Glossary of Terms


This Glossary contains descriptions of terms as commonly used in PIPE Transactions and Registered Direct Offerings and/or on PipeFund.com.

For terms marked with an “ * ”, see also PST Document DEF for precise legal definition used in PipeFund Documents.

20% Rule*
Generally, the rule applicable to an issuer whose securities are traded on the NYSE Amex or the Nasdaq Stock Market which requires stockholder approval prior to the sale, issuance or potential issuance of 20% or more of the outstanding amount of such securities in a private offering at an effective price less than the greater of book or market value.

Accredited Investor
Any Person who comes within any of the following categories at the time of the sale of securities to that Person:
  1. Any bank as defined in section 3(a)(2) of the Securities Act, or any savings and loan association or other institution as defined in section 3(a)(5)(A) of the Securities Act whether acting in its individual or fiduciary capacity; any broker or dealer registered pursuant to section 15 of the Exchange Act; any insurance company as defined in section 2(a)(13) of the Securities Act; any investment company registered under the Investment Company Act or a business development company as defined in section 2(a)(48) of the Investment Company Act; any Small Business Investment Company licensed by the U.S. Small Business Administration under section 301(c) or (d) of the Small Business Investment Act of 1958; any plan established and maintained by a state, its political subdivisions, or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, if such plan has total assets in excess of $5,000,000; any employee benefit plan within the meaning of ERISA if the investment decision is made by a plan fiduciary, as defined in section 3(21) of ERISA, which is either a bank, savings and loan association, insurance company, or registered investment adviser, or if the employee benefit plan has total assets in excess of $5,000,000 or, if a self-directed plan, with investment decisions made solely by persons that are accredited investors;
  2. Any private business development company as defined in section 202(a)(22) of the Investment Advisers Act of 1940;
  3. Any organization described in section 501(c)(3) of the IRC, corporation, Massachusetts or similar business trust, or partnership, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000;
  4. Any director, executive officer, or general partner of the Issuer of the securities being offered or sold, or any director, executive officer, or general partner of a general partner of that Issuer;
  5. Any natural person whose individual net worth, or joint net worth with that person's spouse, at the time of his or her purchase exceeds $1,000,000, excluding the value of the primary residence of such natural person;
  6. Any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year;
  7. Any trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) of the Securities Act; and
  8. Any entity in which all of the equity owners are accredited investors.
See Rule 501(a) of Regulation D of the Securities Act for precise legal definition.

Affiliate*
Generally, with respect to any Person, any other Person that directly or indirectly Controls, is Controlled by, or is under common Control with, such Person.

Anti-Dilution Adjustment Period*
Period during which Weighted-Average Anti-Dilution Adjustment, Full Ratchet Anti-Dilution Adjustment and/or Below-Market Anti-Dilution Adjustment applies under a Convertible Security or Option (including any Note, Preferred Share or Warrant). The default Anti-Dilution Adjustment Period under the PST Documents begins on the date the Securities Purchase Agreement is executed and ends on the date the applicable Convertible Security or Option is no longer outstanding.

Base Prospectus*
Prospectus included in a Registered Direct Registration Statement at the time it is first declared effective by the Commission.

Below-Market Anti-Dilution Adjustment*
Reduction to the Conversion Price, Exercise Price or Exchange Price under a Convertible Security or Option (including any Note, Preferred Share or Warrant) as a result of a Subsequent Issuance of securities by an Issuer at or to a Subsequent Issuance Price which is less than the Market Price as of the date of such issuance. In determining the reduction, generally such Conversion Price, Exercise Price or Exchange Price would be multiplied by a fraction, the numerator of which would be the sum of (a) the number of shares of Common Stock actually outstanding immediately prior to such Subsequent Issuance, plus (b) the number of shares of Common Stock which the aggregate consideration received or receivable (or deemed received or receivable) by the Issuer in connection with such Subsequent Issuance would purchase at such Market Price, and the denominator of which would be the sum of (1) the number of shares of Common Stock of the Issuer actually outstanding immediately after such Subsequent Issuance plus (2) the Maximum Shares Deemed Outstanding as a result of such Subsequent Issuance. Typically, a Below-Market Anti-Dilution Adjustment of a Warrant should also provide for the number of Warrant Shares that may be purchased upon exercise of such Warrant to be inversely proportionately increased so that after such adjustment the aggregate Exercise Price payable under such Warrant for the adjusted number of Warrant Shares would be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.

Beneficial Ownership Limitation*
Limitation contained in a Convertible Security or Option (including any Note, Preferred Share or Warrant) which limits the holder’s right to convert, exercise or exchange such security to the extent such conversion, exercise or exchange would cause the holder to beneficially own in excess of a specified percentage of the outstanding shares of Common Stock of the Issuer. PipeFund Documents refer to this percentage as the Maximum Ownership Percentage. Beneficial ownership is generally determined in accordance with Regulation 13D-G (although typically beneficial ownership of other Convertible Securities or Options held by the holder containing a Beneficial Ownership Limitation is excluded). The default Maximum Ownership Percentage under the PipeFund Documents is 9.9%.

Black-Scholes Option Pricing Model*
Commonly-used formula for determining the value of an Option (including a Warrant) based on the model developed by Fisher Black, Robert Merton and Myron Scholes. Generally the formula factors in the exercise price of the Option, exercise period of the Option, risk-free interest rate and volatility of the underlying security.

Bloomberg
Bloomberg Financial Markets information databases and services operated by Bloomberg, L.P.

Bulletin Board (OTCBB)
Electronic quotation/trading service operated by FINRA which provides price quotes, sale prices and volume information for over-the-counter (OTC) equity securities. There are no listing requirements for the OTCBB, but issuers are required to file current financial statements with the Commission. Note that the OTCBB is not part of The Nasdaq Stock Market (Global Select Market, Global Market or Capital Market).

Business Day
Typically for PIPE Transactions or Registered Direct Offerings, any day except Saturday, Sunday and any U.S. federal legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other governmental action to close.

Buy-In Price*
Total purchase price (including brokerage commissions) for shares of Common Stock purchased in a Buy-In.

