Exchange in Lieu of Conversion Clause Samples
The "Exchange in Lieu of Conversion" clause allows a party, typically the issuer of a security, to exchange the security for another form of consideration instead of converting it into equity or another specified asset. In practice, this means that if a convertible note or preferred share is eligible for conversion into common stock, the issuer may instead provide cash or another security of equivalent value to the holder. This clause provides flexibility for the issuer to manage its capital structure and can help avoid dilution of existing shareholders, while also ensuring that the holder receives fair value for their investment.
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Exchange in Lieu of Conversion. (a) When a Holder surrenders its Notes for conversion, the Company may, at its election (an “Exchange Election”), direct the Conversion Agent to deliver, on or prior to the Trading Day immediately following the Conversion Date, such Notes to one or more financial institutions designated by the Company (each, a “Designated Financial Institution”) for exchange in lieu of conversion. In order to accept any Notes surrendered for conversion, the Designated Financial Institution(s) must agree to timely pay and/or deliver, as the case may be, in exchange for such Notes, the cash, shares of Common Stock or combination thereof that would otherwise be due upon conversion pursuant to Section 14.02 or such other amount agreed to by the Holder and the Designated Financial Institution(s) (the “Conversion Consideration”). If the Company makes an Exchange Election, the Company shall, by the close of business on the Trading Day following the relevant Conversion Date, notify in writing the Trustee, the Conversion Agent (if other than the Trustee) and the Holder surrendering Notes for conversion that the Company has made the Exchange Election, and the Company shall promptly notify the Designated Financial Institution(s) of the relevant deadline for delivery of the Conversion Consideration and the type of Conversion Consideration to be paid and/or delivered, as the case may be.
(b) Any Notes delivered to the Designated Financial Institution(s) shall remain outstanding, subject to the applicable procedures of the Depositary. If the Designated Financial Institution(s) agree(s) to accept any Notes for exchange but does not timely pay and/or deliver, as the case may be, the related Conversion Consideration, or if such Designated Financial Institution(s) does not accept the Notes for exchange, the Company shall pay and/or deliver, as the case may be, the relevant Conversion Consideration, as, and at the time, required pursuant to this Indenture as if the Company had not made the Exchange Election.
(c) The Company’s designation of any Designated Financial Institution(s) to which the Notes may be submitted for exchange does not require such Designated Financial Institution(s) to accept any Notes.
Exchange in Lieu of Conversion. Notwithstanding anything to the contrary in this Article 5, and subject to the terms of this Section 5.08, if a Note is submitted for conversion, the Company may elect to arrange to have such Note exchanged in lieu of conversion by a financial institution designated by the Company. To make such election, the Company must send notice of such election to the Holder of such Note, the Trustee and the Conversion Agent before the Close of Business on the Business Day immediately following the Conversion Date for such Note. If the Company has made such election, then:
(A) no later than the Business Day immediately following such Conversion Date, the Company must deliver (or cause the Conversion Agent to deliver) such Note, together with delivery instructions for the Conversion Consideration due upon such conversion (including wire instructions, if applicable), to a financial institution designated by the Company that has agreed to deliver such Conversion Consideration in the manner and at the time the Company would have had to deliver the same pursuant to this Article 5;
(B) if such Note is a Global Note, then (i) such designated institution will send written confirmation to the Conversion Agent promptly after wiring the cash Conversion Consideration, if any, and delivering any other Conversion Consideration, due upon such conversion to the Holder of such Note; and (ii) the Conversion Agent will as soon as reasonably practicable thereafter contact such Holder’s custodian with the Depositary to confirm receipt of the same; and
(C) such Note will not cease to be outstanding by reason of such exchange in lieu of conversion; provided, however, that if such financial institution does not accept such Note or fails to timely deliver such Conversion Consideration, then the Company will be responsible for delivering such Conversion Consideration in the manner and at the time provided in this Article 5 as if the Company had not elected to make an exchange in lieu of conversion.
