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The Convertible Bond Agreement is a crucial financing instrument used in Indonesian business transactions when companies seek to raise capital while offering investors the flexibility to convert their debt investment into equity. This document is particularly relevant for growing companies seeking alternative financing options or companies preparing for future equity events. The agreement must comply with Indonesian regulatory requirements, including Law No. 40 of 2007 on Limited Liability Companies and OJK regulations governing securities. It typically includes detailed provisions on conversion mechanics, pricing, interest payments, investor protections, and company obligations. The document is especially important in the context of startup funding, corporate restructuring, or when companies wish to defer equity dilution while securing immediate financing.

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

2. Background: Context of the bond issuance, company status, and purpose of the financing

3. Definitions: Definitions of key terms used throughout the agreement

4. Bond Issuance: Details of the bonds being issued, including principal amount, issue date, and maturity

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

6. Conversion Rights: Terms and conditions for converting bonds into shares, including conversion price and ratio

7. Conversion Process: Detailed procedure for exercising conversion rights and timing requirements

8. Representations and Warranties: Statements of fact and assurances from both issuer and bondholders

9. Issuer Covenants: Positive and negative obligations of the issuer during the bond term

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

11. Security: Details of any security or guarantees provided for the bonds

12. Transferability: Conditions and restrictions on transfer of the bonds

13. Notices: Communication procedures between parties

14. Governing Law and Jurisdiction: Specification of Indonesian law as governing law and jurisdiction for disputes

15. General Provisions: Standard boilerplate clauses including amendments, waivers, and severability