Rights, Preferences, Protections Conversion Rights – The investor’s right to convert to common stock, at its option, or automatically upon the vote of a majority of preferred stockholders or a qualified IPO - based on a ratio (initially 1 for 1, as then adjusted). Preemptive Right– The investor’s pro rata right, based on percentage equity ownership, to participate in subsequent financings. If the investor owns 20% of Company before the subsequent financing, it typically has the right to take at least 20% of the subsequent financing. Registration Rights – The investor’s right to force the company, after a period of time, to register the investor’s shares and offer them publicly, or to include them as part of a registration and public offering made by the Company or a Management Stockholder. Redemption Rights – The investor’s right to require the company redeem its shares at a point in the future (i.e. 5 years) normally at the greater of the purchase price or the FMV (which can be determined by a formula, the Board, or an independent appraisal of the business).