Buy-In*
When a Person, who sells shares of Common Stock he anticipates receiving from an Issuer, purchases or is required to purchase (or the Person’s brokerage firm otherwise purchases) shares of Common Stock to deliver in satisfaction of such sale.

By-Laws
By-laws or similar document which governs the internal management of a corporation, including the rights and powers of the corporation’s stockholders, directors and officers. See also “Certificate of Incorporation”.

Cashless Exercise*
Exercise of an Option (including a Warrant), where payment of the aggregate exercise price is made, instead of in cash, by the holder receiving a number of shares of Common Stock equal to (a) the amount by which the current market price for the Common Stock exceeds the exercise price multiplied by (b) the number of shares for Common Stock for which the Option is being exercised, based on a the value of one share of Common Stock equal to the current market price.

Certificate of Designation*
Certificate of designation or other amendment to the Certificate of Incorporation of a corporation designating the rights, preferences and privileges of a series of preferred stock.

Certificate of Incorporation
Certificate or articles of incorporation filed with a state or other applicable jurisdiction to establish a corporation and regulate certain aspects of its existence in accordance with the laws of such state or jurisdiction.

Change of Control*
Generally any change in the control of an Issuer, typically including (i) any merger or consolidation with another company, (ii) any sale or disposition of all or substantially all of the assets of the Issuer, (iii) any reorganization, recapitalization or spin-off whereby the Issuer’s stockholders entitled to vote in the election of the Board of Directors prior to such event cease to own 50% or more of the voting power of the surviving entity after such event, (iv) any purchase, tender or exchange offer consummated with holders of more than 50% of the outstanding equity, (v) any Person or group of Persons becoming the “beneficial owner” of a significant percentage of the outstanding equity, such as 50%, (vi) the replacement of more than one-half of the members of the Issuer’s Board of Directors such that a majority of the members of the Board of Directors were not either (a) a director at the time the applicable Securities Purchase Agreement was executed or (b) nominated to the Board of Directors by other incumbent Director, or (vii) any liquidation or dissolution of the Issuer.

Closing Date*
Date of any Closing.

Closing*
The consummation of the purchase and sale of Securities by investors pursuant to a Securities Purchase Agreement.

Commission (or SEC)*
United States Securities and Exchange Commission, the federal agency which administers the Securities Act, Exchange Act and other securities laws.

Common Stock*
Generally the class of equity security of a corporation which entitles holders to the assets of the corporation after satisfaction of the terms of any debt and preferred stock. With respect to PIPE Transactions or Registered Direct Offerings, Common Stock typically includes stock designated as common stock by the Issuer and currently registered or contemplated to be registered under the Exchange Act.

Company
Issuer selling or agreeing to sell securities in a PIPE Transaction or Registered Direct Offering pursuant to a Securities Purchase Agreement.

Control
Direct or indirect possession of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

Conversion Price*
Price set forth in any Convertible Security (including Notes and Preferred Shares) as the price used to determine the number of shares of Common Stock (or number of other securities underlying such Convertible Security) to be issued to the holder of such Convertible Security upon conversion thereof of a dollar value represented by such Convertible Security.

Conversion Shares
Shares of Common Stock issued or issuable (a) upon conversion, redemption or exercise of, (b) as payment for principal, interest or dividends on, (c) as liquidated damages with respect to, and/or (d) in exchange for or otherwise pursuant to, any Notes or Preferred Shares.

Convertible Securities*
Any evidences of indebtedness, shares or other securities (typically excluding Options) directly or indirectly convertible into or exercisable or exchangeable for shares of Common Stock (including Notes and Preferred Shares).

Default Rate
Interest rate in effect under Transaction Documents following a default thereunder. The default “Default Rate” under the PipeFund Documents is 18% per annum.

Dilutive Issuance*
Subsequent Issuance of securities by an Issuer for, at or to an effective Subsequent Issuance Price which is less than the Conversion Price, Exercise Price or Exchange Price under a Convertible Security or Option (including any Note, Preferred Share or Warrant).

Disclosure Schedule*
Collectively schedules delivered by the Issuer to each Purchaser in a PIPE Transaction or Registered Direct Offering as of the date of execution of the Securities Purchase Agreement, which schedules qualify or set forth exceptions, information or details pertaining to representations or covenants contained in the Securities Purchase Agreement. In a PipeFund Transaction, the Disclosure Schedule must be uploaded to the Transaction Portal for the transaction prior to execution of the Securities Purchase Agreement.

Documents Escrow Agent
Person appointed to serve as the Escrow Agent under a Documents Escrow Agreement to accept, hold and distribute Securities and other closing documents.

Documents Escrow Agreement
Escrow Agreement entered into among the Issuer and Investors in a PipeFund Transaction appointing an escrow agent in a PIPE Transaction to accept, hold and distribute Securities and other closing documents in connection with the closing of the transaction.

DTC
The Depository Trust Company and The Depository Trust & Clearing Corporation and their subsidiaries.

DVP
Delivery Versus Payment, whereby securities are only delivered to a purchaser in settlement of a transaction upon the seller’s receipt of payment for such securities. This procedure prevents either party from assuming risk in the exchange process due to the time elapsed between delivery and payment. By using PipeFund Escrow Services in a PIPE Transaction, DVP is enabled since PipeFund holds the securities and delivers them to Investor(s) upon release of the investment funds which are also held in escrow, permitting a simultaneous exchange.

DVP Settlement
Settlement process for a Registered Direct Offering whereby (a) the Issuer delivers Shares via DTC credit directly to the Investor’s account at the Placement Agent, and (b) the Investor deposits or maintains a minimum cash balance equal to its Subscription Amount in such account prior to such delivery.

DWAC
DTC’s Deposit/Withdrawal at Custodian system by which shares of Common Stock issued by an Issuer may be electronically deposited into a recipient’s securities brokerage account.

DWAC Settlement
Settlement process for a Registered Direct Offering whereby (a) the Issuer delivers Shares via DWAC to the Investor’s designated brokerage account, and (b) the Investor remits its Subscription Amount to the Escrow Account.

EDGAR
Electronic Data Gathering, Analysis, and Retrieval system operated by the Commission.

