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Zero-Coupon Bond

A "zero-coupon bond" refers to a security that doesn't pay interest currently. It is initially sold at a discount from the face value, and at maturity, the face value is paid to the holder.

 

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   Preferred Stock Purchase Agreement

A "preferred stock purchase agreement" is a contract where an investor purchases preferred stock in a company, pursuant to specified terms and conditions. For example, venture capitalists often invest in start-up companies pursuant to a preferred stock purchase agreement. The key provisions of preferred stock purchase agreements include:

    • Amount of shares being sold
    • Price paid
    • Rights of the preferred holder
    • Representations and warranties of the company
    • Covenants of the company
    • Disclosure schedule
    • Registration rights
    • Voting rights, including veto rights on major transactions such as the sale of the company or new financings
    • Anti-dilution protection
    • Pre-emptive rights
    • Rights to Board seats
    • Redemption rights
    • Dividend rights

Sample preferred stock purchase agreement can be found at www.LegalAgreements.com.
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