This convertible debenture template has 12 pages and is a MS Word file type listed under our finance & accounting documents.
Sample of our convertible debenture template:
CONVERTIBLE DEBENTURE This Convertible Debenture (the "Agreement") is effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the "Corporation"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [DEBENTURE HOLDER NAME] (the "Debenture Holder"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] [PERCENTAGE %] Convertible Debenture No. [IDENTIFYING NUMBER] PROMISE TO PAY [YOUR COMPANY NAME] (hereinafter called the "Corporation"), for value received, promises to pay upon presentation of this Debenture to the registered holder hereof or his / her registered assigns, at [FULL ADDRESS], [STATE/PROVINCE], or at any other address in [COUNTRY] indicated by the registered holder hereof: The principal sum of [AMOUNT] in lawful money of [COUNTRY] (the "Principal"); Interest thereon from the date of this Debenture, both before and after default, in like money, at the rate of [PERCENTAGE %] percent per month, calculated and compounded monthly and not in advance, and payable quarterly in advance by the delivery of [NUMBER] post-dated checks at the beginning of each fiscal year of the Corporation, with interest on all overdue amounts of Principal or interest, calculated and compounded daily at the same rate, from the date that the such amount of Principal or interest becomes due to the actual date of payment; A royalty equal to [PERCENTAGE %] percent of the Corporation's annual sales, calculated on the basis of its audited annual financial statements, and payable on the [NUMBER] day following the date of issuance of the said audited financial statements to the Corporation by its auditors, a copy of which shall be provided to the debenture holder. Such royalty shall be adjusted to take into account any partial conversion of the present Debenture pursuant to Article 3 hereof. Any amount not paid when due under this subsection 1.1.3 shall bear interest at the rate set out in subsection 1.1.2 hereof, which shall apply mutatis mutandis. The first royalty payment pursuant to subsection 1.1.3 shall become due and payable by the Corporation on [DATE] and shall be pro-rated to the number of days between [DATE] and [DATE]. The last such royalty payment shall become due and payable on [DATE], unless the present Debenture has been fully redeemed or converted pursuant to Article 2 or Article 3 hereof (as the case may be). The royalty shall continue to be due and payable so long as the Corporation has not fully reimbursed the Principal and all interest due and owing hereunder or the present Debenture has been fully converted. REDEMPTION OF THE DEBENTURE The Corporation may redeem the Debenture at any time after the [NUMBER] anniversary of the date of its issuance upon the following terms and conditions: The Corporation must advise the debenture holder in writing not less than [NUMBER] days prior to the date of redemption of its intention to exercise its redemption rights; The redemption may be effected only for an amount at least equal to the Principal plus a compounded annual rate of return of [PERCENTAGE] percent calculated over the said [NUMBER] year period, which compounded rate of return shall take into account all interest pursuant to subsection 1.1.2 and all royalties pursuant to subsection 1.1.3 then already paid hereunder; This Debenture may not be redeemed unless and until the Corporation shall have paid to the debenture holder in full all amounts of accrued interest and royalties due hereunder but unpaid, in addition to the redemption price contemplated in subsection 2.1.2. The debenture holder shall have the right to demand the redemption or conversion of the present Debenture at any time in the event of a default pursuant to Section 6 hereof, in which event the redemption price shall be equal to the sum of all accrued but unpaid interest and royalties hereunder plus an amount equal to the amount set out at subsection 2.1.2 hereof. CONVERSION OF THE DEBENTURE At any time during the period between the date of issuance hereof and the [NUMBER] anniversary of such date the debenture holder shall have the option to convert the Principal pursuant to the present Debenture or any part thereof (including all accrued interest and royalties due hereunder and any accrued and unpaid interest on the unpaid interest and/or royalties) into such number of [SPECIFY CLASS] common shares in the capital stock of the Corporation (or any class of shares issued as a result of the redesignation of reclassification of the [SPECIFY CLASS] common shares, hereinafter the "Shares") calculated as follows, by tendering at any time during normal business hours the Debenture together with a duly completed conversion notice in the form annexed hereto. The Conversion Price shall be calculated per share on a fully diluted basis and on the assumption that the fair market value of the Corporation, immediately prior to the exercise by the debenture holder of its conversion rights, is [AMOUNT]. For purposes of this Debenture, the phrase "fully diluted" or "on a fully diluted basis" shall mean, when determining the issued and outstanding Common Shares of the Corporation, the aggregate of all issued and outstanding Common Shares and the number of Common Shares that would be issued on the full exercise of all options, warrants and other rights of any kind and whether or not contingent, to acquire or be issued from treasury Common Shares. Once the debenture holder shall have complied with the provisions of Section 3.1, the number of Shares to be issued upon the exercise of the conversion right in respect of this Debenture shall be deemed to have been issued and the debenture holder shall be deemed to be registered holder of such Shares as of and from the Conversion Date. The Corporation shall immediately after the Conversion Date deliver to the debenture holder following the exercise of its conversion right a certificate for the Shares registered in the name of the debenture holder for the number of Shares to which the debenture holder is entitled. Should the debenture holder opt to convert the entire amount contemplated in Section 3.1, the delivery pursuant to subsection 3.4 of the certificate for the appropriate number of Shares registered in the debenture holder's name shall constitute the performance of all the obligations of the Corporation pursuant to this Debenture, such that all amounts due and payable pursuant to this Debenture shall be deemed to have been paid. Should the debenture holder opt to convert less than the entire amount contemplated in Section 3.1, then upon the conversion of the present Debenture, the debenture holder shall be entitled to receive a new debenture upon the terms and conditions herein contained for the balance of the Principal not converted. In the event that at any time prior to the conversion of this Debenture there shall occur: an amalgamation, consolidation or other reorganization of the Corporation, or any change in the rights, privileges, conditions and restrictions attaching to the Shares of the Corporation then issued and outstanding, (collectively, a "Change") while this Debenture remains issued and outstanding then in whole or in part then such Change shall be effected in such manner that the shareholders of the Corporation may receive shares or rights bearing the same privileges, characteristics and rights as the Shares and the debenture holder shall retain its right to convert the Debenture into shares or rights of the same nature and for the same amounts as if the debenture holder had exercised its conversion rights immediately prior to such Change becoming effective.