Effective Date*
Date on which a Registration Statement is first declared effective by the Commission.

Effective Time*
Time at which a Registration Statement is first declared effective by the Commission on the Effective Date.

Effectiveness Deadline*
Date by which a Registration Statement is required to be declared effective by the Commission under the Transaction Documents for a PIPE Transaction. Generally, the default Effectiveness Deadline under the PipeFund Documents is the 90th day following the initial Closing Date (or the 120th day in the event there is a full review of the Registration Statement by the Commission).

Eligible Markets*
PIPE Transactions typically require that the Issuer’s Common Stock remain or become listed on at least one stock market or exchange which is acceptable to the Investors among a list of acceptable exchanges and markets, called Eligible Markets in the PipeFund Documents. The default list of Eligible Markets in the PipeFund Documents includes the New York Stock Exchange, NYSE Amex, Nasdaq Global Select Market, Nasdaq Global Market and Nasdaq Capital Market. Often parties to a PIPE Transaction will add the Bulleting Board as an Eligible Market.

Equity Conditions*
Conditions which must be satisfied by the Issuer in particular circumstances, such as a forced conversion of Notes or Preferred Shares or being permitted to pay interest or dividends in shares of Common Stock. Typical Equity Conditions include one of more of the following: (a) a sufficient number of authorized and reserved but unissued shares of Common Stock for the issuance of all shares of Common Stock underlying Notes, Preferred Shares and Warrants, (b) all the shares underlying Notes, Preferred Shares or Warrants either (i) are registered for resale pursuant to an effective Registration Statement and current Prospectus or (ii) may be sold pursuant to Rule 144 without any volume restrictions, manner of sale requirements or notice requirements, (c) the Common Stock is listed or quoted and is not suspended from trading on an Eligible Market and all shares underlying Notes, Preferred Shares or Warrants are approved for listing on such Eligible Market, (d) no Change of Control is pending, (e) the Issuer has complied with all requirements under the Transaction Documents, and (f) the Issuer is not bankrupt of insolvent.

ERISA
Employee Retirement Income Security Act of 1974.

Escrow Account
Bank account established by the Escrow Agent for the purpose of depositing, holding and distributing funds representing Subscription Amounts received from Investors in accordance with the terms of the Escrow Agreement. In a PipeFund Transaction utilizing PipeFund Escrow Service, PipeFund Services Organization establishes a segregated Escrow Account at JPMorgan Chase Bank upon initiation of the PipeFund Transaction or otherwise designates a reputable banking institution or law firm as Escrow Agent.

Escrow Agent
Person appointed to serve as the Escrow Agent under an Escrow Agreement.

Escrow Agreement
Escrow Agreement entered into among certain participants in a PipeFund Transaction and Escrow Agent appointing the Escrow Agent to serve as escrow agent in a PIPE Transaction or Registered Direct Offering, pursuant to which the Escrow Agent holds cash and/or Securities in connection with the closing of the transaction.

Exchange Act
United States Securities Exchange Act of 1934.

Exchange Price*
Price set forth in any Convertible Security (including Notes and Preferred Shares) as the price used to determine the number of shares of Common Stock (or number of other securities underlying such Convertible Security) to be issued to the holder of such Convertible Security upon exchange thereof of a dollar value represented by such Convertible Security.

Executive Officer
President, any vice president or other individual in charge of a principal business unit, division or function (such as sales, administration or finance), any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Issuer. An executive officer of a Subsidiary may be deemed an Executive Officer if such individual performs such policy-making functions for the Issuer or if such Subsidiary is materially significant to the Issuer.

Exempt Issuances*
Specified types of sales, issuances or grants of Common Stock, Convertible Securities or Options which are exempt from the application of anti-dilution adjustments for Subsequent Issuances of the Issuer’s securities. Typical Exempt Issuances include issuances (a) to any officer, director, employee or consultant of the Issuer or its Subsidiaries pursuant to an option or equity incentive compensation plan duly adopted by the Issuer’s Board of Directors, (b) upon conversion or exchange of any Convertible Securities, or exercise of any Options, in each case outstanding on the date of execution of the Securities Purchase Agreement, in accordance with the terms of such Convertible Securities or Options as of such date of execution, and (c) pursuant to the Securities issued under the Securities Purchase Agreement (including Warrants to any Placement Agent), and (d) by reason of a dividend, stock split, split-up or other distribution on shares of Common Stock for which adjustment of the Conversion Price, Exercise Price and/or Exchange Price is provided under the terms of the Notes, Certificate of Designation and/or Warrants, as applicable.

Exercise Price*
Amount set forth in any Option (including Warrants) as the price the holder of such Option must pay to the Issuer to purchase a single share of Common Stock upon exercise of the Option.

Filing Deadline*
Date by which a Registration Statement is required to be filed with the Commission under the Transaction Documents for a PIPE Transaction. Generally, the default Filing Deadline under the PipeFund Documents is the 30th day following the initial Closing Date.

Final Prospectus*
Final Prospectus, including any prospectus supplement thereto, filed by the Issuer with the Commission pursuant to Rule 424(b), for use in connection with a Registered Direct Offering of the Securities.

Financial Intermediary
Any member or affiliate of FINRA or any other person or entity that is paid a commission in connection with a PipeFund Transaction.

FINRA
Financial Industry Regulatory Authority (successor to the NASD).

Form 10
Form prescribed by the Commission pursuant to which an Issuer initially registers its Common Stock under the Exchange Act.

Form 10 Information
Information required by Form 10 to register securities under the Exchange Act. Under Rule 144, holders of Restricted Securities in a Shell Company generally must wait until one year following the date on which the Issuer publicly furnishes Form 10 Information until such holders may sell such Restricted Securities without registration under the Securities Act.

Form 10-K
Annual Report filed (or required to be filed) with the Commission by an Issuer pursuant to the Exchange Act. Form 20-F or Form 40-F, as applicable, is used by foreign issuers in lieu of Form 10-K.

Form 10-Q
Quarterly Report filed (or required to be filed) with the Commission by an Issuer pursuant to the Exchange Act.

