EEE 4653 ACTUAL FINALS QUESTIONS AND
ANSWERS SET A+
✔✔Overall Board Governance & Voting:
(Terms Sheet) - ✔✔-Board of Directors
-Drag Along
-Founders' Stock Repurchase Rights (reverse vesting)
-No Shop/Confidentiality
-Company/Founder Representations & Warranties
-Expiration Date
✔✔Term Sheet normally is "Non-binding" EXCEPT for
(Terms Sheet) - ✔✔"No Shop/Confidentiality"
✔✔Pre-Money Valuation "Trade Offs" - ✔✔-Increase Pre-Money with Dividend Addition
-Increase Pre-Money Valuations as Dividend Rate
-Increase Pre-Money Valuations as "Liquidation Multiple"
✔✔Increase Pre-Money with Dividend Addition
"Trade Offs" - ✔✔Dividend Rate (i.e. %) Only Accrues on Original Investment Amount
(i.e. "simple interest") versus Original Investment PLUS Unpaid Accrued Dividends (i.e.
"compounding interest)
✔✔Increase Pre-Money Valuations as Dividend Rate
"Trade Offs" - ✔✔Increases (fundamentally increasing Liquidation Multiplier by Dividend
Rate X Projected years - at 10% per year over five years equates to an additional 0.5X
or 50% increase)
✔✔Increase Pre-Money Valuations as "Liquidation Multiple"
"Trade Offs" - ✔✔EXCEEDS a 1.0X
ANSWERS SET A+
✔✔Overall Board Governance & Voting:
(Terms Sheet) - ✔✔-Board of Directors
-Drag Along
-Founders' Stock Repurchase Rights (reverse vesting)
-No Shop/Confidentiality
-Company/Founder Representations & Warranties
-Expiration Date
✔✔Term Sheet normally is "Non-binding" EXCEPT for
(Terms Sheet) - ✔✔"No Shop/Confidentiality"
✔✔Pre-Money Valuation "Trade Offs" - ✔✔-Increase Pre-Money with Dividend Addition
-Increase Pre-Money Valuations as Dividend Rate
-Increase Pre-Money Valuations as "Liquidation Multiple"
✔✔Increase Pre-Money with Dividend Addition
"Trade Offs" - ✔✔Dividend Rate (i.e. %) Only Accrues on Original Investment Amount
(i.e. "simple interest") versus Original Investment PLUS Unpaid Accrued Dividends (i.e.
"compounding interest)
✔✔Increase Pre-Money Valuations as Dividend Rate
"Trade Offs" - ✔✔Increases (fundamentally increasing Liquidation Multiplier by Dividend
Rate X Projected years - at 10% per year over five years equates to an additional 0.5X
or 50% increase)
✔✔Increase Pre-Money Valuations as "Liquidation Multiple"
"Trade Offs" - ✔✔EXCEEDS a 1.0X