A system used in connection with anti-dilution protection. A broad-based weighted average protection adjusts downward the price per share of the preferred stock of investor A due to the issuance of new preferred shares to a new investor B at a price lower than the price investor A originally paid. Investor A’s preferred stock is re-priced to a weighted average of investor A’s price and investor B’s price. If a broad-based weighted average systemis used, the denominator of the formula for determining the new weighted average price contains the total number of outstanding common shares (on an as-if converted basis) on a fully diluted basis (including all convertible securities, warrants and options).
