[{"data":1,"prerenderedAt":525},["ShallowReactive",2],{"document-convertible-debenture-D464":3},{"document":4,"label":23,"preview":11,"thumb":24,"thumb600":25,"description":5,"descriptionCustom":6,"apiDescription":5,"pages":8,"extension":10,"parents":26,"breadcrumb":30,"related":36,"customDescModule":178,"customdescription":6,"mdFm":179,"mdProseHtml":524},{"description":5,"descriptionCustom":6,"label":7,"pages":8,"size":9,"extension":10,"preview":11,"thumb":12,"svgFrame":13,"seoMetadata":14,"parents":15,"keywords":22},"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. ",null,"Convertible Debenture","12",103,"doc","https://templates.business-in-a-box.com/imgs/1000px/convertible-debenture-D464.png","https://templates.business-in-a-box.com/imgs/250px/464.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#464.xml",{"title":6,"description":6},[16,19],{"label":17,"url":18},"Finance & Accounting","/templates/finance-accounting/",{"label":20,"url":21},"Raising Capital","/templates/raising-capital/","convertible debenture","Convertible Debenture Template","https://templates.business-in-a-box.com/imgs/400px/464.png","https://templates.business-in-a-box.com/imgs/600px/464.png",[27,16,19],{"label":28,"url":29},"Templates","/templates/",[31,32,33],{"label":28,"url":29},{"label":17,"url":18},{"label":34,"url":35},"Business Financing & Loans","/templates/business-financing-and-loans/",[37,41,45,49,53,57,61,66,70,74,78,82,86,106,122,136,150,164],{"label":38,"url":39,"thumb":40,"extension":10},"Participating and Convertible Debenture","/template/participating-and-convertible-debenture-D5167","https://templates.business-in-a-box.com/imgs/250px/5167.png",{"label":42,"url":43,"thumb":44,"extension":10},"Convertible Note Agreement","/template/convertible-note-agreement-D870","https://templates.business-in-a-box.com/imgs/250px/870.png",{"label":46,"url":47,"thumb":48,"extension":10},"Collateral Debenture","/template/collateral-debenture-D463","https://templates.business-in-a-box.com/imgs/250px/463.png",{"label":50,"url":51,"thumb":52,"extension":10},"Debenture  Pledge Agreement","/template/debenture-pledge-agreement-D467","https://templates.business-in-a-box.com/imgs/250px/467.png",{"label":54,"url":55,"thumb":56,"extension":10},"Debenture Short Form","/template/debenture-short-form-D468","https://templates.business-in-a-box.com/imgs/250px/468.png",{"label":58,"url":59,"thumb":60,"extension":10},"Pledge Agreement Debenture","/template/pledge-agreement-debenture-D904","https://templates.business-in-a-box.com/imgs/250px/904.png",{"label":62,"url":63,"thumb":64,"extension":65},"Capital Budgeting","/template/capital-budgeting-D12616","https://templates.business-in-a-box.com/imgs/250px/12616.png","xls",{"label":67,"url":68,"thumb":69,"extension":10},"Business Financing Guide","/template/business-financing-guide-D13149","https://templates.business-in-a-box.com/imgs/250px/13149.png",{"label":71,"url":72,"thumb":73,"extension":10},"Financing Agreement Short","/template/financing-agreement-short-D470","https://templates.business-in-a-box.com/imgs/250px/470.png",{"label":75,"url":76,"thumb":77,"extension":10},"Funding Request Form","/template/funding-request-form-D13696","https://templates.business-in-a-box.com/imgs/250px/13696.png",{"label":79,"url":80,"thumb":81,"extension":10},"Funding Request Letter","/template/funding-request-letter-D13697","https://templates.business-in-a-box.com/imgs/250px/13697.png",{"label":83,"url":84,"thumb":85,"extension":10},"Letter of Request for an Equity Investment","/template/letter-of-request-for-an-equity-investment-D471","https://templates.business-in-a-box.com/imgs/250px/471.png",{"description":87,"descriptionCustom":6,"label":88,"pages":89,"size":90,"extension":10,"preview":91,"thumb":92,"svgFrame":93,"seoMetadata":94,"parents":95,"keywords":104,"url":105},"PROMISSORY NOTE This Promissory Note (the \"Note\") is made and effective the [DATE], BETWEEN: [LENDER NAME] (the \"Lender\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] (the \"Borrower\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] TERMS FOR VALUE RECEIVED, the Borrower promises to pay to the order of Lender, at its principal office located at [ADDRESS], or at such other place that is designated in writing by the holder hereof, the principal sum of [AMOUNT], together with all charges and interest herein provided, payable at the rate and in the manner hereinafter set forth: Borrower shall make monthly payments of principal and interest at the rate of [%] per annum based upon an amortization of [NUMBER] months. Monthly payments shall be due on or before the first day of each month with the first payment being due on or before [DATE]. If not sooner paid, all amounts due under this Note, including principal, interest and other charges shall be due and payable in full on or before the first day of [MONTH], [YEAR] (the \"Maturity Date\"). Time is of the essence of the payment obligations hereunder and each monthly payment shall be due and payable on or before the first day of each month. This Note is and will be secured by a certain first priority security interest in all of the tangible and intangible property of the Borrower, to be recorded in all applicable governmental offices. The parties shall execute a separate security agreement, in form and substance acceptable to the Lender in all respects. Borrower agrees to execute any such security agreements presented by the Lender or other documents required by the Lender in order to perfect its security interest in the above described property. Said Security Agreement and any other instruments and documents executed in connection with or given as security for this Note shall hereinafter be referred to collectively as the \"Loan Documents.\" All of the terms, covenants, Conditions, representations and warranties contained in the Loan Documents are hereby made part of this Note to the same extent and with the same force and effect as if fully set forth herein. If all or any portion of any payment due hereunder is not received by the Lender within [NUMBER] calendar days after the date when such payment is due, Borrower shall pay a late charge equal to [%] of such payment, such late charge to be immediately due and payable without demand by Lender. Borrower shall have the right to prepay all (but not a portion) of the indebtedness evidenced by this Note at any time, by paying the Lender an amount equal to the sum of (I) the principal balance then outstanding, (ii) all interest accrued to the date of such prepayment, (iii) all interest calculated through the Maturity Date, and (iv) any late charge or charges then due and owing. If any payment under this Note is not paid in full by the [DAY] of any month during the term hereof or if the entire amount due as represented by this Note is not paid in full on or before the Maturity Date, or should default be made in the performance or observation of any of the terms, covenants, or conditions contained in the Loan Documents, or if any representation or warranty contained in the Loan Documents is breached or is or becomes untrue, this Note shall be in default, and the entire principal amount outstanding hereunder, accrued interest thereon, all late charges, if any, and any and all other charges due hereunder, shall, at Lender's option, immediately become due and payable, without further notice, the giving of such notice being expressly waived by the Borrower","Promissory Note","3",39,"https://templates.business-in-a-box.com/imgs/1000px/promissory-note-D434.png","https://templates.business-in-a-box.com/imgs/250px/434.