The Tennessee Proposal to Amend Certificate of Incorporation to Authorize a Preferred Stock is a significant step in the corporate governance of a Tennessee-based company. This proposal aims to introduce and authorize the issuance of preferred stock in the company's capital structure. Preferred stock is a specific class of stock that grants certain rights and privileges to its holders, distinguishing it from common stock. By amending the certificate of incorporation, the company seeks to provide its shareholders with the option to invest in preferred shares. Preferred stockholders enjoy various advantages compared to common stockholders, including priority in receiving dividends and liquidation proceeds. This proposal grants the company greater flexibility in raising capital and attracting investors by offering different classes of stock. Several types of preferred stock can be authorized with this amendment, including: 1. Cumulative Preferred Stock: This type of preferred stock entitles holders to receive unpaid dividends from previous years before any dividends can be paid to common stockholders. 2. Convertible Preferred Stock: This stock provides the option for preferred stockholders to convert their shares into a fixed number of common stock at a predetermined conversion ratio. This feature allows preferred stockholders to participate in potential future growth of the company. 3. Participating Preferred Stock: With this type of preferred stock, holders receive additional dividends or distributions on top of the fixed dividends stated in the stock's terms. These additional dividends are generally calculated based on the company's profitability. 4. Non-Cumulative Preferred Stock: Unlike cumulative preferred stock, non-cumulative preferred stock does not accumulate unpaid dividends. Once a dividend payment is missed, it cannot be claimed by the stockholders in the future. 5. Redeemable Preferred Stock: This type of preferred stock gives the company the right to repurchase the shares from stockholders at a specific price or within a defined timeframe. It provides flexibility for the company to adjust its capital structure in the future. The proposed amendment to the certificate of incorporation empowers the company to issue preferred stock, which can vary in terms and features to meet the specific needs of the business and its shareholders. This strategic move allows the company to diversify its funding sources, potentially attracting a broader range of investors and facilitating future growth and expansion efforts.