Vermont Anti-Dilution Adjustments

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US-CC-18-354D-3
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This is a multi-state form covering the subject matter of the title.

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FAQ

The conversion ratio is 1 to 1. Adjusting the conversion ratio can be used to maintain an investor's value in the company through anti-dilution provisions. The idea is that the investor paid too much for the shares early in the company's life.

Very simply, if the original conversion price was $5 and in a later round the conversion price is $2.50, the investor's original conversion price would adjust to $2.50. The weighted average provision uses the following formula to determine new conversion prices: C2 = C1 x (A + B) / (A + C)

Weighted average anti-dilution protection gives consideration to the relationship between the total shares outstanding as compared to the shares held by the original investor. The formula is CP2 = CP1 * (A+B) / (A+C).

Very simply, if the original conversion price was $5 and in a later round the conversion price is $2.50, the investor's original conversion price would adjust to $2.50.

Antidegradation limits incremental lowering of water quality in lakes, rivers, and wetlands when applied during a permit review process. Any lowering of water quality must be found to be necessary to avoid substantial economic and social impacts.

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Vermont Anti-Dilution Adjustments