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#434.xml",{"title":6,"description":6},[96,98,101],{"label":17,"url":97},"finance-accounting",{"label":99,"url":100},"Business Loans","business-loan",{"label":102,"url":103},"Promissory Notes","promisory-note","promissory note","/template/promissory-note-D434",{"description":107,"descriptionCustom":6,"label":108,"pages":109,"size":110,"extension":10,"preview":111,"thumb":112,"svgFrame":113,"seoMetadata":114,"parents":116,"keywords":115,"url":121},"SHAREHOLDER LOAN AGREEMENT This Shareholder Loan Agreement (the \"Agreement\") is effective as of [DATE], BETWEEN: [SHAREHOLDER NAME] (the \"Shareholder\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its head office located at: [COMPLETE ADDRESS] AND: [COMPANY NAME] (the \"Borrower\"), a company organized and existing under the laws of the [State/Province] of [STATE/PROVINCE] with its head office located at: [COMPLETE ADDRESS] WHEREAS, the Shareholder desires to loan funds to the Borrower for the Borrower's operations; WHEREAS, the Parties wish to memorialize the terms and conditions governing the Loan; WHEREAS, for the purposes of this Agreement, the Shareholder is willing (i) to be deemed to have accepted the Borrower's assertion that no Existing Default has occurred, (ii) to be deemed to have withdrawn the Default Notice, retroactively, as of [SPECIFY DATE], and (iii) to accept the Borrower's proposal so to restructure the Loan and other Secured Obligations, all on the terms and conditions provided herein; WHEREAS, both the Parties affirm to understand all of the provisions contained in this Agreement, and in case either Party requires clarification as to one or more of the provisions contained herein, either Party has requested clarification or otherwise sought guidance. NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS: LOAN AND INTEREST RATE The Shareholder shall loan a total of [SPECIFY THE AMOUNT] to the Borrower to finance the operations of the Borrower's business (the \"Loan\"). The Loan shall bear interest at the rate of [SPECIFY RATE] % per annum, compounded annually. The Parties shall calculate the interest based on a full year (365 days) consisting of twelve months. Interest will accrue until repayment of the Loan. The amount owed to the Shareholder shall be calculated as the Loan plus accrued interest thereon (the \"Loan Amount\"). If the Borrower fails to pay any sum payable under this Agreement when due, the Borrower shall from time to time on demand pay interest on such sum from and including the due date to the date of actual payment (after as well as before judgment) at a per annum interest rate equal to [SPECIFY RATE] % above the interest rate. REPAYMENT The Loan Amount shall be due and payable on [SPECIFY DATE] (the \"Maturity Date\"), provided that the Borrower has enough cash flow to repay the Loan Amount without adversely affecting its then-current business activities. In the event the repayment of the Loan would adversely affect the then-current business activities of the Borrower, the Maturity Date shall be postponed until the Borrower has enough cash flow to repay the Loan Amount without adversely affecting its then-current business activities. At any time, the Borrower, with one week's prior written notice, may repay the entire Loan Amount to the Shareholder without penalty. OBLIGATIONS OF THE BORROWER The Borrower hereby agrees neither to invest in any new business in any other country, nor shall it pay dividends to any other shareholders of the Company unless and until the entire Loan Amount, along with the interest, has been repaid by it to the Shareholder. DEFAULT If any of the following events of default occur, this Agreement and any other obligations of the Borrower to the Shareholder shall become due immediately, without demand or notice. Failure of the Borrower to pay the principal and any accrued interest when due. The filing of bankruptcy proceedings involving the Borrower as a debtor. The application for the appointment of a receiver for the Borrower. The making of a general assignment for the benefit of the Borrower's creditors. The insolvency of the Borrower. A misrepresentation by the Borrower to the Shareholder for the purpose of obtaining or extending credit.","Shareholder Loan Agreement","4",513,"https://templates.business-in-a-box.com/imgs/1000px/shareholder-loan-agreement-D13239.png","https://templates.business-in-a-box.com/imgs/250px/13239.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#13239.xml",{"title":115,"description":6},"shareholder loan agreement",[117,120],{"label":118,"url":119},"Legal Agreements","business-legal-agreements",{"label":118,"url":119},"/template/shareholder-loan-agreement-D13239",{"description":123,"descriptionCustom":6,"label":124,"pages":89,"size":110,"extension":10,"preview":125,"thumb":126,"svgFrame":127,"seoMetadata":128,"parents":130,"keywords":129,"url":135},"INVESTMENT AGREEMENT This Investment Agreement (the Agreement) is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] a Company (the \"COMPANY\") organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] AND: [YOUR NAME] the principal members of the Company (the \"Company Principals\") collectively referred to in this Agreement as the \"Company Parties.\" and existing under the laws of [STATE/PROVINCE], located at: [COMPLETE ADDRESS] AND: [YOUR COMPANY NAME] a Company (the \"COMPANY\") organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS the Company was formed for the purpose of further developing, commercializing, and operating the business concept identified and includes any subsequent iteration of the business concept developed by the Company Parties (the \"Business\"); WHEREAS the Investor is desirous of making an investment (the \"Investment\") in the amount of [TOTAL INVESTMENT AMOUNT] into the Company to facilitate such Business. NOW THEREFORE, in consideration of the mutual covenants and agreements herein contains, the parties hereto intending to be legally bound agree as follows: THE INVESTMENT 1.1 The Investor will make the Investment in the Company in consideration for the rights and privileges set forth in this Agreement. FUTURE ISSUANCES OF SECURITIES 2.1 From and after the date of this Agreement, the parties agree to take such further action and to execute, acknowledge and deliver all such further documents as are reasonably requested by the other party for carrying out the purposes of this Agreement. 2.2 If at any time in the future, the Company proposes to sell and issue any debt or equity securities, or any other securities or instruments entitling the holder thereof to receive any profits, capital, assets or property of the Company (collectively, \"Securities\"), in a single transaction or series of related transactions that results in gross proceeds to the Company of at least [STATE AMOUNT] (a \"Qualified Financing\"), the Company shall deliver written notice to the Investor stating (i) its bona fide intention to offer such Securities, (ii) the amount and type of Securities to be offered and (iii) the price and terms upon which it proposes to offer such securities. Upon receipt of such notice, the Investor shall be entitled to exercise any of the rights specified in sections 3, 4 and 5. RIGHT OF FIRST OFFER 3.1 The Investor shall have the first right to purchase all the Securities to be offered and sold in such Qualified Financing at the price and on the same terms and conditions specified in the notice. RIGHT TO PARTICIPATE 4","Investment Agreement","https://templates.business-in-a-box.com/imgs/1000px/investment-agreement-D12831.png","https://templates.business-in-a-box.com/imgs/250px/12831.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12831.xml",{"title":129,"description":6},"investment agreement",[131,132],{"label":17,"url":97},{"label":133,"url":134},"Shareholders & Investors","shareholders-investors","/template/investment-agreement-D12831",{"description":137,"descriptionCustom":6,"label":138,"pages":89,"size":139,"extension":10,"preview":140,"thumb":141,"svgFrame":142,"seoMetadata":143,"parents":144,"keywords":148,"url":149},"TERM SHEET Issue: [Venture Capital FIRM] (\"VC\") and/or any member of its corporate group (\"the VC Group\") will purchase up to [AMOUNT] Series A Convertible Preferred Stock (\"Series A\") newly issued by [YOUR COMPANY NAME] (the \"Company\") at a price per share of [PRICE] (the \"Purchase Price\"). In addition, other investors shall purchase at least [AMOUNT] but not more than [AMOUNT] of newly issued Series A at the Purchase Price. The shares of Series A will be convertible at any time at the option of the holder into common shares of the Company (\"Common Stock\") on a one-for-one basis, adjusted for future share splits. The Purchase Price equates to a pre-money valuation of [VALUATION]. The calculation is based on [NUMBER] fully diluted shares of Common Stock. If the number of shares issued, or stock awards/options authorized increases before the closing the price per share for Series A Convertible Preferred Stock shall be reduced so that the pre-money valuation is unchanged. The Series A Convertible Preferred Stock shall be referred to herein as the \"Preferred Stock.