant Industries
Financial Services
Technology
Real Estate
Manufacturing
Mining
Healthcare
Renewable Energy
Infrastructure
Start-ups
Scale-ups
Private Equity
Venture Capital
Professional Services
Telecommunications
Relevant Teams
Legal
Finance
Corporate Finance
Treasury
Compliance
Risk Management
Corporate Governance
Board Secretariat
Investment
Capital Markets
Relevant Roles
Chief Financial Officer
Finance Director
Corporate Lawyer
Investment Manager
Company Secretary
Legal Counsel
Compliance Officer
Investment Director
Treasury Manager
Corporate Finance Manager
Chief Executive Officer
Board Director
Financial Controller
Risk Manager
Investment Banker
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