Form 8-K
Current Report filed (or required to be filed) with the Commission by an Issuer pursuant to the Exchange Act to promptly disclose particular material changes or information concerning the Issuer.

Form S-1
Long Form adopted by the Commission for registering securities under the Securities Act for sale by the Issuer or resale by Investors and/or others.

Form S-3
Short Form adopted by the Commission for registering securities under the Securities Act for sale by the Issuer or resale by Investors and/or others. This Form also permits incorporation by reference, permitting it to remain effective over time without refiling the Form.

Full Ratchet Anti-Dilution Adjustment*
Reduction of the Conversion Price, Exercise Price or Exchange Price under a Convertible Security or Option (including any Note, Preferred Share or Warrant) to equal the Subsequent Issuance Price following a Subsequent Issuance of securities by an Issuer at or to a Subsequent Issuance Price which is less than such Conversion Price, Exercise Price or Exchange Price then in effect.

Funds Escrow Agent
Person appointed to serve as the Escrow Agent under an Escrow Agreement solely to accept, hold and distribute subscription funds.

GAAP
United States generally accepted accounting principles applied on a consistent basis during the periods involved.

Guarantee
Any guarantee or surety agreement executed and delivered by an Issuer or its Subsidiaries or any third party in favor of Investor(s) pursuant to the Transaction Documents which guarantees the Issuer’s or any Subsidiary’s obligations or liabilities under one or more of the Transaction Documents.

IFRS
International Financial Reporting Standards, as issued by the International Accounting Standards Board, applied on a consistent basis during the periods involved.

Investment Company Act
United States Investment Company Act of 1940.

Investment Manager
Investment manager, advisor or other Person which enters into PIPE Transactions and/or Registered Direct Offerings on an Investor's behalf pursuant to discretionary authority (e.g., investment manager of a hedge fund, general partner of a private equity fund, investment advisor for discretionary accounts).

Investor
Person who purchases or agrees to purchase Securities in a PIPE Transaction or Registered Direct Offering pursuant to a Securities Purchase Agreement. Investors are often referred to as Purchasers in Transaction Documents (including in PipeFund Documents).

IRC
United States Internal Revenue Code of 1986.

Issuer
Issuer selling or agreeing to sell securities in a PIPE Transaction or Registered Direct Offering pursuant to a Securities Purchase Agreement. An Issuer is often referred to as the Company in Transaction Documents (including in PipeFund Documents).

Joint Closing Instructions
Written instructions executed by the Issuer and the Purchaser Closing Representative and delivered at Closing to the Escrow Agent in a PIPE Transaction or Registered Direct Offering, which instructions authorize and direct the Escrow Agent to distribute the escrow funds and/or Securities in accordance with the Escrow Agreement and such instructions.

Legal Counsel
Law firm or attorney representing a party or participant in a PIPE Transaction or Registered Direct Offering, including as legal counsel for the Issuer, one or more Investor(s) or the Placement Agent.

Legend Removal Date*
Date by which any restrictive legend contained on a stock certificate is required to be removed. The default Legend Removal Date under the PipeFund Documents is the 3rd Trading Day following the date on which an Investor delivers to the Issuer a legended certificate with a request that such legend be removed, provided such delivery is made during a period when legend removal is required.

Liquidated Damages Percentage*
Percentage of the Subscription Amount or other value required to be paid by the Issuer to the Investor(s) as Liquidated Damages as a result of the Issuer’s failure, refusal or inability to comply with the applicable provision in the Transaction Documents. The default Liquidated Damages Percentage under the PipeFund Documents is 1½%.

Liquidated Damages*
The estimate by the Issuer and Investor(s) of a portion of the amount of damages suffered or to be suffered by the Investor(s) as a result of the Issuer’s failure, refusal or inability to comply with the applicable provision in the Transaction Documents.

Listing Default*
Failure by the Issuer to maintain the listing of its Common Stock on an Eligible Market.

Lock-Up Agreement*
Any agreement executed and delivered by a designated executive officer or director of the Issuer or any third party pursuant to the Transaction Documents which restricts such Person from disposing of securities of the Issuer beneficially owned by such Person for a specified period of time.

Material Adverse Change
Any change of the Issuer that has a Material Adverse Effect.

Material Adverse Effect
A material adverse effect on (i) the operations, results of operations, management, assets, properties, prospects, business or condition (financial or otherwise) of the Issuer and its Subsidiaries, taken as a whole, (ii) the legality, validity or enforceability of any Transaction Document, (iii) the Issuer’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document, or (iv) the rights and remedies of any Investor under the terms of any Transaction Document in any material respect.

Maximum Aggregate Investment Amount
Maximum aggregate Subscription Amount permitted by all Investors in the aggregate at all Closings collectively under the Securities Purchase Agreement. This maximum, if any, is to be designated in the Securities Purchase Agreement.

Maximum Ownership Percentage*
Percentage specified by an Investor or holder of securities (in the Securities Purchase Agreement or otherwise) as the maximum percentage of the outstanding shares of Common Stock of the Issuer which such Investor can beneficially own following a conversion, exercise or exchange of a Convertible Security or Option (including any Note, Preferred Share or Warrant). The default Maximum Ownership Percentage under the PipeFund Documents is 9.9%. Investors typically choose either a 4.9% or 9.9% Maximum Ownership Percentage. Beneficial ownership, determined in accordance with Regulation 13D-G, of an Issuer’s Common Stock in excess of (a) 5% requires the holder to file a Schedule 13G or Schedule 13D with the Commission, and (b) 10% requires the holder to make additional filings with the Commission in accordance with Section 16(a) under the Exchange Act and to disgorge any short swing profits made in the Common Stock by the holder in accordance with Section 16(b) under the Exchange Act.

Maximum Shares Deemed Outstanding
Maximum number of shares of Common Stock potentially issuable upon full conversion, exercise or exchange of Options or Convertible Securities issued by the Issuer in a Subsequent Issuance after execution of a Securities Purchase Agreement (typically regardless of whether such Options or Convertible Securities are then exercisable, convertible or exchangeable and without regard to any limitations on beneficial ownership contained therein). See also “Subsequent Issuance.”