\" Dividend: The Preferred Stock is entitled to an annual [AMOUNT] per share dividend, payable when and if declared by the Board of Directors, but prior to any payment on Common Stock; dividends are not cumulative. Liquidation Preference: The Series A will have a liquidation preference so that proceeds on a merger, sale or liquidation (including non-cumulative dividends) will first be paid to the Series A and will include a [%] per annum compounding guaranteed return calculated on the total amount invested. Upon completion of an additional round of funding of at least [AMOUNT] the compounding guaranteed return feature will expire. The liquidation preference will cease to operate if the proceeds due to Series A, on a merger, sale or liquidation on an as-converted basis, exceed the proceeds that would be due under the liquidation preference. Use of Proceeds: The funds raised by Series A will be used principally for general working capital purposes. Voting Rights: The holders of the Series A shall have the right to vote with the Common Stock on an as-if-converted basis. Redemption: If not previously converted, the Series A is to be redeemed in three equal successive annual installments beginning [DATE]. Redemption will be at the purchase price plus a [%] per annum cumulative guaranteed return. Pre-emptive Rights: Holders of the Preferred Stock will be granted rights to participate in future equity financings of the Company based upon their pro-rata, as-if-converted, ownership of the Company. Automatic Conversion: The Preferred Stock shall be automatically converted into Common Stock at the then applicable conversion rate (1:1 assuming no share splits) in the event of an underwritten public offering of shares of the Company at a total offering of not less than [AMOUNT] and at a per share public offering price of not less than three times the Series A purchase price per share, adjusted for splits. Anti-Dilution: Series A shall have weighted average anti-dilution, based on a weighted average formula to be agreed, for all securities purchased as part of this transaction (excluding shares, options and warrants issued for management incentive and small issues for strategic purposes of under [NUMBER] shares). Management Options: Simultaneously with this transaction, one million new shares shall expand the Company's management incentive stock option pool - bringing the total number of shares issued and stock incentives (awards and options) authorized to [NUMBER OF SHARES]. Rights of First Offer; Tag-Along: The Company and the Investors will have a right of first refusal with respect to any employee's shares proposed to be resold. Alternatively, the Investors will have the right to participate in the sale of any such shares to a third party (co-sale rights), which rights will terminate upon a public offering. Information Rights: Monthly actual vs. plan and prior year. Annual budget [NUMBER] days before beginning of fiscal year","Term Sheet",42,"https://templates.business-in-a-box.com/imgs/1000px/term-sheet-D473.png","https://templates.business-in-a-box.com/imgs/250px/473.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#473.xml",{"title":6,"description":6},[145,146],{"label":17,"url":97},{"label":20,"url":147},"raising-capital","term sheet","/template/term-sheet-D473",{"description":151,"descriptionCustom":6,"label":152,"pages":153,"size":110,"extension":10,"preview":154,"thumb":155,"svgFrame":156,"seoMetadata":157,"parents":159,"keywords":162,"url":163},"WHOLESALE AGREEMENT This Wholesale Agreement (\"Agreement\") is made and effective this [Date], BETWEEN: [COMPANY NAME] (the \"Customer\"), a corporation organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [COMPANY NAME] (the \"Seller\"), a corporation organized and existing under the laws of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] All sales made by [COMPANY NAME] (\"Seller\") to you (\"Customer\") are governed by these Terms and Conditions of Sale unless otherwise indicated by [COMPANY NAME] in writing. Please read these Terms and Conditions thoroughly before applying for wholesale pricing The Seller reserves the right to amend or modify these Terms and Conditions of sale at any time at its sole discretion. Seller shall not accept Customer's purchase orders unless and until Customer consents to these Terms and Conditions of Sale and completes the Wholesale Application. These Terms and Conditions of Sale as set forth in this document will govern all transactions between Customer and Seller. These Terms and Conditions of Sale also apply to all future transactions unless modified in writing signed by Seller and Customer. Distribution grant Seller hereby grants to Customer and Customer hereby accepts from Seller the non-exclusive right to distribute [COMPANY NAME] products subject to all terms and conditions set forth in this Agreement. Customer shall not, directly or indirectly, including through any agents, distribute, market, sell or solicit orders for any [COMPANY NAME] products on any of the third-party selling platform, including, but not limited to [SPECIFY]. Customer further covenants and agrees not to distribute, market or sell [COMPANY NAME] products to any person if the Customer knows or has any reason to believe that such [COMPANY NAME] product will be resold by such person, directly or indirectly, on any of the [SPECIFY] selling platform, including, but not limited to [SPECIFY]. If Customer becomes aware that any person to whom Customer supplies any [COMPANY NAME] product is marketing or selling, or is planning to market or sell, the [COMPANY NAME] product on any of the [SPECIFY] selling platform, including, but not limited to [SPECIFY], Customer shall immediately notify Seller and shall cease forthwith to supply such person with [COMPANY NAME] product. Method of ordering Once the Customer's account has been established and a Wholesale Agreement has been signed, [COMPANY NAME] will configure the Customer's account so that the customer has access to [COMPANY NAME] wholesale prices through the online store. The Customer must place the wholesale order online via our website and the wholesale account will only provide access to wholesale products. Acceptance of orders All orders placed by Customer are subject to Seller's acceptance. Seller hereby reserves the right to reject any order, in whole, or in part, for any reason whatsoever. Minimum original order The minimum original order is $ [SPECIFY] and must be paid to the Seller by the Customer by [SPECIFY TYPE OF PAYMENT METHOD]. The seller accepts [VISA/MASTERCARD/OTHER] as acceptable credit cards for initial orders. For credit card purchases, 100% of purchase price will be billed at the time of shipment. Order will generally be shipped within [SPECIFY] days of placing the order. If more lead time is needed, Customer will be notified within [SPECIFY] days. Minimum re-order The minimum re-order amount is $ [SPECIFY]. Terms may be extended by the Seller to the Customer for reorders as outlined below. For credit card purchases, 100% of the purchase price will be billed at the time the goods are ready to be shipped. Payments [COMPANY NAME] accept any of the following methods of payment for wholesale accounts: Credit card (Visa, MC, etc.) Bank wire transfer Paypal Certified cashier's check from major banking institution COD payments are not accepted. All wholesale account payments will be subject to a \"waiting\" period to verify clearance of the funds before any shipment will be made. After the funds have been properly verified as released and deposited to Seller's accounts, shipment of requested products will be sent. All orders must be paid in full at time of purchase. Seller will not ship any order that is unpaid Shipping Orders will be shipped by the Seller via UPS, DHL, FedEx or another company. Alternatively, orders may be shipped by any method arranged for by the Customer. [COMPANY NAME] will try to accommodate all rush orders. Most small orders, up to [SPECIFY] units, are shipped within [SPECIFY] business days after order and payment are received. Special orders and backorders will require additional time and can be estimated at the customer's request on a case by case basis. Actual shipping time is contingent upon availability of goods and credit verification. Seller will not be responsible for shipping delays caused by a carrier. Notice of defects The Customer is responsible for inspecting the goods upon receipt. Any goods with visible damage must be reported to the Seller, upon receipt of the goods, in the customer's warehouse. The Customer shall notify the Seller in writing, within 5 days of receipt of the goods by the Customer, of any claim for damage resulting from any defect in the goods discovered by the Customer, including, without limitation, claims relating to missing parts, quality, or specifications. The Seller is not responsible for missing parts when deliveries are intended for a third party other than the Customer. Acceptance of late or defective merchandise Failure by the Customer to provide written notice of a claim, as set out in these Terms and Conditions of Sale, constitutes a waiver of any future claim that the Customer may have for damages resulting from such defects, including late delivery. Changes to pricing & products Prices are subject to change without notice. All goods will be shipped at the prices in effect at the time of shipping. The Seller reserves the right, at its sole discretion, to change packaging and any included documentation. All orders are subject to availability. Confidentiality Customer shall not disclose and shall otherwise maintain the confidentiality of all pricing information, terms, and advance product information supplied by the seller","Wholesale Agreement","6","https://templates.business-in-a-box.com/imgs/1000px/wholesale-agreement-D12707.png","https://templates.business-in-a-box.com/imgs/250px/12707.