Drafting Convertible Preferred Stock Provisions, Equity Warrants and Options, Restricted Stock and Restricted Stock Unit Grants

Structuring Liquidation and Distribution Preferences, Conversion Rights, Anti-Dilution Protection, and Tax Provisions

Recording of a 90-minute premium CLE/CPE webinar with Q&A

Conducted on Wednesday, August 26, 2015

Recorded event now available

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Program Materials

This CLE webinar will discuss the risks and benefits of convertible preferred stock and equity options and warrants, as well as restricted stock and restricted stock unit grants, for investors, key employees and companies. The program will discuss drafting considerations and key terms for stock, warrants, option plans and restricted stock and restricted stock unit grants, as well as the tax ramifications for investors, employees and companies.


Convertible preferred stock provides investors two key benefits: a liquidation preference over common stock if the company is sold or liquidates and the right to convert into common stock if the company’s value increases significantly.

Key stock provisions include liquidation preferences, conversions, anti-dilution protection, and tax and accounting considerations. Drafters of stock provisions must be precise and clear in setting forth rights, powers and preferences.

Other incentives for investors and employees include equity warrants and options and restricted stock and restricted stock unit grants. Companies issuing Nonqualified Stock Options (NSOs), Incentive Stock Options (ISOs), Restricted Stock (RS) and Restricted Stock Units (RSUs) must be cognizant of the tax impacts of such awards, both to the companies themselves and to the employees or investors.

Listen as our authoritative panel of practitioners analyzes pros and cons of convertible preferred stock, equity options and warrants and restricted stock and restricted stock unit grants for investors, key employees and companies. The program will cover drafting considerations and key terms for these plans or arrangements, as well as tax issues for both investors, employees and companies.



  1. Convertible preferred stock
    1. Market trends in preferred deal terms
    2. National venture capital association:  http://nvca.org/resources/model-legal-documents/
    3. Fenwick & West venture capital survey 4th quarter 2014
    4. Participating versus nonparticipating
    5. Capped or not
    6. Board seats
    7. Negative covenants
    8. Tag-along and drag-along rights
    9. Preemptive rights
    10. Redemption rights
  2. Equity warrants and options
    1. Conversion ratios and post-conversion rights 
    2. Anti-dilution and liquidity provisions for warrants
    3. Stock options: NSOs and ISOs
    4. Restricted stock and RSUs
    5. Tax issues for equity compensation plans and grants and “phantom” equity
    6. Change-in-control issues


The speaker will review these and other key issues:

  • What are the benefits and risks for investors in obtaining convertible preferred stock?
  • What are the risks and benefits for companies issuing convertible preferred stock?
  • What key considerations must counsel consider in drafting convertible stock provisions?
  • What are the key plan terms for warrants and options?
  • How can a Section 409A valuation of employee stock options benefit both the company and key employees?


Joseph W. Bartlett
Joseph W. Bartlett

Special Counsel
McCarter & English

Mr. Bartlett's practice focuses in the areas of corporate law, securities and business transactions and venture...  |  Read More

Adam B. Cantor
Adam B. Cantor

Chiesa Shahinian & Giantomasi

Mr. Cantor chairs his firm's Employee Benefits and Executive Compensation Group. He focuses on employee...  |  Read More

Smith, Laurence
Laurence M. Smith

Chiesa Shahinian & Giantomasi

Mr. Smith is the co-chair of the firm's Corporate and Securities Group. He has a broad-based transactional practice...  |  Read More

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