Exchange in Lieu of Conversion. When a Holder surrenders Notes for conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or prior to the first Business Day immediately following the Conversion Date, such Notes to a financial institution designated by the Company for exchange in lieu of conversion. In order to accept any Notes surrendered for conversion, the designated financial institution must agree to pay and/or deliver, as the case may be, in exchange for such Notes, the Settlement Amount that the Company would be obligated to deliver upon the conversion of such Notes at the time the Company would otherwise be required to deliver such consideration. By the Close of Business on the Business Day immediately following the Conversion Date, the Company will notify the Holder surrendering Notes for conversion, the Trustee and the Conversion Agent that it has directed the designated financial institution to make an exchange in lieu of conversion and that the designated financial institution has agreed to make such exchange in lieu of conversion. A copy of such notice shall include wire instructions and delivery instructions and shall be delivered to the conversion agent and to the designated institution.
(i) If the designated institution accepts any such Notes, it will deliver the amount of cash, if any, and the number of shares of Common Stock, if any, due upon conversion of such Notes directly to the Holder of such Notes no later than 11:00 a.m., New York City time, on the date the Company would have otherwise been required to deliver such consideration. In the case of Notes held through the Depositary, (x) the designated institution shall send an e-mail confirmation to the Conversion Agent once it has (a) wired such cash, if any, to the Holder, providing a Federal Reference Number, (b) processed a transfer to such Holder of such number of shares of Common Stock, if any, and (y) the Conversion Agent shall then contact the Holder’s custodian with the Depositary to confirm their receipt of such cash and number of shares of Common Stock, if any. Notes exchanged by the designated institution will remain outstanding. If the designated institution agrees to accept any Notes for exchange in lieu of conversion but does not timely deliver the related consideration, or if such designated institution does not accept the Notes for exchange, the Company will deliver the relevant consideration to the Holder on the applicable settlement date therefor as if the Company...
Exchange in Lieu of Conversion. (a) If at any time when a Holder surrenders Securities for conversion prior to the Maturity Date of the Securities the Company:
(i) has designated a financial institution, which shall be a direct or indirect Depositary participant (a “Designated Institution”), to accept such Securities in exchange for cash and shares of Common Stock, if any, equal to the consideration due upon conversion as provided in Section 5.03; and
(ii) notifies the Holder surrendering such Securities for conversion by the second Trading Day after the applicable Conversion Date, that it has directed the Designated Institution to make an exchange in lieu of conversion, then, notwithstanding anything in this Indenture to the contrary, the Company may direct the Conversion Agent to surrender such Securities, on or prior to the commencement of the applicable Observation Period, to the Designated Institution for exchange in lieu of conversion.
(b) If the Designated Institution accepts Securities surrendered for exchange, it shall deliver cash and shares of Common Stock, if any, to the Conversion Agent and the Conversion Agent will deliver such cash and shares of Common Stock, if any, to such Holder on the second Business Day immediately following the last day of the applicable Observation Period. Any Securities so exchanged by such Designated Institution shall remain outstanding for all purposes under this Indenture.
(c) If the Designated Institution agrees to accept any Securities for exchange but does not timely deliver the related consideration to the Conversion Agent, or if the Designated Institution does not accept such Securities for exchange, the Company shall, within the time period specified in Section 5.02(c), convert such Securities into cash and shares of Common Stock, if any, in accordance with the provisions of Section 5.02 and Section 5.03. For the avoidance of doubt, in no event will the Company’s designation of a financial institution pursuant to this Section 5.16 require such financial institution to accept any Securities for exchange.
Exchange in Lieu of Conversion. (a) When a Holder surrenders its Notes for conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or prior to the second Business Day following the relevant Conversion Date, such Notes to a financial institution designated by the Company (the “Designated Institution”) for exchange in lieu of conversion. In order to accept any Notes surrendered for conversion for exchange in lieu of conversion, the Designated Institution must agree to timely deliver, in exchange for such Notes, the cash, shares of Common Stock or combination of cash and shares of Common Stock, at the Company’s election, that would otherwise be due upon conversion as described in Section 13.02 above and in respect of which the Company has notified converting Holders. If the Company makes the election described above, the Company shall, by the close of business on the second Business Day following the relevant Conversion Date, notify the Holder surrendering Notes for conversion that it has made such election. In addition, the Company shall concurrently notify the Designated Institution of the relevant deadline for delivery of the consideration due upon conversion. Any Notes exchanged by the Designated Institution will remain outstanding.