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12707.xml",{"title":158,"description":6},"wholesale agreement",[160,161],{"label":118,"url":119},{"label":118,"url":119},"shareholders agreement","/template/shareholders-agreement-D12707",{"description":165,"descriptionCustom":6,"label":166,"pages":89,"size":110,"extension":10,"preview":167,"thumb":168,"svgFrame":169,"seoMetadata":170,"parents":172,"keywords":171,"url":177},"NON-DISCLOSURE AGREEMENT (NDA) This Non-Disclosure Agreement (the \"Agreement\") is made and effective [DATE], BETWEEN: [YOUR COMPANY NAME] (the \"Disclosing Party\"), a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [YOUR COMPLETE ADDRESS] AND: [RECEIVING PARTY NAME] (the \"Receiving Party\"), an individual with his main address located at OR a corporation organized and existing under the laws of the [State/Province] of [STATE/PROVINCE], with its head office located at: [COMPLETE ADDRESS] WHEREAS, Receiving Party has been or will be engaged in the performance of work on [DESCRIBE]; and in connection therewith will be given access to certain confidential and proprietary information; and WHEREAS, Receiving Party and Disclosing Party wish to evidence by this Agreement the manner in which said confidential and proprietary material will be treated. NOW, THEREFORE, it is agreed as follows: NON-DISCLOSURE OF CONFIDENTIAL INFORMATION Both Parties understand and agree that each Party may have access to the confidential information of the other party. For the purposes of this Agreement, \"Confidential Information\" means proprietary and confidential information about the Disclosing Party's (or it's suppliers') business or activities. Such information includes all business, financial, technical, and other information marked or designated by such Party as \"confidential\" or \"proprietary.\" Confidential Information also includes information which, by the nature of the circumstances surrounding the disclosure, ought in good faith to be treated as confidential. For the purposes of this Agreement, Confidential Information does not include: Information that is currently in the public domain or that enters the public domain after the signing of this Agreement. Information a Party lawfully receives from a third Party without restriction on disclosure and without breach of a non-disclosure obligation. Information that the Receiving Party knew prior to receiving any Confidential Information from the Disclosing Party. Information that the Receiving Party independently develops without reliance on any Confidential Information from the Disclosing Party. Each Party agrees that it will not disclose to any third Party or use any Confidential Information disclosed to it by the other Party except when expressly permitted in writing by the other Party. Each Party also agrees that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control. TERM The term of this Agreement is [number] of [years/months] from the date of execution by both Parties. TITLE The Receiving Party agrees that all Confidential Information furnished by the Disclosing Party shall remain the sole property of the Disclosing Party. DISCLAIMER","Non Disclosure Agreement Nda","https://templates.business-in-a-box.com/imgs/1000px/non-disclosure-agreement-nda-D12692.png","https://templates.business-in-a-box.com/imgs/250px/12692.png","https://templates.business-in-a-box.com/svgs/docviewerWebApp1.html?v6#12692.xml",{"title":171,"description":6},"non disclosure agreement nda",[173,174],{"label":118,"url":119},{"label":175,"url":176},"Confidentiality Agreements","confidentiality-agreement","/template/non-disclosure-agreement-nda-D12692",false,{"seo":180,"reviewer":193,"legal_disclaimer":197,"quick_facts":198,"at_a_glance":200,"personas":204,"variants":229,"glossary":255,"clauses":292,"how_to_fill":343,"common_mistakes":384,"faqs":409,"industries":437,"comparisons":454,"diy_vs_lawyer":468,"jurisdictions":481,"related_template_ids_curated":502,"schema":511,"classification":512},{"meta_title":181,"meta_description":182,"primary_keyword":183,"secondary_keywords":184},"Convertible Debenture Template (Free Word)","Free convertible debenture template for debt-to-equity financing. Covers principal, interest, conversion mechanics, triggers, and default. Free Word and PDF download.","convertible debenture template",[185,186,187,188,189,190,191,192],"convertible debenture agreement","convertible debt template","convertible note template","convertible debenture template word","convertible debenture free download","debt to equity conversion agreement","startup convertible debt agreement","convertible debenture sample",{"name":194,"credential":195,"reviewed_date":196},"Bruno Goulet","CEO, Business in a Box","2026-05-02",true,{"difficulty":199,"legal_review_recommended":197,"signature_required":197,"notarization_required":178},"advanced",{"what_it_is":201,"when_you_need_it":202,"whats_inside":203},"A Convertible Debenture is a legally binding debt instrument issued by a company to a lender that gives the lender the right — or in some cases the obligation — to convert the outstanding principal and accrued interest into equity shares at a defined conversion price or formula. This free Word download covers all core terms including principal amount, interest rate, maturity date, conversion mechanics, anti-dilution protection, and events of default, and can be edited online and exported as PDF.\n","Use it when a company is raising bridge capital ahead of a priced equity round, when an investor wants downside protection as a creditor but upside participation as a shareholder, or when both parties want to defer valuation negotiations until a qualifying financing event.\n","Principal amount and interest terms, maturity and repayment conditions, voluntary and mandatory conversion triggers, conversion price or discount rate, anti-dilution adjustments, representations and warranties, covenants, events of default, and governing law. A schedule of defined terms and a conversion notice form are included as attachments.