§107.850. Restrictions on redemption of Equity Securities. — Inbound Citations

(b) Equity Securities means stock of any class in a corporation, stock options, warrants, limited partnership interests in a limited partnership, membership interests in a limited liability company, or joint venture interests. If the Financing agreement contains debt-type acceleration provisions or includes redemption provisions, other than those permitted under § 107.850, the security will be considered a Debt Security for purposes of § 107.855 and § 107.1150(c)(1).

(b) You may make a Short-term Financing for a term less than one year if the Financing is:

(1) The contemplated long-term Financing must be in an amount at least equal to the short-term Financing, and must be made by you alone or in participation with other investors;

(2) For protection of your prior investment(s);

(3) For the purpose of Financing a change of ownership under § 107.750. The total amount of such Short-term Financings may not exceed 20 percent of your Loans and Investments (at cost) at the end of any fiscal year; or

(4) For the purposes of aiding a Disadvantaged Business certified to perform a contract awarded under a Federal, State, or local government set-aside program.

(a) This section applies to all Loans and Debt Securities. As required by § 107.800(b), you must include as Debt Securities any equity interests with redemption provisions that do not meet the restrictions in § 107.850.