Legal Question in Securities Law in Illinois

Re: Structuring Private LLC/Preferred Stock offering that may be convertible to

I have been providing answers to questions on Lawguru.com for well over a year now, and I can say without hesitation that your questions are the most sophisticated I've found, which is undoubtedly why no attorney has yet to attempt to answer them.

1. In truth, I would need to know more about the structure of your organization before answering fully, but my sense is it depends upon the event that makes the preferred shares convertible and whether common shares are in treasury at the time of the conversion.

2. A convertible high yield debt purchase and preferred stock each have their benefits and drawbacks. If there is a risk of failure of the company, i.e., if it is, say, a biotech company with a drug that needs FDA approval in order to survive (or any other high-risk venture), then the debt-holder would get priority in any liquidation or bankruptcy, whereas the preferred shareholder would take after a creditor.

3. In the past I have introduced two clients or others I know to see whether they could do business.

-- Kenneth J. Ashman; www.AshmanLawOffices.com; [email protected]

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