\n",[205,209,213,217,221,225],{"title":206,"use_case":207,"icon_asset_id":208},"Startup founders","Issuing bridge financing to angel investors ahead of a Series A round","persona-startup-founder",{"title":210,"use_case":211,"icon_asset_id":212},"Early-stage investors","Lending capital with the right to convert into equity at a future priced round","persona-investor",{"title":214,"use_case":215,"icon_asset_id":216},"Corporate development officers","Structuring strategic bridge financing for a subsidiary or acquisition target","persona-cfo",{"title":218,"use_case":219,"icon_asset_id":220},"Private equity firms","Providing mezzanine debt with conversion features in leveraged transactions","persona-private-equity",{"title":222,"use_case":223,"icon_asset_id":224},"Small business owners","Raising growth capital from known lenders without an immediate equity dilution event","persona-small-business-owner",{"title":226,"use_case":227,"icon_asset_id":228},"Corporate lawyers and paralegals","Preparing a first-draft instrument for client review and negotiation","persona-corporate-lawyer",[230,233,237,241,244,247,251],{"situation":231,"recommended_template":42,"slug":232},"Seed-stage startup deferring valuation to a future priced round","convertible-note-agreement-D870",{"situation":234,"recommended_template":235,"slug":236},"Investor requiring a valuation cap and discount rate only","SAFE Agreement","safe-driving-policy-D13767",{"situation":238,"recommended_template":239,"slug":240},"Lender requiring security over company assets as well as conversion rights","Secured Convertible Debenture","convertible-debenture-D464",{"situation":242,"recommended_template":108,"slug":243},"Existing shareholder providing bridge financing to a portfolio company","shareholder-loan-agreement-D13239",{"situation":245,"recommended_template":88,"slug":246},"Company raising longer-term subordinated debt with no conversion feature","promissory-note-D434",{"situation":248,"recommended_template":249,"slug":250},"Public company issuing convertible debt to institutional investors","Convertible Bond Indenture","bond-agreement-D13310",{"situation":252,"recommended_template":253,"slug":254},"Bridge loan ahead of a specific acquisition rather than an equity round","Bridge Loan Agreement","loan-agreement-D417",[256,259,262,265,268,271,274,277,280,283,286,289],{"term":257,"definition":258},"Debenture","An unsecured debt instrument backed by the general creditworthiness of the issuer rather than specific collateral.",{"term":260,"definition":261},"Conversion Price","The per-share price at which outstanding principal and interest convert into equity — either fixed at issuance or calculated as a discount to a future financing round's price.",{"term":263,"definition":264},"Valuation Cap","A ceiling on the company's valuation used to calculate the conversion price, protecting early lenders from excessive dilution when conversion occurs at a high valuation.",{"term":266,"definition":267},"Discount Rate","A percentage reduction applied to the price per share in a qualifying financing round, giving the convertible holder shares at a lower effective price than new investors pay.",{"term":269,"definition":270},"Qualifying Financing","A future equity financing round of a specified minimum size that triggers automatic or voluntary conversion of the debenture into shares of that round's class.",{"term":272,"definition":273},"Maturity Date","The date by which the debenture must be repaid in cash or converted into equity if it has not already converted through a qualifying financing event.",{"term":275,"definition":276},"Accrued Interest","Interest that has accumulated on the outstanding principal since the issue date, which typically converts alongside principal rather than being paid in cash.",{"term":278,"definition":279},"Anti-Dilution Adjustment","A mechanism that adjusts the conversion price downward if the company later issues shares at a lower price, protecting the debenture holder's economic position.",{"term":281,"definition":282},"Event of Default","A specified condition — such as missed payments, insolvency, or covenant breach — that gives the holder the right to demand immediate repayment of the full outstanding amount.",{"term":284,"definition":285},"Subordination","A contractual ranking arrangement in which the debenture holder agrees that senior creditors must be paid first in the event of liquidation or insolvency.",{"term":287,"definition":288},"Pre-Money Valuation","The agreed value of a company immediately before a new investment is made, used as the denominator when calculating the number of shares issued upon conversion.",{"term":290,"definition":291},"Covenant","A contractual obligation — either positive (do this) or negative (do not do this) — that the issuing company must comply with throughout the term of the debenture.",[293,298,303,308,313,318,323,328,333,338],{"name":294,"plain_english":295,"sample_language":296,"common_mistake":297},"Parties, Recitals, and Defined Terms","Identifies the issuer (the company) and the holder (the lender), states the commercial purpose of the instrument, and defines all capitalized terms used throughout the document.","This Convertible Debenture (the 'Debenture') is issued as of [DATE] by [COMPANY LEGAL NAME], a [STATE/PROVINCE] [ENTITY TYPE] ('Issuer'), to [HOLDER LEGAL NAME] ('Holder'). Capitalized terms not otherwise defined herein have the meanings set out in Schedule A.","Using informal shorthand names (e.g., 'the Company') without tying them to the exact registered legal entity name, which creates enforceability ambiguity if the issuer operates under a trade name.",{"name":299,"plain_english":300,"sample_language":301,"common_mistake":302},"Principal Amount and Issue Price","States the face value of the debenture — how much the lender is advancing — and confirms the proceeds are received in full at closing.","The Issuer hereby promises to pay to the order of the Holder the principal sum of $[AMOUNT] (the 'Principal Amount'), receipt of which is hereby acknowledged, together with interest as set out herein.","Failing to confirm receipt of proceeds within the instrument itself. If the debenture is signed before funds are actually transferred, the document may be unenforceable for lack of consideration until a closing certificate is executed.",{"name":304,"plain_english":305,"sample_language":306,"common_mistake":307},"Interest Rate and Accrual","Sets the annual interest rate, the accrual method (simple or compound), and whether interest is paid in cash periodically or accrues and converts alongside principal.","Interest shall accrue on the outstanding Principal Amount at the rate of [X]% per annum, calculated on a 365-day basis, from the Issue Date until conversion or repayment in full. Accrued Interest shall convert into shares alongside Principal upon any Conversion Event and shall not be payable in cash.","Leaving the accrual method unstated. Simple and compound interest produce meaningfully different amounts over a 12–24 month bridge term — courts will not infer a method, and the ambiguity benefits neither party.",{"name":309,"plain_english":310,"sample_language":311,"common_mistake":312},"Maturity and Repayment","Defines the maturity date, the conditions under which the debenture is repaid in cash if it has not converted, and any right of the issuer to extend the term.","Unless earlier converted or repaid, the outstanding Principal Amount and all Accrued Interest shall become due and payable on [DATE] (the 'Maturity Date'). The Issuer may extend the Maturity Date by [X] months upon [X] days' written notice to the Holder, provided no Event of Default has occurred.","Omitting a maturity extension provision. Without one, the debenture automatically becomes due in cash on the maturity date even if an equity round is imminent — forcing an inconvenient repayment or a rushed amendment.",{"name":314,"plain_english":315,"sample_language":316,"common_mistake":317},"Conversion Mechanics — Voluntary and Mandatory","Sets out exactly how and when the debenture converts into shares: the triggers (voluntary holder election or mandatory on a qualifying financing), the conversion formula, and the share class issued.","Upon the closing of a Qualifying Financing, the outstanding Principal Amount and Accrued Interest shall automatically convert into shares of the class issued in such Qualifying Financing at a price equal to the lesser of (a) the Qualifying Financing price per share multiplied by [1 minus the Discount Rate] and (b) the Valuation Cap divided by the Fully Diluted Share Count immediately prior to such closing.","Drafting conversion as exclusively voluntary at the holder's discretion with no mandatory conversion trigger. This can leave a debenture outstanding indefinitely after a successful financing round, creating a cap table overhang and complicating future investor diligence.",{"name":319,"plain_english":320,"sample_language":321,"common_mistake":322},"Valuation Cap and Discount Rate","Defines the economic protection mechanisms: the maximum valuation at which the holder converts (cap) and/or the percentage discount to the next-round price the holder receives.","For purposes of conversion, the Valuation Cap shall be $[AMOUNT] and the Discount Rate shall be [X]%. In the event both a Valuation Cap and a Discount Rate apply, the Holder shall receive the number of shares calculated using whichever formula produces the lower effective per-share price.","Setting a valuation cap but omitting language that specifies whether it applies to pre-money or post-money valuation. The two calculations produce different share counts, and the distinction can represent significant economic