(b) If the Designated Institution agrees to accept any Notes for exchange but does not timely deliver the related consideration due upon conversion to the Conversion Agent, or if the Designated Institution does not accept such Notes for exchange, the Company shall, within the time period specified in Section 13.02(c), convert such Notes into cash, shares of Common Stock or combination of cash and shares of Common Stock, at the Company’s election, in accordance with the provisions of Section 13.02.
(c) For the avoidance of doubt, in no event will the Company’s designation of a Designated Institution pursuant to this Section 13.13 require the Designated Institution to accept any Notes for exchange.
Exchange in Lieu of Conversion. When a Holder surrenders its Securities for conversion, the Company may, at its election (an “Exchange Election”), direct the Conversion Agent to surrender, on or prior to the Business Day following the Conversion Date, such Securities to a financial institution designated by the Company for exchange in lieu of conversion. In order to accept any Securities surrendered for conversion, the designated institution must agree to timely deliver, in exchange for such Securities, the Settlement Amount that would otherwise be due upon conversion pursuant to Section 14.03. If the Company makes an Exchange Election, the Company shall, by the Close of Business on the Business Day following the relevant Conversion Date, notify the Holder surrendering its Securities for conversion that the Company has made the Exchange Election and the Company will notify the designated financial institution of the relevant deadline for delivery of the Settlement Amount. Any Securities exchanged by the designated institution will remain outstanding, subject to the Applicable Procedures of the Depositary. If the designated institution agrees to accept any Securities for exchange but does not timely deliver the related Settlement Amount, or if such designated financial institution does not accept the Securities for exchange, the Company shall deliver the relevant Settlement Amount as if it had not made an Exchange Election.
Exchange in Lieu of Conversion. (A) Notwithstanding anything in this Supplemental Indenture, the Base Indenture or the Securities to the contrary, if a Holder surrenders any Security for conversion, the Company may, but is not obligated to, direct the Conversion Agent to surrender, on or prior to the second (2nd) Business Day following the Conversion Date of such conversion, such Security to a financial institution designated by the Company (which may not be an Affiliate of the Company; provided that, for purposes of this Section 10.14, an “Affiliate” shall include any Person with direct or indirect ownership of ten percent (10%) or more of the equity of the Company or the power to directly or indirectly vote more than ten percent (10%) of the securities having ordinary voting power for the election of directors of the Company) (a “Financial Institution”) for exchange in lieu of conversion. In order to accept any Securities surrendered for conversion, such designated institution must agree to deliver, in exchange for such Securities, the Conversion Consideration due upon such conversion in accordance with this Indenture. By the close of business on the second (2nd) Business Day immediately following such Conversion Date, the Company shall notify such Holder, the Trustee and the Conversion Agent that the Company has directed the designated financial institution to make an exchange in lieu of such conversion, and such financial institution shall be required to notify the Conversion Agent, no later than the close of business on the second (2nd) Business Day immediately following such Conversion Date, of the Settlement Method applicable to such conversion, which Settlement Method must comply with the terms of this Indenture.
(B) In order to accept such Security surrendered for conversion, the Financial Institution must agree to deliver, in exchange for such Security, the Conversion Consideration due upon such conversion as prescribed by Section 10.02(A)(i) (it being understood that such Financial Institution shall be permitted to provide a Settlement Method Election Notice with respect to such conversion in accordance with Section 10.02(B), if the Company is permitted to provide such a Settlement Method Election Notice pursuant to Section 10.02(B)).
(C) If such Financial Institution so accepts any such Security to be converted, then it shall deliver the Conversion Consideration due upon such conversion to the Conversion Agent, and the Conversion Agent shall deliver such Conversion Considerat...
Exchange in Lieu of Conversion. Notwithstanding anything to the contrary in this ARTICLE 7, and subject to the terms of this Section 7.12, if a Note is to be converted, the Company may elect to arrange to have such Note exchanged in lieu of conversion by a financial institution designated by the Company. To make such election, the Company must provide written notice of such election to the Holder of such Note before the Close of Business on the Business Day immediately after the Conversion Date for such Note. If the Company has made such election, then:
(a) no later than the Business Day immediately after such Conversion Date, the Company must deliver such Note, together with delivery instructions for the consideration due upon such conversion, to a financial institution designated by the Company that has agreed to deliver such consideration in the manner and at the time the Company would have had to deliver the same pursuant to this ARTICLE 7; and
(b) such Note will not cease to be outstanding by reason of such exchange in lieu of conversion; provided, however, that if such financial institution does not accept such Note or fails to timely deliver such consideration, then the Company will be responsible for delivering such consideration in the manner and at the time provided in this ARTICLE 7 as if the Company had not elected to make an exchange in lieu of conversion.
