If preferred or debt securities are proposed to be issued which are convertible, or are proposed to be issued in units with warrants or options (whether or not severable), the conversion rights, options or warrants (as the case may be) must be fair and equitable under the circumstances and should normally contain an appropriate antidilution provision providing for an adjustment of the number of shares into which such shares or units are convertible, or of the number of shares purchasable pursuant to such options or warrants, upon any stock split or stock dividend or other recapitalization of the issuer. Provision may also be made for a similar adjustment upon the issuance of additional shares of the class issuable upon conversion, or purchasable upon exercise, by the issuer for a consideration less than the conversion price or the exercise price of the options or warrants (as the case may be) or less than the then current market price for the class so issuable.

Note: Authority cited: Section 25610, Corporations Code. Reference: Section 25140, Corporations Code.

History

1. Amendment filed 2-2-83; effective thirtieth day thereafter (Register 83, No. 6).