ADJUSTMENTS TO THE CONVERSION Clause Samples

The "Adjustments to the Conversion" clause defines how the terms of converting one type of security or instrument into another may be modified under certain circumstances. Typically, this clause outlines scenarios such as stock splits, mergers, or issuance of additional shares, and specifies how conversion ratios or prices will be recalculated to ensure fairness to the parties involved. Its core practical function is to protect investors and stakeholders from dilution or unintended changes in value, ensuring that the conversion rights remain equitable despite changes in the company’s capital structure.