Common use of Conversion Notices Clause in Contracts

Conversion Notices. (a) In the event that a Conversion Notice is served on the Manager pursuant to Clause 20.5, the Prescribed Equity of the defaulting Joint Venturer ("the Reducing Party") shall be reduced and of the Electing Party shall be correspondingly increased in accordance with the following formula : CPE = DP/V x 100 where CPE is the change in Prescribed Equities of the Reducing Party and the Electing Party; DP is the amount of the Default Payment (as defined in Clause 20.5) as at the date the change in Prescribed Equity takes effect; and is the fair value of the entire Joint Venture determined and certified by the Auditor (who shall be engaged by the Manager for this purpose), acting as expert and not as an arbitrator, as what in its opinion is the fair value of the entire Joint Venture on a going concern basis assuming a willing (but not anxious) vendor and a willing (but not anxious) purchaser contracting at arm's length. (b) For the sake of clarity, the Joint Venturers agree that in the event that an Electing Party's Prescribed Equity is to be increased in accordance with this clause, its new Prescribed Equity shall be equal to its Prescribed Equity prior to such increase plus CPE.