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The Standby Equity Purchase Agreement (SEPA) is a strategic financing instrument used in the Australian market when companies require flexible access to capital without immediate dilution. This document is particularly valuable for listed companies seeking to maintain a reliable source of funding while retaining control over the timing and amount of capital raised. The agreement complies with Australian regulatory requirements, including the Corporations Act 2001 and ASX listing rules, and typically includes detailed provisions for share issuance mechanics, pricing formulas, regulatory compliance, and investor protections. It's commonly used during growth phases, for working capital needs, or to fund specific projects where traditional financing methods may be less suitable. The document requires careful consideration of corporate governance, securities laws, and market disclosure obligations.

1. Parties: Identifies the company issuing shares and the investor(s) committing to purchase them

2. Background: Sets out the context of the agreement, including the company's desire to raise capital and the investor's willingness to provide standby commitment

3. Definitions: Defines key terms used throughout the agreement, including technical terms related to pricing, commitment amount, and trading periods

4. Commitment and Purchase Obligation: Details the investor's commitment to purchase shares and the maximum commitment amount

5. Purchase Notice Mechanics: Specifies procedures for the company to issue purchase notices and the investor's obligations to respond

6. Pricing Mechanism: Defines how the purchase price for shares will be calculated, including any discounts to market price

7. Conditions Precedent: Lists conditions that must be satisfied before purchase obligations arise

8. Closing Procedures: Details the process for completing each purchase transaction

9. Company Representations and Warranties: Standard and specific representations regarding the company's authority, shares, and business

10. Investor Representations and Warranties: Representations regarding the investor's authority and financial capacity

11. Covenants: Ongoing obligations of both parties during the agreement term

12. Term and Termination: Duration of the agreement and circumstances allowing early termination

13. Confidentiality: Provisions protecting confidential information exchanged under the agreement

14. General Provisions: Standard boilerplate clauses including notices, amendments, governing law, etc.