MFN Transaction*
Any transaction in which the Issuer issues or sells any securities to an investor in one or a series of related capital raising transactions which grants to such investor the right to receive additional securities or better terms based in some manner upon future sales or issuances of Common Stock, Options or Convertible Securities on terms more favorable than those granted to such investor in such capital raising transaction(s).

Minimum Aggregate Investment Amount
Minimum aggregate Subscription Amount required by all Investors in the aggregate at all Closings collectively under the Securities Purchase Agreement. This minimum, if any, is to be designated in the Securities Purchase Agreement.

NASD
National Association of Securities Dealers, Inc., predecessor to FINRA.

Notes*
Debentures, promissory notes, bonds or similar debt securities, whether secured or unsecured, purchased or contemplated to be purchased pursuant to a Securities Purchase Agreement (or upon exercise of Warrants entitling the holder to purchase Notes).

OFAC
Office of Foreign Assets Control of the United States Treasury Department.

Offering
Offering and sale of Securities pursuant to either (a) a Securities Purchase Agreement for a PIPE Transaction or (b) a Registered Direct Registration Statement for a Registered Direct Offering.

Offering Termination Date
Date following which no further sales of Securities pursuant to the Offering may occur under a Securities Purchase Agreement. The default Offering Termination Date under the PipeFund Documents is the 30th day following the initial Closing.

Options
Any rights, warrants or options to subscribe for, purchase or otherwise acquire shares of Common Stock, Convertible Securities or other Options (including Warrants).

Organizational Documents
Collectively the Certificate of Incorporation, By-Laws, operating agreement, partnership agreement and all other documents adopted, filed or agreed upon in connection with the formation or organization of a Person or relating to the conduct of such Person’s affairs or the rights, powers and obligations of its shareholders, partners or members.

Party
Any Person party to a Transaction Document in a PIPE Transaction or Registered Direct Offering.

Per Share Purchase Price
Price set forth in the Securities Purchase Agreement as the effective purchase price per share of Common Stock under a Securities Purchase Agreement.

Periodic Report
Any Annual Report, Quarterly Report or Current Report (generally filed on Form 10-K, 10-Q or 8-K, respectively) filed or required to be filed by an Issuer with the Commission under the Exchange Act.

Person
An individual, corporation, partnership, limited liability company, trust, business trust, association, joint stock company, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, governmental authority or agency or any other form of entity.

Physical Settlement
Settlement process for a Registered Direct Offering whereby (a) the Issuer delivers stock certificates evidencing the Shares to the Investor, and (b) the Investor remits its Subscription Amount to the Escrow Account.

Pink Sheets
Pink Sheets Electronic Quotation Service operated by Pink Sheets LLC (formerly the National Quotation Bureau, Inc.).

PIPE Transaction*
The offer and sale of an Issuer’s Common Stock (or a class thereof), and/or securities directly or indirectly convertible, exercisable and/or exchangeable into or for Common Stock, in a transaction exempt from the registration requirements of the Securities Act, where such Common Stock is registered under the Exchange Act or otherwise publicly traded or contemplated to be publicly traded.

PipeFund
PipeFund Services Organization and the business and services operated and rendered by PipeFund Services Organization to facilitate PIPE Transactions and Registered Direct Offerings.

PipeFund Document License
License granting participants in a PIPE Transaction or Registered Direct Offering the right to use the PipeFund Documents for such transaction. This license only applies for a single transaction. See www.pipefund.com/legal to view the license agreement.

PipeFund Documents
Collectively all PipeFund Forms and PST Documents developed by PipeFund Services Organization for use in PIPE Transactions and Registered Direct Offerings.

PipeFund Escrow Service
Escrow service provided by PipeFund Services Organization whereby PipeFund serves as and/or otherwise designates a banking institution or law firm as Escrow Agent in a PipeFund Transaction, receiving, holding and distributing investment funds and/or certain Transaction Documents in connection with its duties as Escrow Agent.

PipeFund Forms
Proprietary form or template documents developed by PipeFund Services Organization in Microsoft Word® for use in preparing Transaction Documents for PIPE Transactions and Registered Direct Offerings, which incorporate by reference the terms, conditions and definitions contained in PST Documents. Current PipeFund Forms are generally available and accessible at www.pipefund.com. Current PipeFund Forms include:
  • Form of Securities Purchase Agreement (PIPE)
  • Form of Securities Purchase Agreement (RD)
  • Form of Warrant
  • Form of Convertible Note
  • Form of Certificate & Designation
  • Form of Escrow Agreement
  • Form of Documents Escrow Agreement
PipeFund Services Organization
PipeFund Services Organization, LLC, a Delaware limited liability company.

PipeFund Services Organization Standard Transaction Document (PST Document)
Proprietary standard transaction documents developed by PipeFund Services Organization in fixed PDF form intended to be incorporated by reference into Transaction Documents for PIPE Transactions and Registered Direct Offerings. PST Documents are designated and referenced by name and (where applicable) version number and generally available and accessible at www.pipefund.com.

PipeFund Transaction
PIPE Transaction or Registered Direct Offering which utilizes the services of PipeFund Services Organization, including PipeFund Documents and/or PipeFund Escrow Services. Each PipeFund Transaction receives a unique Transaction Code.

PipeFund Transaction Code
The number (or code) assigned to a PIPE Transaction or Registered Direct Offering by PipeFund Services Organization, which consists of the Issuer’s ticker symbol, followed by the two digit year in which the applicable offering commenced and the sequential alphabetical letter, starting with “A”, indicating the applicable offering/transaction within such year on pipefund.com. For example, the second PIPE Transaction or Registered Direct Offering by IBM in 2012 would be assigned the code “IBM-12-B”.

Placement Agent
Any placement agent, broker, underwriter or finder in connection with a PIPE Transaction or Registered Direct Offering.

Plan of Distribution
The plan of distribution and/or sale of Registrable Securities by Investors in a PIPE Transaction pursuant to an effective Registration Statement, which plan is set forth in the related Prospectus. This plan typically provides a broad array of available means and manner by which the Registrable Securities may be sold.

