Pennsylvania Code › Title 10 - BANKING AND SECURITIES › Part VII - Securities › Subpart A - Definitions › Chapter 102 - DEFINITIONS › Section 102.021 - Definitions

Current through Register Vol. 54, No. 28, July 13, 2024
(a) The following
				  words and terms, when used in this part, have the following meanings, unless
				  the context clearly indicates otherwise:
3(c)(1) fund
-A qualifying private fund
					 that is eligible for exclusion from the definition of "investment company" in
					 section 3(c)(1) of the Investment Company Act of 1940 (15 U.S.C.A. §
												80a-3(c)(1)).
203(d) restricted securities
-Securities
					 purchased under section 203(d) of the act (70 P.S. §
												1-203(d)) if the purchaser
					 is subject to the restriction not to resell the security for 12 months after
					 the date of the purchase.
Accountant's report
-A document prepared by
					 an independent certified public accountant indicating the scope of the audit
					 with either of the following:
(i) An
				  opinion regarding the financial statements taken as a whole.
(ii) An assertion that an overall opinion
				  cannot be expressed and the reason why.
Accredited investor
-As defined in Rule 501
					 of Regulation D ( 17 CFR
					 230.501 ) (relating to definitions and terms
					 used in Regulation D).
Act
-The Pennsylvania Securities Act of
					 1972 (70 P.S. §§
												1-101-1-703.1).
Advertisement
-
(i) As defined in section 102(a) of the act
				  (70
				  P.S. §
												1-102(a))
				  wherein the term:
(A) Communication includes,
				  without limitation, letters, brochures, pamphlets, displays, sales literature
				  and any form of electronic communication, including e-mail, which is used in
				  connection with a sale or purchase, or an offer to sell or purchase a
				  security.
(B) Publicly disseminated
				  means communication directed to or communicated to more than 50 persons in this
				  Commonwealth.
(ii) For
				  purposes of §
											404.010 (relating to
				  advertisements by investment advisers and investment adviser representatives),
				  any notice, circular, letter or other written communication addressed to more
				  than one person, or any notice or other announcement in any publication, by
				  radio or television, or by electronic means, which offers:
(A) An analysis, report or publication
				  concerning securities, or which is to be used in making any determination as to
				  when to buy or sell any security, or which security to buy or sell.
(B) A graph, chart, formula or other device
				  to be used in making any determination as to when to buy or sell any security,
				  or which security to buy or sell.
(C) Other investment advisory service with
				  regard to securities.
Agent
-As defined in section 102(c) of the
					 act:
(i) Including a person considered
				  an officer, director, partner or employee of an issuer, or an individual
				  occupying a similar status or performing similar functions, if the designation
				  is applied for the purpose of avoiding registration as an agent under the
				  act.
(ii) Excluding persons acting
				  as transfer agents and registrars on behalf of issuers or performing only
				  ministerial duties in handling securities and maintaining lists of security
				  holders.
Aggregate indebtedness
-As defined in
					 17 CFR
					 240.15c3-1 (relating to net
					 capital requirements for brokers or dealers), promulgated under the Securities
					 Exchange Act of 1934 (15
					 U.S.C.A. §§
												78a-78qq).
Agricultural cooperative
					 association
-
(i) An
				  association which admits to membership only persons engaged in agriculture and
				  is organized and operated to engage in a cooperative activity for persons
				  engaged in agriculture in connection with:
(A)
				  Producing, assembling, marketing, buying, selling, bargaining or contracting
				  for agricultural products; harvesting, preserving, drying, processing,
				  manufacturing, blending, canning, packing, ginning, grading, storing,
				  warehousing, handling, transporting, shipping or utilizing the products; or
				  manufacturing or marketing the by products of agriculture.
(B) Manufacturing, processing, storing,
				  transporting, delivering, handling, or buying for or furnishing supplies to its
				  members and patrons.
(C) Performing
				  or furnishing business, educational, recreational or other services, including
				  the services of labor, buildings, machinery, equipment, trucks, trailers and
				  tankers, or other services connected with the purposes in this subparagraph and
				  subparagraph (ii) on a cooperative basis.
(ii) A federation of individual agricultural
				  cooperative associations if the federation does not possess greater powers or
				  purposes and engages in operations no more extensive than an individual
				  agricultural cooperative association.
Agricultural cooperative association
					 member
-A patron, to the extent that the organic law or another law to
					 which the agricultural cooperative association is subject requires the patron
					 to be treated as a member.