value.",{"name":324,"plain_english":325,"sample_language":326,"common_mistake":327},"Anti-Dilution and Adjustment Provisions","Adjusts the conversion price downward if the company issues new shares at a price below the current conversion price, protecting the holder against down-round dilution.","In the event the Issuer issues shares or securities convertible into shares at a price per share less than the then-applicable Conversion Price, the Conversion Price shall be adjusted on a [broad-based weighted-average / full-ratchet] basis as set out in Schedule B.","Selecting full-ratchet anti-dilution without recognizing its punitive impact on founders and other shareholders in a down round. Broad-based weighted-average anti-dilution is the market standard for most convertible instruments and is far less likely to destabilize the cap table.",{"name":329,"plain_english":330,"sample_language":331,"common_mistake":332},"Representations, Warranties, and Covenants","The issuer represents material facts (valid incorporation, no undisclosed liabilities, authorized share capital) and makes ongoing covenants (maintain good standing, not incur senior debt without consent, provide financial statements).","The Issuer represents and warrants as of the Issue Date that: (a) it is duly incorporated and in good standing under the laws of [JURISDICTION]; (b) the execution of this Debenture has been duly authorized; and (c) to the Issuer's knowledge, there is no pending litigation that would materially impair its ability to perform its obligations hereunder.","Limiting representations to the issue date without including a bring-down mechanism. Representations that are true at signing but false at conversion — due to undisclosed litigation or a material change — give the holder no contractual remedy unless a bring-down clause is included.",{"name":334,"plain_english":335,"sample_language":336,"common_mistake":337},"Events of Default and Remedies","Lists the specific conditions that constitute a default — missed payment, insolvency filing, covenant breach, change of control — and the holder's remedies, including acceleration of the full outstanding amount.","Each of the following constitutes an Event of Default: (a) failure to pay any amount due within [X] business days of the due date; (b) the Issuer making an assignment for the benefit of creditors or filing for bankruptcy protection; (c) any material breach of a covenant not cured within [30] days of written notice.","Drafting an exhaustive default list but omitting a cure period for non-payment events. Courts in several jurisdictions have refused to enforce immediate acceleration where the issuer had no opportunity to cure an inadvertent missed payment.",{"name":339,"plain_english":340,"sample_language":341,"common_mistake":342},"Governing Law, Jurisdiction, and Miscellaneous","Specifies the applicable law, the courts or arbitration forum for disputes, and standard boilerplate provisions including amendment procedures, entire agreement, and severability.","This Debenture shall be governed by and construed in accordance with the laws of [STATE/PROVINCE/COUNTRY], without regard to conflict-of-laws principles. Any dispute shall be submitted to the exclusive jurisdiction of the courts of [CITY/JURISDICTION]. This Debenture may be amended only by written instrument signed by both parties.","Choosing a governing jurisdiction that has no connection to where the issuer is incorporated or the holder resides. Courts in the chosen jurisdiction may decline to hear the case, or the chosen law may produce unexpected results on conversion mechanics or default remedies.",[344,349,354,359,364,369,374,379],{"step":345,"title":346,"description":347,"tip":348},1,"Enter the parties' full legal names and jurisdiction","Use the issuer's exact registered corporate name and the holder's legal name or entity name. Confirm both against corporate registry filings before insertion.","If the holder is a fund or trust, name the general partner or trustee as the party and reference the fund in the recitals — this prevents execution authority disputes.",{"step":350,"title":351,"description":352,"tip":353},2,"Set the principal amount and confirm the issue date","Enter the exact dollar amount being advanced. The issue date should be the date funds are actually transferred, not the date the document is drafted.","If closing occurs in tranches, use a schedule of advances rather than a single principal amount to avoid ambiguity about which funds are outstanding at conversion.",{"step":355,"title":356,"description":357,"tip":358},3,"Define the interest rate and accrual method","Choose a rate (typically 4–8% for bridge debentures), specify simple or compound accrual, and confirm whether interest converts or is paid in cash at maturity.","Confirm the rate does not exceed the criminal interest rate ceiling in the governing jurisdiction — in Canada, 60% per annum is the Criminal Code ceiling; in some US states, usury limits apply to non-bank lenders.",{"step":360,"title":361,"description":362,"tip":363},4,"Set the maturity date and extension terms","Choose a maturity date 12–24 months from issuance for most bridge instruments. Decide whether the issuer may extend unilaterally and for how long, and include the notice period.","A 6-month unilateral extension right is market standard for early-stage bridges — it prevents forced repayment when a round is close but not yet closed.",{"step":365,"title":366,"description":367,"tip":368},5,"Draft the conversion triggers and formula","Define what constitutes a Qualifying Financing (minimum dollar threshold, e.g., $1M+), whether conversion is mandatory or voluntary at that trigger, and whether maturity triggers a conversion option or cash repayment.","Set the Qualifying Financing threshold high enough to exclude insider bridge rounds — otherwise the debenture converts prematurely at a low valuation before the real price-discovery round.",{"step":370,"title":371,"description":372,"tip":373},6,"Set the valuation cap and discount rate","Enter the valuation cap as a pre-money figure and the discount rate as a whole percentage. Confirm the interaction clause specifies that the holder receives the more favorable calculation.","Market discount rates for seed-stage bridges typically run 15–20%. Caps should reflect a reasonable pre-money estimate of the company's Series A valuation — not an aspirational number.",{"step":375,"title":376,"description":377,"tip":378},7,"Complete representations, warranties, and covenants","Review each representation for accuracy as of the issue date. Add or remove covenants based on the issuer's current obligations — for example, remove a 'no senior debt' covenant if senior bank debt already exists.","Have the issuer's CEO sign a closing certificate confirming the representations are true as of the closing date — this creates a contemporaneous record that limits 'I didn't know' defenses.",{"step":380,"title":381,"description":382,"tip":383},8,"Review events of default and cure periods, then execute","Confirm each default event is defined precisely and that cure periods are commercially reasonable (typically 5 business days for payment, 30 days for covenant breach). Both parties sign; retain a fully executed copy.","Use an eSign platform to timestamp execution and store the executed instrument — a timestamped digital record is accepted as evidence in virtually all common-law jurisdictions.",[385,389,393,397,401,405],{"mistake":386,"why_it_matters":387,"fix":388},"Using pre-money vs. post-money cap language inconsistently","A $5M cap on a pre-money basis and a $5M cap on a post-money basis produce different share counts — the difference can represent 10–20% of the holder's converted position depending on round size.","State explicitly in the Valuation Cap definition whether the cap refers to pre-money or post-money valuation, and confirm which share count (fully diluted, treasury method, or as-converted) is used as the denominator.",{"mistake":390,"why_it_matters":391,"fix":392},"Omitting a mandatory conversion provision","Without mandatory conversion on a qualifying financing, the debenture remains outstanding as debt after the round closes, creating a senior creditor whose existence complicates future financing and acquisition due diligence.","Include an automatic conversion clause triggered by any Qualifying Financing above a specified threshold, with no holder action required to effect conversion.",{"mistake":394,"why_it_matters":395,"fix":396},"Leaving the definition of 'Qualifying