RIGHT TO CONVERSION Clause Samples
The Right to Conversion clause grants a party, typically an investor or lender, the ability to convert their interest—such as debt or preferred shares—into another form of equity, usually common shares, under specified conditions. This right often becomes exercisable upon certain events, like a future financing round or at the holder’s discretion, and the conversion terms, such as the conversion rate or price, are usually predetermined in the agreement. The core function of this clause is to provide flexibility and potential upside to the holder, allowing them to participate in the company’s equity growth while also protecting their initial investment.
RIGHT TO CONVERSION. 3.2.1 The holders of the Series A Preference Shares shall have the right, at any time and from time to time to require the Company, by written notice (the “Series A Conversion Notice”), to convert all or part of the Series A Preference Shares, held by it into Ordinary Shares.
3.2.2 Each 0.001 of a Series A Preference Share shall convert into 0.001 of an Ordinary Share, subject to further adjustments in accordance with Schedule 5, without the holders of such Series A Preference Shares being required to pay any amount for such conversion (“Series A Conversion Factor”).
3.2.3 The Ordinary Shares issued under this paragraph 3.2 shall: (a) rank pari passu with other then-outstanding Ordinary Shares; (b) be duly authorised, validly issued and fully paid up; and (c) be issued free of Encumbrances.
3.2.4 The Series A Conversion Notice shall be dated and shall comprise the following details:
(a) the number of Series A Preference Shares in respect of which the holder of such Series A Preference Share is exercising its right under paragraph 3.2; and
(b) the number of Ordinary Shares that such Shares shall convert into pursuant to paragraph 3.2, with such number of Ordinary Shares to be determined, for the avoidance of doubt, based upon such financial and corporate details of the Company as are required to accurately calculate the same, which shall be provided by the Company to the relevant Series A Investors.
3.2.5 Upon receiving the Series A Conversion Notice, the Company shall effect the following:
(a) Convene a meeting of the Board to be held not later than 21 (twenty one) days from the date of the Series A Conversion Notice, in which meeting the Company shall approve:
(i) The conversion of such number of Series A Preference Shares as are mentioned in the Series A Conversion Notice; and
(ii) The issuance and allotment of such number of Ordinary Shares as are mentioned in the Series A Conversion Notice.
(b) Cancel the share certificates representing such number of Series A Preference Shares as are stated in the Series A Conversion Notice. The Company and the Founders agree to do all such acts and deeds to give effect to the provisions of this paragraph 3.2, including, if required, convening a meeting of the Board to approve the splitting of the share certificates representing the Series A Preference Shares;
(c) Issue share certificates to the Series A Investors, to evidence such Series A Investors as the owner of the Ordinary Shares issued upon conversion of such n...
RIGHT TO CONVERSION. Except as set forth on the face of the Positron Notes or within the Note Purchase Agreement, Loan Agreement, Security Agreement, Voting Agreement and Registration Rights Agreement between Imagin and Positron, dated May 21, 2004, the Statements of Designation of Positron's Series C and D Preferred Stock dated May 21, 2004, and other related documents, (the "Issuance Agreements"), Imagin is aware of no reason which would impair Cipher's right to deliver the Positron Notes to Positron in order to obtain the Positron Preferred and the Conversion Shares from Positron.
RIGHT TO CONVERSION. 3.2.1 The holders of the Series D Preference Shares shall have the right, at any time and from time to time to require the Company, by written notice (the “Series D Conversion Notice”), to convert all or part of the Series D Preference Shares, held by it into Ordinary Shares.
3.2.2 Each 0.001 of a Series D Preference Share shall convert into 0.001 of an Ordinary Share, subject to further adjustments in accordance with Schedule 5, without the holders of such Series D Preference Shares being required to pay any amount for such conversion (“Series D Conversion Factor”).
3.2.3 The Ordinary Shares issued under this paragraph 3.2 shall: (a) rank pari passu with other then-outstanding Ordinary Shares; (b) be duly authorised, validly issued and fully paid up; and (c) be issued free of Encumbrances.
3.2.4 The Series D Conversion Notice shall be dated and shall comprise the following details: