Ok you are trying to make something out of nothing. The shares issued in the condo purchase were authorized preferred shares of PBLS. They did not take common shares and convert them to preferred. That deal is for current common share holder who have the option to convert their 167 common share for 1 voting preferred stock.
When PBLS purchased the condo they used their previously authorized preffered shares and issued them to the seller. In the condo deal he was issued 400,000 common shares with a value of $10 per share or $4,000,000 the balance due on the purchase. He then has two options that he can exercise to get the balance of the purchase price, option 1 hold them for 5 years and then can redeem them by putting them to PBLS, at that time the holder would receive $4,000,000 in cash from PBLS. He was also offered another option, as he wanted to spread his capital gain across as many years as possible. The language is clear, he can convert 15% or 60,000 share after he has held them for 1 year, the price per share would be the price posted on the stock exchange as of the post mark date. So he can convert his 60,000 preferred share for 60,000 common stock shares. This is the holder choosing. If he converts and the price is below $10 then PBLS is at a big windfall as they are off the hook for those 60,000 shares or $600,000.00. The price is only relevant to the holder of the shares it does not affect PBLS at all, in fact if they convert to the common it reduces PBLS future liability.
I dont know how you see that as not a 1 for 1 deal. So there is not conversion like there was for the common shareholder who could trade in 167 common share for 1 preferred and then recieve a 6% dividend. As I stated before the $4,000,000 is actually an interest free loan for PBLS, they do not have to pay a dividend or interest on the money. The seller just holds onto the shares or he may sell them to a willing buyer.
Should the common stock price exceed $10.00 in 5 years, then the seller (holder of the preferred shares) would obviously choose option 2 and convert his shares to common shares and reap the benefits of the increase value of the shares as we all would also.
So dont make this as complicated, it is pretty clear the intent of the parties. The only problem I have is if the Agreement that I have (I was a party to the transaction, I brought Madison Bank into the mix) So if the document that is recorded with the government states that the seller is entitled to preferred shares of PBLS LLC, then their is a problem and it will have to be corrected.
So I let the cat out of the bag, I have in dept knowledge of
