Lender Conversion Option Clause Samples
The Lender Conversion Option clause grants the lender the right to convert all or part of the outstanding loan amount into equity in the borrower’s company, typically under specified conditions or at a predetermined conversion rate. In practice, this means that instead of being repaid in cash, the lender can choose to receive shares or ownership interests, often triggered by events such as a future financing round or upon maturity of the loan. This clause provides flexibility for the lender to participate in the company’s potential upside while offering the borrower an alternative to cash repayment, thereby aligning interests and potentially easing cash flow constraints.
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Lender Conversion Option. At the option of the applicable Lender, the principal and interest on the applicable Note may, at any time while any Obligations under such Note remain outstanding, or in case either Note or some portion thereof shall be called for prepayment prior to such date, then, with respect to such Note or portion thereof as is called for prepayment, until and including, but (if no default is made in the payment of the prepayment price) not after, the close of business on the date that is three (3) days prior to the date fixed for such prepayment, be converted, in whole or in part, into fully paid and non-assessable Conversion Shares at the Conversion Price (the “Lender Conversion Option”); provided, however, (i) in no event shall the ▇▇▇▇▇ Note be convertible into more than 112,752 Conversion Shares, and (ii) in no event shall the Roundball Note be convertible into more than 504,735 Conversion Shares. If and whenever on or after the Closing Date, the Borrower issues or sells, or in accordance with this Section 2.2.1, is deemed to have issued or sold, any Equity Interests of Borrower (including the issuance or sale of shares of Common Stock owned or held by or for the account of the Borrower, but excluding shares of Common Stock deemed to have been issued or sold by the Borrower in connection with an Exempt Offering) for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion Price in effect immediately prior to such issue or sale (the foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal to the New Issuance Price.
Lender Conversion Option. At the option of the Lender, this Note is convertible into Class B Preferred Shares at any one time prior to the Repayment Date in accordance with the terms and conditions of the Loan Agreement and the Company’s M&A.