Preferred Shares*
Shares of preferred stock of an Issuer purchased or contemplated to be purchased pursuant to a Securities Purchase Agreement (or upon exercise of Warrants entitling the holder to purchase Preferred Shares). Such shares have the rights, preferences and privileges set forth in a Certificate of Designation for such shares.

Preliminary Prospectus*
In a Registered Direct Offering of Securities of an Issuer, the Base Prospectus contained in a Registered Direct Registration Statement or other preliminary Prospectus filed by the Issuer with the Commission pursuant to Rule 424(b) of the Securities Act, subject to completion, together with any supplement to the preliminary Prospectus.

Principal Market
Principal stock exchange or market on which an Issuer’s Common Stock is publicly traded.

Prospectus*
Any prospectus, notice, circular, advertisement, letter or communication which offers any security for sale or confirms the sale of any security. With respect to a PIPE Transaction or Registered Direct Offering, generally a Prospectus refers to the Prospectus contained in or related to a Registration Statement or Registered Direct Registration Statement, respectively (whether preliminary, final, summary or free writing or an offering circular or similar document).

PST Documents (PipeFund Services Organization Standard Transaction Documents)
Proprietary standard transaction documents developed by PipeFund Services Organization in fixed PDF form intended to be incorporated by reference into Transaction Documents for PIPE Transactions and Registered Direct Offerings. PST Documents are designated and referenced by name and (where applicable) version number and generally available and accessible at www.pipefund.com. Current PST Documents include:
  • PST Document GTC (General Terms and Conditions)
  • PST Document GTC-RD (General Terms and Conditions – Registered Direct Offering)
  • PST Document DEF (Definitions)
  • PST Document WAR (Standard Warrant Terms)
  • PST Document CN (Standard Note Terms)
  • PST Document ESC (Standard Escrow Terms)
  • PST Document ESC-D (Standard Escrow Terms for Documents)
Purchaser Closing Representative
Person in a PipeFund Transaction designated by Investors in a Securities Purchase Agreement to act on their behalf to authorize the release or return of funds or documents pursuant to the Escrow Agreement. The Purchaser Closing Representative may be any Person not affiliated with the Issuer, including any Placement Agent, any Purchaser or any Purchaser’s counsel. If there is only one Purchaser in a PIPE Transaction, then such Purchaser is the Purchaser Closing Representative (unless another Person is designated).

Purchaser Registration Counsel
Legal counsel designated by holders of Registrable Securities to review a Registration Statement.

Purchaser*
Person who purchases or agrees to purchase Securities in a PIPE Transaction or Registered Direct Offering pursuant to a Securities Purchase Agreement.

Registered Direct Offering*
The offer and sale of an Issuer’s Common Stock (or a class thereof), and/or securities directly or indirectly convertible, exercisable and/or exchangeable into or for Common Stock, pursuant to a Prospectus contained in a Registration Statement filed under the Securities Act which has been declared effective by the Commission, where such Common Stock is registered under the Exchange Act or otherwise publicly traded or contemplated to be publicly traded.

Registered Direct Registration Statement*
Registration Statement filed with the Commission by an Issuer under the Securities Act pursuant to which the Issuer offers and/or sells Securities to Investors in a Registered Direct Offering. Under the PipeFund Documents, the Registered Direct Registration Statement is specified in the Securities Purchase Agreement by its registration number and the date on which it first became effective.

Registrable Securities*
All shares of Common Stock issued, and all shares of Common Stock directly or indirectly issued or issuable upon conversion, exercise or exchange of Notes, Preferred Shares and/or Warrants issued, in a PIPE Transaction which are subject to registration rights in the Transaction Documents.

Registration (or Register or Registered)
Registration of the offer, sale or resale of securities effected by preparing and filing a Registration Statement in compliance with the Securities Act, and the declaration or ordering of the effectiveness of such Registration Statement by the Commission.

Registration Compliance*
All Equity Conditions are satisfied for the period that Registration Compliance is being determined.

Registration Period*
Period during which a Registration Statement must be effective covering the resale of Registrable Securities pursuant the Transaction Documents in a PIPE Transaction. The default Registration Period under the PipeFund Documents commences on the Effective Date of the Registration Statement and ends on the earlier of (a) the date when all Registrable Securities covered by the Registration Statement have been sold publicly, and (b) the date on which all Registrable Securities are eligible for sale without registration or restriction pursuant to Rule 144, but no less than one year following the Closing Date.

Registration Statement*
Registration statement filed or to be filed with the Commission by an Issuer to register the offer and sale of securities under the Securities Act. With respect to a PIPE Transaction, Registration Statement refers to a registration statement filed or required to be filed by an Issuer pursuant to the Transaction Documents covering the sale or resale of Registrable Securities. With respect to a Registered Direct Offering, Registration Statement refers to a Registered Direct Registration Statement filed by an Issuer pursuant to which the Issuer offers and/or sells Securities to Investors in a Registered Direct Offering.

Regulation 13D-G
Regulation 13D-G, as promulgated by the Commission under the Exchange Act, which among other things sets forth the provisions for determining beneficial ownership under the Exchange Act.

Regulation D
Regulation D, as promulgated by the Commission under the Securities Act, which provides rules pursuant to which an Issuer may offer and sell securities to Investors without being subject to the registration and prospectus delivery requirements of the Securities Act. Reg. D, as it is commonly known, is a “safe harbor” provision, not an exclusive election; the Issuer can also claim the availability of any other applicable exemption under the Securities Act, including Section 4(2) of the Securities Act (a transaction not involving any public offering). PIPE Transactions are typically exempt from or not subject to the registration and prospectus delivery requirements of the Securities Act pursuant to Reg. D, Regulation S or Section 4(2) under the Securities Act.

Regulation S
Regulation S, as promulgated by the Commission under the Securities Act, which provides rules pursuant to which an Issuer may offer and sell securities to Investors outside the United States without being subject to the registration and prospectus delivery requirements of the Securities Act. Reg. S, as it is commonly known, is a “safe harbor” provision, not an exclusive election; the Issuer can also claim the availability of any other applicable exemption under the Securities Act, including Section 4(2) of the Securities Act (a transaction not involving any public offering).

