Ask HN: YCombinator Term Sheet - Protective Provisions

I want to learn more about Angel and VC Terms Sheets and general investing legal documents and thought that the YCombinator Term Sheet (found here http://ycombinator.com/seriesaa.html) would be a great place to start. Everything in there I understand and seems to make sense. But, I have one question: In the Protective provisions section, it states:

"So long as any of the Preferred is outstanding, consent of the holders of at least 50% of the Preferred will be required for any action that:"... "(iii) approves any merger, sale of assets or other corporate reorganization or acquisition"

Because Preferred stock can be converted to common stock at any time surely this means that the owners of Preferred stock can convert 99.9% of their Preferred stock to common stock, and keep the 0.1% of Preferred stock through all rounds of funding and have final say on all matters mentioned in (iii) above?

Is this done in practice, what am I missing? (and thanks in advanced)