Rollover and Conversion Clause Samples
The Rollover and Conversion clause defines the process by which an existing financial instrument, such as a loan or convertible note, can be extended or converted into another form, typically equity. In practice, this clause outlines the conditions under which the original maturity date may be extended (rolled over) or the outstanding amount may be converted into shares of the company, often upon a triggering event like a new financing round. Its core function is to provide flexibility for both parties, allowing investors to either continue their investment or transition to equity, thereby addressing the need for adaptable financing arrangements as a company grows.
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Rollover and Conversion. 3.3.1 Subject to the terms and conditions of this Agreement and provided that no declaration has been made by the Lender under section 10.2, the Borrower may from time to time request that a Loan or any portion thereof be rolled over or converted to another form of Loan in accordance with the provisions hereof.
3.3.2 The Borrower shall repay to the Lender the full amount of each Bankers’ Acceptance and Libor Loan on the Expiry Date of the BA Period or Interest Period applicable thereto, in accordance with the provisions hereof governing repayment and prepayment, unless such Loan shall be rolled over or converted to another form of Loan on such Expiry Date in accordance with the provisions hereof.
3.3.3 Each request by the Borrower for a Rollover or Conversion shall be made by the delivery of a duly completed and executed Borrowing Notice to the Lender at the Branch of Account, and the provisions of section 3.1 shall apply to the Rollover or Conversion as if such Rollover or Conversion were an Advance.
3.3.4 Each Rollover or Conversion of a Libor Loan or Bankers’ Acceptance shall be made effective as of the Expiry Date of the Interest Period or BA Period applicable thereto.
3.3.5 If the Borrower does not deliver a Borrowing Notice at or before the time required by section 3.3.3; and
3.3.5.1 in the case of a Bankers’ Acceptance, does not pay to the Lender the Face Amount thereof on the Expiry Date of the relevant BA Period; or
3.3.5.2 in the case of a Libor Loan, does not pay to the Lender the principal amount thereof on the Expiry Date of the relevant Interest Period, such Loan shall be converted to a Prime Rate Loan (if the maturing Loan is denominated in Canadian dollars) or a Base Rate Loan (if the maturing Loan is denominated in U.S. dollars), and all of the provisions hereof applicable to Prime Rate Loans and Base Rate Loans, as the case may be, shall apply thereto.
3.3.6 A Rollover or Conversion shall not constitute a repayment of the relevant Loan but shall result in a change in the basis of calculation of interest or fees (as the case may be) for such Loan and, where applicable, the Currency of the Loan, in accordance with the provisions hereof.
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Rollover and Conversion