Financing' too vague or too low","A threshold that is too low — or undefined — can trigger conversion in an insider bridge round at an unfavorable price before the company has reached true price discovery.","Define Qualifying Financing as a bona fide equity financing led by a third-party investor with a minimum aggregate proceeds threshold of at least 2–3× the debenture principal.",{"mistake":398,"why_it_matters":399,"fix":400},"Selecting full-ratchet anti-dilution instead of weighted-average","Full-ratchet anti-dilution resets the conversion price to the lowest subsequent issuance price regardless of how few shares were issued at that price — devastating to founders and other shareholders in any down-round scenario.","Use broad-based weighted-average anti-dilution as the default. Reserve full-ratchet only for very small instruments to sophisticated institutional investors who specifically negotiate for it.",{"mistake":402,"why_it_matters":403,"fix":404},"Signing the debenture before funds are transferred","In most common-law jurisdictions, a debt instrument executed before consideration is received may be challenged for lack of consideration, particularly if the company later becomes insolvent and a trustee in bankruptcy reviews the instrument.","Coordinate execution and wire transfer on the same business day, or include a condition precedent stating the debenture is not effective until confirmed receipt of funds, documented by a closing certificate.",{"mistake":406,"why_it_matters":407,"fix":408},"No cure period for payment defaults","Immediate acceleration on a missed payment gives the holder a nuclear remedy for an inadvertent administrative error — wire delays, banking holidays, or a clerical oversight — and courts sometimes refuse to enforce it as unconscionable.","Include a 5-business-day cure period for payment defaults and a 30-day cure period for covenant breaches, with written notice required before the cure period begins.",[410,413,416,419,422,425,428,431,434],{"question":411,"answer":412},"What is a convertible debenture?","A convertible debenture is a debt instrument that gives the holder the right — or in some structures the obligation — to convert the outstanding loan balance, including accrued interest, into equity shares of the issuing company. It functions as a loan until a conversion event occurs, at which point the debt is extinguished and the holder becomes a shareholder. It is commonly used in bridge financing, mezzanine lending, and early-stage capital raises where both parties want to defer valuation negotiations.\n",{"question":414,"answer":415},"What is the difference between a convertible debenture and a convertible note?","The terms are often used interchangeably, but technically a debenture is an unsecured debt instrument backed only by the issuer's creditworthiness, while a note is a simpler promissory instrument. In practice, convertible debentures tend to include more detailed covenants, anti-dilution provisions, and conversion mechanics than a standard convertible note. For seed-stage startups, a convertible note is often sufficient; for growth-stage or institutional transactions, a full debenture structure is more appropriate.\n",{"question":417,"answer":418},"When should a company use a convertible debenture instead of issuing equity directly?","A convertible debenture is preferred when both parties want to raise capital quickly without negotiating a company valuation, when the company expects a priced equity round in the near term and wants the current lender to participate at that round's price, or when the investor wants downside protection as a creditor but upside participation as a shareholder. It defers the valuation conversation to a point when the company has more traction and a cleaner price-discovery process.\n",{"question":420,"answer":421},"What is a valuation cap in a convertible debenture?","A valuation cap sets the maximum company valuation at which the debenture converts into equity, regardless of the actual valuation at the qualifying financing round. If the company raises at a valuation above the cap, the holder converts as if the valuation were the cap — receiving more shares per dollar than new investors. This rewards early lenders for taking on more risk before the company's value was established.\n",{"question":423,"answer":424},"Is a convertible debenture secured or unsecured?","A standard convertible debenture is unsecured, meaning the holder has no claim on specific company assets in the event of default — only a general creditor claim ranking behind secured lenders. A secured convertible debenture adds a security interest (a lien or charge) over specific or all company assets, giving the holder priority in insolvency. Secured structures require additional perfection steps — filing a UCC-1 in the US or a PPSA financing statement in Canada — to be enforceable against third parties.\n",{"question":426,"answer":427},"What happens if the company does not raise a qualifying financing before the maturity date?","If no qualifying financing occurs before maturity, most debentures give the holder the choice to either demand repayment of the full principal and accrued interest in cash, or elect to convert at a pre-agreed default conversion price (often the valuation cap divided by the fully diluted share count). Some debentures allow the issuer to extend the maturity date unilaterally for a defined period. Without any such provision, the entire outstanding balance becomes immediately due and payable as of the maturity date.\n",{"question":429,"answer":430},"Does a convertible debenture need to be registered with securities regulators?","In most jurisdictions, convertible debentures issued to a small number of accredited or sophisticated investors in a private placement are exempt from full prospectus or registration requirements. In the US, the most common exemptions are Regulation D Rule 506(b) and Rule 506(c). In Canada, accredited investor and minimum amount exemptions under National Instrument 45-106 typically apply. The conversion into equity at a later date is also treated as a separate securities issuance requiring its own exemption. Consider consulting a securities lawyer before issuance.\n",{"question":432,"answer":433},"Can interest on a convertible debenture convert into equity rather than being paid in cash?","Yes — this is the market standard for early-stage convertible debentures. Accrued interest is added to the outstanding principal balance and converts into equity alongside principal at the conversion event. This avoids cash interest payments that would strain a pre-revenue company's liquidity and simplifies the conversion calculation. Some debentures give the holder the option to elect cash payment of interest at maturity instead of conversion, but this option is more common in institutional and growth-stage instruments.\n",{"question":435,"answer":436},"What governing law should a convertible debenture use?","The governing law should correspond to the jurisdiction where the issuer is incorporated and where both parties have a genuine connection. US companies typically use Delaware or the state of incorporation; Canadian companies use their home province (Ontario, British Columbia, or Alberta are most common). Using a neutral jurisdiction like Delaware for a foreign-incorporated company is generally not recommended unless both parties have US counsel and US operations, as enforcement complications can arise.