Working Capital Financing

Working Capital Financing (Debt) – Refers to short-term debt (debt having maturities less than one year) which is used to finance Issuer cash flow short falls resulting from short-term payable obligations and uncollected short-term receivable.  Growing Issuers often have working capital pressures where cash is needed in increasing amounts to pay vendors before cash has been collected from a growing base of customer receivables.

Weighted Average Anti-Dilution

Weighted Average Anti-Dilution (Equity) - Issuance terms designed to protect all of the percentage ownership an equity Investor has in the Issuer when there is a future issuance of equity at a lower price than the previous equity sales.  Weighted average anti-dilution protection results in partial dilution protection, based upon the relative size of the later equity issuance to the earlier equity series receiving the protection.


Waterfall (Equity) – Describes the succession of Issuer payment preferences such that when one is satisfied, further payments are made to the next level preference.  For example, in participating Preferred Stock, Preferred dividends (which accrue over time) are paid first, followed by payment of the Investor’s invested capital, followed by distributions to common equity holders.


Warranties (Debt or Equity) -  Found in various financing agreements including but not limited to: accuracy of financial statements; no material adverse change; absence of litigation; no violation of agreements; compliance with laws; payment of taxes; solvency; compliance with environmental matters; accuracy of information; and validity, priority and perfection of security interest in the collateral (if appropriate).


Warrant (Equity) – An option that gives the holder the right to purchase securities (usually equity) from an issuer at a specific price within a certain time.  Warrants are sometimes included as part of a new debt issuance in order to provide Investors with a potentially enhanced return.

Uniform Commercial Code

Uniform Commercial Code - Is one of a number of uniform acts that have been promulgated in conjunction with efforts to harmonize the law of sales and other commercial transactions in all 50 states within the United States of America.  In securities transactions, these laws affect the perfection of liens on collateral used to support the repayment of notes.

Tag-Along Right

Tag-Along Right (Equity) – A shareholder right that assures that if the majority shareholder sells his stake, minority holders have the right to join the deal and sell their stake at the same terms and conditions as would apply to the majority shareholder. This right protects minority shareholders. Tag-along rights are standard terms in Shareholders Agreements.

State Securities Laws

State Securities Laws (Debt or Equity) - A state law in the United States that regulates the offering and sale of securities to protect the public from fraud. Though the specific provisions of these laws vary among states, they all require the registration of all securities offerings and sales, as well as of stockbrokers and brokerage firms. Each state's blue sky law is administered by its appropriate regulatory agency, and most also provide private causes of action for private investors who have been injured by securities fraud.  Also known as Blue Sky laws.

Subscription Agreement

Subscription Agreement (Debt or Equity) – An Agreement between the Issuer and the Investor which contains representations by each party relating to their condition at the time the security is issued/purchased.  This agreement evidences the investor’s commitment to invest and the amount of funds he is investing.  This Agreement can also be titled a Purchase Agreement.