Restricted Securities
Securities acquired directly or indirectly from an Issuer, or from an affiliate of an Issuer, in a transaction or chain of transactions not involving any public offering. Generally Securities issued to Investors in a PIPE Transaction, including securities issued upon conversion, exercise or exchange of Securities, will constitute Restricted Securities under Rule 144.

Rule 144*
Rule 144, as promulgated by the Commission under the Securities Act, which provides rules pursuant to which an Investor may publicly sell securities received in a PIPE Transaction (including shares of Common Stock issued upon conversion, exercise or exchange of Notes, Preferred Shares and/or Warrants) without being subject to the registration and prospectus delivery requirements of the Securities Act. Although Rule 144 is technically a safe harbor provision, common practice is to not publicly sell Restricted Securities without either satisfying the rules contained in Rule 144 or selling pursuant to an effective Registration Statement covering such sale. Generally, an Investor non-affiliated with the Issuer may sell Restricted Securities without registration under the Securities Act after a holding period of six months, provided that if the Issuer has not been subject to the reporting requirements of the Exchange Act for at least the 90-day period prior to the contemplated sale or has not filed all required reports under the Exchange Act at the time of the contemplated sale, the holding period is one year. If the Issuer was a Shell Company, among other requirements the holding period is one year from the date the Issuer files Form 10 Information with the Commission. This synopsis is merely a summary in general terms of certain aspects of Rule 144 and is subject in its entirety to the actual provisions of Rule 144 under the Securities Act.

Rule 415*
Rule 415, as promulgated by the Commission under the Securities Act, which provides conditions under which securities may be registered for sale or resale under the Securities Act in an offering to be made on a continuous or delayed basis in the future. Investors in PIPE Transactions who sell Registrable Securities under a Registration Statement generally rely on Rule 415 to permit them to sell such securities at market prices prevailing at any time in the future. Recently Rule 415 has been a significant issue for PIPE Transaction participants; beginning in the fall of 2006 the Commission staff began asserting in Registration Statement comment letters and public statements that if the number of shares of Common Stock being registered represented a large percentage of the Issuer’s outstanding common stock or public float, the staff would view the Investors as affiliates of the Issuer and the offering would be deemed a primary offering by the Issuer instead of a secondary offering by the Investors. Consequently Rule 415 would not be available unless the Issuer was able to satisfy the more stringent conditions directly or indirectly required by Rule 415 (e.g., public float of at least $75 million, listing or quotation on a national securities exchange or market). Although there are no fixed guidelines, generally the Commission has frowned upon registration in excess of 30% of an Issuer’s public float, and in particular with respect to PIPE Transactions involving Convertible Securities. Recent changes to Rule 144 and Form S-3 eligibility requirements may have alleviated this issue. This synopsis is merely a summary in general terms of certain aspects of Rule 415 and is subject in its entirety to the actual provisions of Rule 415 and Form S-3 under the Securities Act and the Commission interpretations thereunder.

Sarbanes-Oxley
United State Sarbanes-Oxley Act of 2002.

SEC (or Commission)*
United States Securities and Exchange Commission, the federal agency which administers the Securities Act, Exchange Act and other securities laws.

Securities
All Shares, Notes, Preferred Shares and/or Warrants purchased pursuant to a Securities Purchase Agreement in a PIPE Transaction or Registered Direct Offering.

Securities Act
United States Securities Act of 1933.

Securities Purchase Agreement
Securities purchase agreement relating to the purchase and sale of securities entered into between an Issuer and Investor(s). In a PipeFund Transaction, the Securities Purchase Agreement incorporates by reference, in whole or in part, the applicable version of PST Document GTC set forth therein.

SEDAR
System for Electronic Document Analysis and Retrieval operated by the Canadian Securities Administrators.

Selling Stockholder Questionnaire
Questionnaire furnished by an Issuer to Investor(s) soliciting information in connection with the preparation of a Registration Statement and/or the offer and sale of the Securities in a PIPE Transaction or Registered Direct Offering.

Shares
Shares of Common Stock of an Issuer purchased or contemplated to be purchased pursuant to a Securities Purchase Agreement.

Shell Company
An entity that has (a) no or nominal operations, and (b) either (i) no or nominal assets, (ii) assets consisting solely of cash and cash equivalents, or (iii) assets consisting of any amount of cash and cash equivalents and nominal other assets.

Short Sale
Sale of shares of Common Stock which the seller does not own or any sale of shares of Common Stock which is consummated by the delivery of shares of Common Stock borrowed by, or for the account of, such seller, as determined in accordance with Rule 200 of Regulation SHO under the Exchange Act.

Stockholder Approval
A vote of or written consent by the requisite number of stockholders of an Issuer under applicable corporate law and in accordance with the applicable rules and regulations of the Principal Market and the Commission which either, as applicable (a) approves the Transactions pursuant to the Securities Purchase Agreement, including the issuance of shares of Common Stock equal to and in excess of 20% of the Common Stock and voting power of the Issuer outstanding before the Closing in satisfaction of the 20% Rule, (b) amends the Issuer’s Certificate of Incorporation to increase the number of authorized shares of Common Stock, or (c) other applicable corporate action.

Subscription Amount
Aggregate dollar amount to be paid by a Purchaser for Securities under a Securities Purchase Agreement.

Subsequent Issuance *
Generally any issuance by the Issuer after execution of a Securities Purchase Agreement of any shares of Common Stock, Options or Convertible Securities (in which case typically the issuance of Options or Convertible Securities will constitute issuance of the Maximum Shares Deemed Outstanding). Typically a Subsequent Issuance will also include amendments to, and/or any increase in the number of shares underlying, any previously issued Options or Convertible Securities, but will exclude stock dividends, stock splits and other pro rata distributions to the extent anti-dilution protection is already provided for in the Transaction Documents.

Subsequent Issuance Price*
Amount actually paid or payable for one share of Common Stock upon the issuance or deemed issuance of such share by the Issuer in a Subsequent Issuance. The Subsequent Issuance Price is generally used for determining whether a Dilutive Issuance has occurred and the calculation of a Weighted-Average Anti-Dilution Adjustment, Full Ratchet Anti-Dilution Adjustment or Below-Market Anti-Dilution Adjustment. In general, the Subsequent Issuance Price will factor in the effect of the issuance of Options or Convertible Securities, Variable Rate Transactions, MFN Transactions, modifications of outstanding Options or Convertible Securities, and aspects of the consideration received. For the specific terms and provisions of Subsequent Issuance Price under the PipeFund Documents, see PST Document DEF.

