This convertible debenture template defines the contractual relationship between the person who agrees to lend a sum of money to a corporation and that corporation, which in exchange undertakes to issue a debenture that may later be converted into shares in its share capital. The debenture constitutes security issued to acknowledge a debt of the corporation that provides for the payment of a sum to the holder, with interest.

Business corporations seeking a medium-term debt instrument to raise capital may wish to use a debenture issued to a single lender or, in the case of a large corporation, through a public offering. Unlike a bond, debentures are not completely guaranteed, but they generally earn a higher interest rate.

0.00 INTERPRETATION
0.01 Definitions
0.01.01 Activities
0.01.02 Breach
0.01.03 Debenture
0.01.04 Dispute
0.01.05 Encumber / Encumbrance
0.01.06 Force Majeure
0.01.07 Hazardous Materials
0.01.08 Intellectual Property
0.01.09 Law
0.01.10 Legal Representatives
0.01.11 Ordinary Course of Business
0.01.12 PARTY
0.01.13 Person
0.01.14 Prime Rate
0.01.15 Subsidiary
0.02 Entire Agreement
0.03 Applicable Law
0.04 Non-Compliance
0.04.01 Severability
0.04.02 Substitute Provision
0.05 Miscellaneous
0.05.01 Cumulative Rights
0.05.02 No Waiver
0.05.03 Time and Days
a) Time of the Essence
b) Computation of Time
0.05.04 Financial References
0.05.05 Cross-References
0.05.06 Gender and Number
0.05.07 Headings
0.05.08 Presumptions
0.05.09 Knowledge
0.05.10 Approval
0.05.11 Accounting Standards
1.00 PURPOSE
1.01 Promise to Pay
1.02 Subordination (if applicable)
1.03 Interest
2.00 TERMS OF PAYMENT
2.01 Principal Amount
2.02 Interest
2.03 Arrears
2.04 Advance Payment
2.04.01 ISSUER’s Right
a) Full Amount
b) Notice
2.04.02 Interest
3.00 SECURITY
4.00 MUTUAL REPRESENTATIONS AND WARRANTIES
4.01 Authority
4.02 Binding Agreement
4.03 Canadian Resident
4.04 Canadian Status
4.05 Commission
4.06 Nominee
4.07 Independent Legal Advice
4.08 Fundamental Provisions
4.09 Disclosure
4.10 Legal Proceedings
5.00 REPRESENTATIONS AND WARRANTIES OF ISSUER
5.01 Status
5.02 Share Capital
5.03 Private Issuer
5.04 Restrictions
5.05 Corporate Records
5.05.01 Accuracy
5.05.02 Registers
5.06 Subsidiaries (if applicable)
5.07 Financial Statements
5.07.01 Accounting Standards
5.07.02 Liabilities
5.07.03 Debts of Officers
5.07.04 Investments
5.07.05 No Misrepresentation
5.07.06 Accounting Methods
5.08 Tax Position
5.08.01 Income Tax Returns
5.08.02 Extension of Time Limit
5.08.03 No Outstanding Amounts
5.08.04 Provision
5.08.05 Reassessment
5.08.06 Deductions
5.08.07 Advance Ruling
5.08.08 Non-arm’s Length Transaction
5.08.09 Claims
5.09 Legal Proceedings
5.10 Solvency
5.11 Security Granted
5.12 Suretyship and Guarantee
5.13 Peaceful Enjoyment
5.13.01 Valid Leases
5.13.02 Non-essential Property
5.13.03 Lease Unaffected by Debenture
5.14 Validity of Immovable Deeds
5.15 Equipment
5.16 Inventory
5.17 Accounts Receivable
5.17.01 Entered in Books
5.17.02 Amounts Owing
5.17.03 Quality and Warranty
5.17.04 No Claims
5.18 Intellectual Property
5.18.01 Intellectual Property Rights
5.18.02 Validity of IP Rights
5.18.03 Effect of Debenture
5.18.04 Absence of Litigation
5.18.05 Third-Party Rights
5.18.06 No Breach
5.18.07 Use by Others
5.19 Continuous Operations
5.20 Hazardous Materials
5.21 Important Contracts
5.22 Work Relations
5.22.01 Collective Agreement and Certification
5.22.02 Pension Plans and Other Benefits
5.22.03 Other Plans
5.22.04 Labour Standards
5.22.05 Occupational Health and Safety
5.22.06 Obligations Towards Employees
5.23 Pension Plan
5.24 Insurance
5.25 Conduct in Exercising of Duties
6.00 REPRESENTATIONS AND WARRANTIES OF HOLDER
6.01 Status
6.01.01 Qualified Investor
6.01.02 No Default
7.00 MUTUAL DUTIES AND OBLIGATIONS
7.01 Confidential Information
7.01.01 Undertaking
7.01.02 Duration of Undertaking
7.01.03 End of Agreement
a) Request for Return
b) Destruction
7.02 Continuation of Representations and Warranties
7.03 Disclosure of Debenture
7.04 Further Assurances
8.00 DUTIES AND OBLIGATIONS OF ISSUER
8.01 Issue of Replacement Debenture
8.02 Payment at Maturity Date
8.03 Dissolution and Liquidation or Sale
8.04 Maintenance of Corporate Existence
8.05 Reorganization of its Business
8.06 Insurance
8.07 Regulations and Permits
8.08 Annual Financial Statements
8.09 Quarterly Financial Statements
8.10 Anti-Dilution
8.11 Other Information
9.00 DUTIES AND OBLIGATIONS OF HOLDER
9.01 Safeguarding of Debenture
9.02 Replacement
10.00 RIGHT OF CONVERSION
10.01 Terms of Conversion
10.02 Conversion Price
10.03 Presumption
10.04 Remittance of Share Certificates
10.05 Remittance of New Debenture
10.06 Interest
10.07 Payment of Costs
10.08 Undertakings of ISSUER
10.08.01 Conservation of Sufficient Number of Shares
10.08.02 Shares Fully Paid
10.09 No Share Splitting
11.00 SPECIAL PROVISIONS
11.01 Assignment
11.01.01 Prohibition
11.01.02 Reasonable Cause
11.01.03 Effect of Breach
11.01.04 Exception
11.02 Force Majeure
11.02.01 Limitation on Liability
11.02.02 Duty
11.02.03 Right of Other PARTY
12.00 GENERAL PROVISIONS
12.01 Notice
12.02 Dispute Resolution
12.02.01 Good Faith Negotiations
a) Written Notice
b) Meeting
c) Legal Proceedings
d) Protective Measures
12.02.02 Mediation
a) Process
b) Mediator
c) Settlement
d) Legal Proceedings [OR Arbitration]
12.02.03 Arbitration
a) Notice
b) Reply
c) Appointment of a Third Arbitrator
d) Confidentiality
e) Hearing
f) Ruling
g) Costs
h) Supplementary Rules
12.03 Choice of Venue
12.04 Amendment
12.05 No Waiver of Rights
12.06 Electronic Transmission and Signature
12.07 Language
13.00 TERMINATION OF DEBENTURE
13.01 Rights of HOLDER
13.02 Remedies of HOLDER
13.03 Application of Recourses
14.00 EFFECTIVE DATE

SCHEDULE 5.23 – PENSION PLAN
SCHEDULE 10.01 – NOTICE OF CONVERSION