Principal Amount Conversion Conditions Clause Samples
The Principal Amount Conversion Conditions clause defines the specific circumstances under which the principal amount of a financial instrument, such as a loan or convertible note, may be converted into another form of consideration, typically equity. This clause outlines the triggers for conversion, such as the occurrence of a financing round, maturity date, or other agreed-upon events, and may specify conversion rates or formulas. Its core function is to provide clear guidelines for when and how the principal amount can be converted, ensuring predictability and reducing disputes between parties regarding the conversion process.
Principal Amount Conversion Conditions. Subject to Sections 2.1(a), 2.2, and 3.2 hereof, the Holder shall convert into shares of Common Stock all or a portion of the Principal Amount due on the Maturity Date if the following conditions (the "Conversion Criteria") are satisfied: (i) the average closing price of the Common Stock as reported by Bloomberg, L.P. on the Principal Market for the five (5) trading days immediately preceding the Maturity Date shall be greater than or equal to 120% of the Fixed Conversion Price and (ii) the amount of such conversion does not exceed twenty-five percent (25%) of the aggregate dollar trading volume of the Common Stock for the period of twenty-two (22) trading days immediately preceding the Maturity Date. If subsection (i) of the Conversion Criteria is met but subsection (ii) of the Conversion Criteria is not met as to the entire Principal Amount, the Holder shall convert only such part of the Principal Amount that meets subsection (ii) of the Conversion Criteria. Any portion of the Principal Amount due on the Maturity Date that the Holder has not been able to convert into shares of Common Stock due to the failure to meet the Conversion Criteria, shall be paid in cash by the Companies on the Maturity Date at the rate of 100% of the Principal Amount otherwise due on the Maturity Date.