Exchange in Lieu of Conversion. Notwithstanding anything herein to the contrary, when a Holder surrenders Notes for conversion, the Company may, at its election, direct the Conversion Agent to surrender, on or prior to the scheduled Trading Day immediately preceding the first Trading Day of the applicable Observation Period (or, if the Company has elected Physical Settlement, on or prior to the second Business Day immediately following the relevant Conversion Date), such Notes to a financial institution designated by the Company for exchange in lieu of conversion (the “Financial Institution”). In order to accept any Notes surrendered for conversion, the Financial Institution must agree to pay and/or deliver, as the case may be, in exchange for such Notes, all of the cash, shares of Common Stock or a combination thereof due upon conversion, all in accordance with Section 10.03 above. By the close of business on the Scheduled Trading Day immediately preceding the first trading day of the applicable Observation Period (or, if the Company has elected Physical Settlement, by the close of business on the second Business Day immediately following the relevant Conversion Date), the Company will notify the Holder surrendering Notes for conversion that the Company has directed the Financial Institution to make an exchange in lieu of conversion. If the Financial Institution accepts any such Notes, it will pay and/or deliver, as the case may be, the cash, shares or Common Stock or a combination thereof due upon conversion to the Conversion Agent, and the Conversion Agent will pay and/or deliver such cash and/or shares of Common Stock to the Holder on the third Business Day immediately following the last Trading Day of the applicable Observation Period (or, if the Company has elected Physical Settlement, on the third Business Day immediately following the relevant Conversion Date). Any Notes exchanged by the Financial Institution will remain outstanding. If the Financial Institution agrees to accept any Notes for exchange but does not timely pay and/or deliver the related cash, shares of Common Stock or a combination thereof, as the case may be, or if the Financial Institution does not accept the Notes for exchange, the Company shall, as promptly as practical thereafter, convert the Notes and pay and/or deliver, as the case may be, the cash, shares or Common Stock or a combination thereof due upon conversion on the third Business Day immediately following the last Trading Day of the applicable Obser...
Exchange in Lieu of Conversion. The Company shall have the option, exercisable at any time or from time to time, by an instrument in writing signed by the Company and provided to the Conversion Agent, to designate a, or change the existing designation of the, financial institution (an “Exchange Party”) to which Notes surrendered by a Holder for conversion will be initially offered by the Conversion Agent on behalf of a Holder for exchange in lieu of conversion. In order to accept any Notes surrendered for conversion, the Exchange Party must agree to deliver in exchange for such Notes, the shares of Common Stock and/or cash which would otherwise be due upon conversion in accordance with Section 9.3. If the Exchange Party accepts any Notes for conversion, it will deliver to the Conversion Agent, and the Conversion Agent will deliver to converting Holders, the shares of Common Stock and/or cash which would otherwise be due upon conversion. In the event that the Exchange Party agrees to accept any Notes for conversion but fails to deliver the consideration for the converted Notes by the second Business Day following the last Trading Day of the applicable Conversion Reference Period, the Notes will be converted by the Company in accordance with this Article IX and the Company will, as promptly as practical thereafter, but not later than three Business Days following the last Trading Day of the applicable Conversion Reference Period, deliver to the Holder shares of Common Stock and/or cash which would otherwise be due upon conversion in accordance with Section 9.3. Any Notes exchanged by the Exchange Party shall remain outstanding. The designation by the Company of an Exchange Party does not require such Exchange Party to accept any Notes for conversion. If the Exchange Party declines to accept any Notes surrendered for conversion, the Company will convert the Notes on the terms provided in this Indenture. The Company will not pay any consideration to, or otherwise enter into any arrangement with, the Exchange Party for or with respect to such designation.