Transaction Adjustments In Convertible Securities

Law360, New York (April 23, 2010, 1:38 PM EDT) -- Convertible debt and equity securities, such as preferred stock, convertible notes or debentures, and warrants, which we refer to collectively as “convertible securities,” are financial instruments with embedded derivatives. Generally, these securities contain anti-dilution adjustment provisions that are intended to protect the holder or the issuer from the occurrence of a number of events that could affect the value of the instruments.

“Standard” anti-dilution provisions, including provisions related to stock options, stock dividends, and similar transactions, are found in virtually all such instruments. Other anti-dilution provisions...
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