\n",[438,442,446,450],{"industry":439,"icon_asset_id":440,"specifics":441},"Technology / SaaS","industry-saas","Bridge financing ahead of a Series A, with conversion into preferred shares at a discount to the round price and a valuation cap reflecting pre-revenue MRR multiples.",{"industry":443,"icon_asset_id":444,"specifics":445},"Biotech / Life Sciences","industry-healthtech","Long maturity terms of 24–36 months to bridge clinical trial milestones, with milestone-based conversion triggers and regulatory approval as a qualifying event.",{"industry":447,"icon_asset_id":448,"specifics":449},"Real Estate Development","industry-real-estate","Mezzanine financing secured against development assets, converting into an equity interest in the project entity upon reaching a defined loan-to-value threshold.",{"industry":451,"icon_asset_id":452,"specifics":453},"Manufacturing","industry-manufacturing","Equipment or expansion bridge financing with conversion rights tied to an EBITDA multiple rather than a priced equity round, reflecting the asset-heavy valuation basis.",[455,459,462,465],{"vs":456,"vs_template_id":457,"summary":458},"Convertible Note","convertible-note-agreement-D12858","A convertible note is a simpler, shorter instrument commonly used in seed-stage transactions. It typically covers principal, interest, maturity, and basic conversion mechanics without detailed covenants, anti-dilution provisions, or representations. A convertible debenture is more comprehensive and appropriate for larger amounts, institutional investors, or growth-stage transactions where lenders require stronger contractual protections.",{"vs":235,"vs_template_id":460,"summary":461},"D{SAFE_AGREEMENT_ID}","A SAFE (Simple Agreement for Future Equity) is not a debt instrument — it carries no interest, no maturity date, and no repayment obligation. It converts into equity on a qualifying financing but does not give the holder creditor status. A convertible debenture creates an actual debt obligation with a maturity date and accrued interest, giving the holder priority over equity in a liquidation scenario. SAFEs are simpler; debentures provide more lender protection.",{"vs":108,"vs_template_id":463,"summary":464},"shareholder-loan-agreement-D12814","A shareholder loan agreement is a straightforward inter-company or related-party loan without a conversion feature. It is repaid in cash on the agreed schedule and does not affect the cap table. A convertible debenture is specifically structured to convert into equity and is designed for third-party investors or strategic lenders who want future shareholding rights alongside debt protection.",{"vs":88,"vs_template_id":466,"summary":467},"promissory-note-D140","A promissory note is a simple, unconditional promise to repay a fixed sum with interest by a stated date. It carries no conversion rights, no anti-dilution provisions, and typically no covenants. A convertible debenture adds an entire conversion layer — cap, discount, trigger events, and equity mechanics — making it a hybrid instrument suited for investors who want both creditor protection and equity upside.",{"use_template":469,"template_plus_review":473,"custom_drafted":477},{"best_for":470,"cost":471,"time":472},"Early-stage companies issuing a standard bridge debenture of under $250K to a single accredited investor in a familiar jurisdiction","Free","1–2 hours",{"best_for":474,"cost":475,"time":476},"Bridge rounds of $250K–$2M, multiple holders, cross-border investors, or transactions requiring securities exemption confirmation","$500–$2,000","3–5 business days",{"best_for":478,"cost":479,"time":480},"Institutional or mezzanine debentures above $2M, secured instruments, public company issuances, or multi-jurisdiction transactions","$3,000–$15,000+","2–4 weeks",[482,487,492,497],{"code":483,"name":484,"flag_asset_id":485,"note":486},"us","United States","flag-us","Convertible debentures issued to accredited investors in the US are typically exempt from SEC registration under Regulation D Rule 506(b) or Rule 506(c). The conversion into equity is treated as a separate securities issuance requiring its own Reg D filing within 15 days of first sale. State blue sky laws may impose additional notice or filing obligations. Usury laws vary by state and can limit permissible interest rates for non-bank lenders; confirm the applicable ceiling before setting the rate.",{"code":488,"name":489,"flag_asset_id":490,"note":491},"ca","Canada","flag-ca","Canadian convertible debentures are most commonly issued under the accredited investor exemption or the minimum amount exemption under National Instrument 45-106. Both the initial issuance and the conversion into shares are separate distributions requiring their own exemptions and report of exempt distribution filings within 10 days. Quebec civil law applies different rules to debt instruments than common-law provinces; issuers with Quebec-resident holders should confirm the instrument is valid under the Civil Code. The Criminal Code interest ceiling of 60% per annum applies to all lenders.",{"code":493,"name":494,"flag_asset_id":495,"note":496},"uk","United Kingdom","flag-uk","UK convertible debentures issued to high-net-worth individuals or sophisticated investors are typically structured as exempt offers under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005. The conversion into shares may require a prospectus exemption under the UK Prospectus Regulation unless the issuance is below the £8M threshold or limited to fewer than 150 non-qualified investors. Post-Brexit, EU prospectus passporting is no longer available for UK issuers.",{"code":498,"name":499,"flag_asset_id":500,"note":501},"eu","European Union","flag-eu","EU convertible debentures issued to qualified investors are exempt from prospectus requirements under the EU Prospectus Regulation (Regulation 2017/1129) when the total consideration is below €8M over 12 months. GDPR obligations apply to the processing of investor personal data in connection with the debenture. Member state securities laws add local filing and notification requirements — France, Germany, and the Netherlands each maintain distinct private placement frameworks. Anti-dilution provisions involving adjustments to conversion price should be reviewed for compliance with applicable company law restrictions on share issuances in the relevant member state.",[232,246,243,503,504,505,506,507,508,254,509,510],"investment-agreement-D12831","term-sheet-D473","shareholders-agreement-D12707","non-disclosure-agreement-nda-D12692","subscription-agreement-D12537","board-resolution-D78","letter-of-intent_acquisition-of-business-D5197","checklist-customer-due-diligence-D13916",{"emit_how_to":197,"emit_defined_term":197},{"primary_folder":97,"secondary_folder":513,"document_type":514,"industry":515,"business_stage":516,"tags":517,"confidence":523},"business-financing-and-loans","agreement","general","startup",[518,519,520,521,522],"fundraising","equity","convertible-debenture","debt-instrument","startup-financing",0.92,"\u003Ch2>What is a Convertible Debenture?\u003C/h2>\n\u003Cp>A \u003Cstrong>Convertible Debenture\u003C/strong> is a hybrid debt-equity instrument through which a company borrows money from an investor under terms that allow — or require — the outstanding principal and accrued interest to convert into equity shares at a future point, either at a predefined conversion price or at a price derived from a subsequent financing round. Until conversion occurs, the instrument functions as debt: the issuer owes the principal, interest accrues, and the holder ranks as a creditor ahead of shareholders. Upon a qualifying conversion event, the debt is extinguished and the holder receives shares, typically at a discount to the price paid by new investors or subject to a valuation cap that rewards the holder for investing early. Convertible debentures are widely used in bridge financing, mezzanine lending, and early-stage capital raises precisely because they defer the valuation negotiation — both parties agree today on the mechanics of how equity will be priced later, once the market has provided clearer data.\u003C/p>\n\u003Ch2>Why You Need This Document\u003C/h2>\n\u003Cp>Raising capital on informal or loosely documented terms is one of the most reliably expensive mistakes a company can make. Without a properly drafted convertible debenture, the economic terms of the conversion — the cap, the discount, the share class, the anti-dilution mechanics — exist only in emails and term sheets that courts treat as preliminary negotiations rather than binding obligations. Disputes over what the parties actually agreed to, particularly when a company's valuation has increased significantly by the time of conversion, frequently result in litigation that costs more than the original capital raised. A signed convertible debenture also establishes the holder's creditor status unambiguously, which matters in any insolvency or acquisition scenario where creditor claims are ranked and paid before equity. For issuers, the covenants and default provisions create a structured framework that prevents the relationship from deteriorating without a clear contractual path forward. This template gives you a market-standard starting point covering every material term — principal, interest, conversion, anti-dilution, and default — so that a 30-minute legal review, rather than a custom drafting engagement, is all that stands between you and a signed instrument.\u003C/p>\n",1781186017351]