The Book of Jargon®

The Nasdaq Stock Market, Inc. NASDAQ is the largest electronic screen-based Equity Securities market in the United States. NYSE and NASDAQ are the two principal market centers for buying and selling Equity Securities in the United States.

Acronym for Non-Disclosure Agreement.

Acronym for the New York Stock Exchange.

Legalese for an agreement not to do something. These are contractual provision often found in an Investor Rights Agreement or Loan and Security Agreement for Startups, which prohibit the company from engaging in specified activities, such as issuing new Preferred Stock, amending the Charter, making incurring new Debt, selling assets or making Acquisitions. Think of these Negative Covenants as the “Thou Shalt Not” covenants. Negative Covenants can be highly customized to specific conditions and are often negotiated heavily. Compare Affirmative Covenants.

Now part of NYSE Euronext, which was formed in April 2007. In contrast to other exchanges, the NYSE still conducts some of its transactions on a trading floor located on Wall Street.

The prohibition of broadly marketing a Securities offering in a Private Placement. While general solicitation is now permitted in certain Reg D offerings as a result of rules adopted by the SEC in July 2013 in connection with the JOBS Act, general solicitation still has not been widely used in the Private Placement context because of some of the procedural requirements that must be met.

An agreement by one or both companies involved in a Financing or Merger that they will only deal with the other party involved and will not solicit other investments or bids or provide information to other possible bidders or Investors during a certain period of time.

An Investor that does not qualify as an Accredited Investor.

A contractual restraint on competition. In Startups, this type of clause is more common on the East Coast than the West Coast because of the limitations established by certain states, like California, regarding the enforceability of this type of clause.

A Dividend that does not automatically accrue.

Another name for a Confidentiality Agreement.

Preferred Stock that has a Liquidation Preference that gets paid in preference to the holders of Common Stock, but after the Preferred Stockholder receives this amount it does not participate in any assets distributed to the Common Stock unless the Preferred Stockholder elects to convert into Common Stock (and in that case, they forgo their Liquidation Preference and instead simply get what the Common Stockholders receive).

A type of Option granted under an Equity Incentive Plan, typically granted to a non-employee (such as a Director or a Consultant), that does not qualify for the beneficial tax treatment provided by Incentive Stock Option (ISO) under the Internal Revenue Code (IRC).

Agreement not to poach or hire a company’s Employees or customers. Certain states, like California, have limited the enforceability of this type of clause.

Similar to a Stock Purchase Agreement but instead of Equity, this agreement provides for a loan to the company in exchange for a Convertible Promissory Note, usually as part of a Bridge Financing.