The Convertible Bond Agreement is a key financing document used when companies seek to raise capital through debt that can later be converted into equity. This instrument is particularly valuable for growing companies that need funding but want to defer equity dilution. The agreement, governed by Australian law, must comply with the Corporations Act 2001 (Cth) and related regulations. It details the complete terms of the bond issuance, including principal amount, interest rate, maturity date, conversion price and mechanism, events triggering conversion, and protection for both issuer and bondholders. This document is commonly used in growth financing, acquisition financing, or restructuring scenarios, offering investors the security of debt with potential equity upside.
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1. Parties: Identifies the issuing company and the initial bondholder(s) or trustee
2. Background: Sets out the context of the bond issuance and the company's authority to issue the bonds
3. Definitions and Interpretation: Defines key terms and interpretation rules for the agreement
4. Issue of Bonds: Details the bond issuance, including amount, issue price, and interest rate
5. Status and Ranking: Establishes the ranking of the bonds in relation to other company debt
6. Interest: Specifies interest calculation, payment dates, and interest-related conditions
7. Conversion Rights: Details the conversion mechanism, including timing, price, and adjustment provisions
8. Redemption and Purchase: Covers maturity redemption, early redemption rights, and company purchase rights
9. Payments: Sets out payment mechanics and procedures
10. Events of Default: Lists events triggering default and consequences
11. Undertakings: Details company commitments and ongoing obligations
12. Representations and Warranties: Contains issuer's representations and warranties
13. Bondholder Rights and Obligations: Specifies rights and duties of bondholders
14. Notices: Sets out requirements for valid notices under the agreement
15. General Provisions: Contains standard boilerplate provisions
16. Governing Law and Jurisdiction: Specifies applicable law and dispute resolution forum
1. Security: Include when bonds are secured against company assets
2. Trustee Provisions: Required when a trustee structure is used for the bond issuance
3. Tax Provisions: Detailed tax clauses when specific tax arrangements apply
4. Registration and Transfer: Detailed transfer provisions when bonds are transferable
5. Meetings of Bondholders: Include when bondholders can make collective decisions
6. Subordination: Required when bonds are subordinated to other debt
7. Anti-Dilution Provisions: Detailed provisions protecting conversion rights in corporate actions
1. Bond Certificate Form: Template for physical bond certificates if issued
2. Conversion Notice: Form for exercising conversion rights
3. Interest Calculation Examples: Examples showing interest calculations
4. Conversion Price Adjustments: Detailed formulae for conversion price adjustments
5. Company Information: Key company details and capital structure
6. Transfer Form: Template for transferring bonds if transferable
7. Security Documents: If secured, details of security arrangements
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