Series Seed Preferred Stock Purchase Agreement

Neither the purchaser nor its senior executives, directors, employees, representatives, shareholders or partners made a general request for the offer and sale of Series Seed Preferred Stock shares, or (b) advertisements related to the offer and sale of Series Seed Preferred Stock shares. 1.2.3 The Company will provide any purchaser participating in this transaction with a certificate representing the shares of the preferred stock in the series that the purchaser represents at this closing in exchange for payment of the full purchase price by cheque payable to the Company by bank transfer to a bank account designated by the Company. , by cancelling or converting bonds or other convertible bonds of the Company issued primarily for capital purposes (for example. B for future equity) or through a combination of these methods. Recognizing that convertible debt securities are primarily used for their equity-type characteristics, leading start-up accelerator YCombinator has developed an alternative financial instrument called Simple Agreement for Future Equity or SAFE. A SAFE is essentially a convertible debt with distant characteristics of the debt. Like convertible bonds, FAS converts equity based on the price of the entity`s next equity financing and whether SAFE has a valuation cap, discount or both. Unlike convertible bonds, FAS has no interest and no maturity date. In the absence of a due date, FAS can remain on hold indefinitely without converting it into equity. From the company`s point of view, this protects the company from investors who use the threat of a default to take advantage of the company`s behavior or to get better terms along the way. From the investor`s point of view, this hinders the investor`s ability to hold the company to account as an investment manager. Whatever stock-type transformation characteristics described above, it is important to remember that convertible debt securities are due.

They appear as such in the company`s balance sheet. They`re interested. Unless amended, they must be repaid until their respective maturities. These terms naturally accompany debt and there is nothing wrong with accepting them by nature. The terms of the debt may therefore be somewhat incompatible with the spirit of seed internship investments. One of the reasons convertible bonds can be convertible is that, given the risks associated with seed internship investments, it is difficult to retain an interest rate that is both low enough to be controlled by the company and high enough to attract investors. In other words, convertible bond investors are not included for interest; they only really earn if the business is doing well and the convert permit is converted to equity. As a result, even when convertible debt maturing and debt matures, bondholders tend to extend the maturities of their bonds, because if they do, there is a chance that the business will succeed and, if they do not, there is near certain assurance that the business will fail (and probably will not be able to repay the investor).

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