Question

Review Certificate of Designation of Series A Convertible Preferred Stock ("CD") of Riffpad, Inc. and then answer the following questions. Assume that Riftpad filed the CD with the Delaware Division of Corporations on January 1, 2016 and issued all 10,000 shares of Series A Preferred Stock on that date to Sjo- Time Fund IX, LP ('S,0-Time') and all 10,000 shares remain outstanding. 1. What is the dollar amount of Accruing Dividends per share of Series A Preferred Stock on June 30,2018 assuming that Riffpad has never paid a dividend on its Series A Preterred Stock? 2. If Riffpad were to liquidate on June 30,2019 , and assuming that Riffpad had never paid a dividend on its Series A Preferred Stock as of that date, what is the dollar amount per share of the preterential payment described in section 21 of the Certificate of Designation?

Answer 1

The dollar amount of Accruing Dividends per share is $0. The dollar amount per share of the preterential payment depends on the liquidation value specified in the CD.

Step-by-step explanation:

The dollar amount of Accruing Dividends per share of Series A Preferred Stock on June 30, 2018, can be calculated by multiplying the number of shares by the Accruing Dividends rate. Since Riffpad has never paid a dividend on its Series A Preferred Stock, the Accruing Dividends rate is 0%. Therefore, the dollar amount of Accruing Dividends per share is $0.

The preterential payment described in section 21 of the Certificate of Designation represents the liquidation preference for the Series A Preferred Stock. In the event of liquidation on June 30, 2019, the holders of Series A Preferred Stock would be entitled to preferential payment before any payment is made to other classes of stock. The dollar amount per share of the preterential payment would depend on the liquidation value specified in the CD.