T+#, T+3
Although generally the term has been used to refer to the number of Trading Days following a stock trade by which settlement must occur, in PIPE Transactions T+# similarly refers to the number of Trading Days following a conversion, exchange or exercise of Convertible Securities or Options by which the Issuer is required to deliver the shares of Common Stock issuable upon such conversion, exchange or exercise, where “#” represents the such number of Trading Days. T+3 is often used in PIPE Transactions.

Trading Day*
Typically any day on which the Principal Market of an Issuer is open for general trading.

Trading Market*
Any national securities exchange, market or trading or quotation facility. See also “Eligible Markets”.

Transaction Code
The number (or code) assigned to a PIPE Transaction or Registered Direct Offering by PipeFund Services Organization, which consists of the Issuer’s ticker symbol, followed by the two digit year in which the applicable offering commenced and the sequential alphabetical letter, starting with “A”, indicating the applicable offering/transaction within such year on pipefund.com. For example, the second PIPE Transaction or Registered Direct Offering by IBM in 2010 would be assigned the code “IBM-10-B”.

Transaction Documents
With respect to any PIPE Transaction or Registered Direct Offering, all transaction documents in connection with the Transactions, including the Securities Purchase Agreement, any Notes and/or Warrants directly or indirectly issued pursuant thereto, any Certificates of Designation designating the rights, preferences and privileges of any Preferred Shares directly or indirectly issued pursuant thereto, any Security Documents, Guarantees and/or Lock-Up Agreements, and any other agreements or documents executed and/or delivered pursuant to the foregoing transaction documents or in connection with the Transactions.

Transactions
Collectively all transactions contemplated by a Securities Purchase Agreement and the other Transaction Documents in a PIPE Transaction or Registered Direct Offering.

Transfer Agent
Transfer agent who handles issuing and transferring an Issuer’s shares of Common Stock.

Transfer Agent Instructions*
Irrevocable instructions delivered by an Issuer to its Transfer Agent instructing the Transfer Agent to deliver stock certificates to one or more Investors.

U.S. Person
Generally, any natural person resident in the United States or any partnership or corporation organized or incorporated under the laws of the United States. See definition contained in Rule 902(k) of Regulation S promulgated under the Securities Act for a more complete definition.

Underlying Shares
All Conversion Shares and Warrant Shares.

Variable Rate Transaction*
Transaction in which an Issuer issues or sells (a) any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive additional shares of, Common Stock either (i) at a conversion, exercise or exchange price or other rate that is based upon and/or varies with, or is subject to adjustment based on, the trading prices of or quotations for the Common Stock at any time after the initial issuance of such debt or equity securities, (ii) with a fixed conversion, exercise or exchange price or other rate that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events related to Issuer’s business or the market for the Common Stock, or (iii) under a warrant exercisable for a number of shares based upon and/or varying with the trading prices of or quotations for the Common Stock at any time after the initial issuance of such warrant, or (b) any securities of the Issuer pursuant to an agreement whereby the Issuer may sell securities of the Issuer at a future determined price (typically including an “equity line” structure which provides for the sale from time to time of securities of the Issuer which are registered for sale or resale pursuant to the Securities Act).

VWAP*
Generally, on any particular Trading Day or for any particular period, the volume-weighted average sale price per share of Common Stock on the Principal Market on such Trading Day during the regular trading session or for such period, respectively, typically as reported by Bloomberg through its “Volume at Price” function.

Warrant Coverage Percentage*
Percentage used to determine the number of Warrant Shares issuable upon exercise of Warrants issued or to be issued in a PIPE Transaction or Registered Direct Offering. In a PIPE Transaction or Registered Direct Offering for Common Stock, generally the number of Warrant Shares is determined by multiplying the number of shares of Common Stock purchased in a transaction by the Warrant Coverage Percentage. In a PIPE Transaction for Notes or Preferred Shares, generally the number of Warrant Shares is determined by multiplying the initial number of Conversion Shares by the Warrant Coverage Percentage, using either the initial Conversion Price under the Notes or Preferred Shares or a defined market price as the conversion price for such purpose.

Warrant Shares
Shares of Common Stock issued or issuable upon exercise or redemption of, in exchange for and/or otherwise pursuant to Warrants.

Warrants*
Warrants, options or similar subscription or purchase rights purchased or contemplated to be purchased pursuant to a Securities Purchase Agreement entitling Investor(s) to purchase shares of Common Stock (or Preferred Shares, Notes and/or Warrants which are convertible, exercisable or exchangeable for shares of Common Stock).

Weighted-Average Anti-Dilution Adjustment*
Reduction to the Conversion Price, Exercise Price or Exchange Price under a Convertible Security or Option (including any Note, Preferred Share or Warrant) as a result of any Dilutive Issuance. In determining the reduction, generally such Conversion Price, Exercise Price or Exchange Price would be multiplied by a fraction, the numerator of which would be the sum of (a) the number of shares of Common Stock actually outstanding immediately prior to such Dilutive Issuance, plus (b) the number of shares of Common Stock which the aggregate consideration received or receivable (or deemed received or receivable) by the Issuer in connection with such Dilutive Issuance would purchase at the Subsequent Issuance Price, and the denominator of which would be the sum of (1) the number of shares of Common Stock of the Issuer actually outstanding immediately after such Dilutive Issuance plus (2) the Maximum Shares Deemed Outstanding as a result of such Dilutive Issuance. Typically, a Weighted-Average Anti-Dilution Adjustment of a Warrant should also provide for the number of Warrant Shares that may be purchased upon exercise of the Warrant to be inversely proportionately increased so that after such adjustment the aggregate Exercise Price payable under the Warrant for the adjusted number of Warrant Shares would be the same as the aggregate Exercise Price in effect immediately prior to such adjustment.