The Convertible Bond Subscription Agreement is a crucial financing document used when companies seek to raise capital through debt that can be converted into equity. This agreement is particularly relevant for growth-stage companies in Canada looking to secure funding while deferring equity dilution. The document must comply with Canadian securities regulations, including both federal requirements and provincial securities laws where the offering takes place. It typically includes detailed provisions about the bond terms, conversion mechanics, investor rights, and company obligations. The agreement is commonly used in private placements and can be structured to take advantage of various prospectus exemptions under National Instrument 45-106. Companies often choose convertible bonds as a financing instrument when they need immediate capital but expect their equity value to increase, making the conversion feature attractive to investors.

1. Parties: Identification of the Bond Issuer and the Subscriber(s)

2. Background: Context of the bond issuance and general purpose of the agreement

3. Definitions and Interpretation: Key terms used throughout the agreement and interpretation rules

4. Subscription and Issue of Bonds: Terms of subscription, payment mechanics, and bond issuance procedures

5. Bond Terms: Principal amount, interest rate, maturity date, and other core bond terms

6. Conversion Rights: Conversion mechanics, timing, price/ratio, and procedures

7. Representations and Warranties of the Issuer: Issuer's confirmations regarding corporate status, authority, and compliance

8. Representations and Warranties of the Subscriber: Subscriber's confirmations regarding capacity, investment knowledge, and regulatory compliance

9. Covenants: Ongoing obligations of the Issuer and Subscriber

10. Events of Default: Circumstances constituting default and consequences

11. Notices: Communication procedures between parties

12. Confidentiality: Protection of confidential information

13. Assignment: Transfer and assignment rights and restrictions

14. General Provisions: Boilerplate clauses including governing law, amendments, and severability