Mandatory Conversion - IPO Clause Samples
The Mandatory Conversion - IPO clause requires that certain securities, such as convertible notes or preferred shares, automatically convert into common stock upon the occurrence of a company's initial public offering (IPO). Typically, this conversion happens at a predetermined rate or according to specific terms outlined in the agreement, ensuring that holders of these securities become common shareholders when the company goes public. This clause streamlines the transition to a public company structure and ensures all investors are treated equitably during the IPO process, eliminating ambiguity about the status of convertible securities at the time of the offering.
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Mandatory Conversion - IPO. Upon consummation of the IPO (as defined below), this Note shall automatically convert, through no further action on the part of the Company or the Holder, into that number of shares of Common Stock equal to the quotient of (A) the Conversion Amount (as defined below) divided by (B) the Conversion Price. For the purpose of this Section 3(a), the “Conversion Price” shall be equal to fifty percent (50%) of the IPO Price to Public (as defined below) (rounded to two decimal places); provided; however, that in no event shall the Conversion Price be greater than $7.362 or nor less than $3.681, in each case as adjusted for stock splits, stock dividends, stock combinations, recapitalizations, or the like that occur after the Issuance Date in accordance with Section 5.