投资协议条款清单(Term Sheet)- 转换权.pdf

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1、投资协议条款清单（TermSheet）-转换权作者:桂曙光TermSheet:ConversionWhilelotsofVCspostureduringtermsheetnegotiationsbysaying"thatisnon-negotiable",termsrarelyare.Occasionally,atermwillactuallybenon-negotiable.InalltheVCdealswe'veeverseen,thepreferredhastheright-atanytime-toconvertitsstakeintocommon.Followingisthes

2、tandardlanguage:"Conversion:TheholdersoftheSeriesAPreferredshallhavetherighttoconverttheSeriesAPreferred,atanytime,intosharesofCommonStock.Theinitialconversionrateshallbe1:1,subjecttoadjustmentasprovidedbelow."Thisallowsthebuyerofpreferredtoconverttocommonshouldhedetermineonaliquidationthatheisb

3、etteroffgettingpaidonaproratacommonbasisratherthanacceptingtheliquidationpreferenceandparticipatingamount.Itcanalsobeusedincertainextremecircumstanceswherebythepreferredwantstocontrolavoteofthecommononacertainissue.Donote,however,thatonceconverted,thereisnoprovisionfor"re-converting"backtoprefer

4、red.Amoreinterestingtermistheautomaticconversion,especiallysinceithasseveralcomponentsthatarenegotiable."AutomaticConversion:AlloftheSeriesAPreferredshallbeautomaticallyconvertedintoCommonStock,atthethenapplicableconversionprice,upontheclosingofafirmlyunderwrittenpublicofferingofsharesofCommonSt

5、ockoftheCompanyatapersharepricenotlessthan[three]timestheOriginalPurchasePrice(asadjustedforstocksplits,dividendsandthelike)pershareandforatotalofferingofnotlessthan[$15]million(beforedeductionofunderwriterscommissionsandexpenses)(a"QualifiedIPO").All,oraportionof,eachshareoftheSeriesAPreferreds

6、hallbeautomaticallyconvertedintoCommonStock,atthethenapplicableconversionpriceintheeventthattheholdersofatleastamajorityoftheoutstandingSeriesAPreferredconsenttosuchconversion."InanIPOofaventure-backedcompany,theinvestmentbankerswillwanttoseeeveryoneconvertintocommonstockatthetimeoftheIPO(itisex

7、tremelyrareforaventurebackedcompanytogopublicwithmultipleclassesofstock–ithappens–butit'srare).Thethresholdsoftheautomaticconversionarecriticaltonegotiate–astheentrepreneur;youwantthemlowertoinsuremoreflexibilitywhileyourinv