Amount
-A quantity, which for the purpose
					 of:
(i) Evidence of indebtedness is the
				  principal amount.
(ii) Shares is
				  the number of shares.
(iii) Any
				  other kind of security is the number of units.
Any credit union
-An institution organized
					 as a credit union under the applicable laws of the Commonwealth, the business
					 of which is:
(i) Confined
				  substantially to the credit union business (the receipt of deposits from and
				  the making of loans to bona fide members of the credit union).
(ii) Supervised and examined as a credit
				  union by the appropriate Commonwealth authorities having supervision over that
				  institution.
Audit
-The examination of historical
					 financial statements by an independent certified public accountant in
					 accordance with generally accepted auditing standards for the purpose of
					 expressing an opinion thereon.
Auditor's report
-A written report by an
					 independent certified public accountant which contains either an expression of
					 opinion on an entity's financial statements, taken as a whole, or an assertion
					 that an opinion cannot be expressed.
Bank
-
(i) As defined in section 102(d) of the
				  act.
(ii) The term does not
				  include:
(A) A holding company for a
				  bank.
(B) A bank-in-organization if
				  the state or Federal regulator with primary authority over the
				  bank-in-organization determines that it is not a bank under the law governing
				  that bank-in-organization.
Bank holding company
-A person engaged,
					 either directly or indirectly, primarily in the business of owning securities
					 of one or more banks for the purpose, and with the effect, of exercising
					 control.
Beneficial ownership
-
(i) For purposes of §§
											203.184 and
				  609.012 (relating to offers and
				  sales to principals; and computing the number of offerees, purchasers and
				  clients) and section 203(s)(v) and (t)(v) of the act, as defined in
				  17 CFR
				  240.13d-3 (relating to determination of
				  beneficial owner).
(ii) For
				  purposes of §
											302.070 (relating to registration
				  exemption for investment advisers to private funds), as defined in
				  17 CFR
				  270.2a51-2 (relating to definitions of
				  beneficial owner for certain purposes under sections 2(a)(51) and 3(c)(7) and
				  determining indirect ownership interests).
(iii) For purposes of §§
											304.012,
				  305.019 and
				  404.011 (relating to investment
				  adviser required records; dishonest and unethical practices; and investment
				  adviser brochure disclosure), as defined in
				  17 CFR
				  275.204A-1 (relating to investment adviser
				  codes of ethics).
Bona fide distribution
-A distribution not
					 made solely to avoid the registration provisions of section 201 of the act
					 (70
					 P.S. §
												1-201).
Bona fide pledgee
-
(i) A secured party who takes securities in
				  pledge to secure a bona fide debt.
(ii) The term does not include a secured
				  party who takes securities in pledge under either of the following
				  circumstances:
(A) Without any intention or
				  expectation that they will be redeemed but merely as a step in the distribution
				  to the public.
(B) Without having
				  secured knowledge, in the exercise of reasonable diligence, before the
				  consummation of the pledge that the securities taken in pledge are lawfully
				  owned by the party making the pledge.
Bond
-
(i) A debt obligation, including a note,
				  debenture or other evidence of indebtedness.
(ii) For purposes of §
											202.092 (relating to guaranties of
				  certain debt securities exempt), an exempt security under section 3(a)(2) of
				  the Securities Act of 1933 (15 U.S.C.A. §
												77c(a)(2)) when either of
				  the following applies:
(A) The issuer of the
				  security is located in this Commonwealth.
(B) The guaranty issued in connection with
				  the bond, note, debenture or other evidence of indebtedness is considered to be
				  a separate security under Securities and Exchange Commission Rule 131 (
				  17 CFR
				  230.131 ) (relating to definition of security
				  issued under governmental obligations).
Branch office
-As defined in FINRA Rule
					 3110(e) or any successor rule.
Broker-dealer
-
(i) As defined in section 102(e) of the
				  act.
(ii) The term does not include
				  persons:
(A) Acting as transfer agents and
				  registrars on behalf of issuers.
(B) Performing only ministerial duties in
				  handling securities and maintaining lists of security holders.
CRD
-The Central Registration Depository
					 operated by FINRA, and any successor thereto.
Class of a series
-Equity securities of an
					 issuer of substantially similar character, the holders of which enjoy
					 substantially similar rights and privileges.
Client
-
(i) A person to whom an investment adviser or
				  investment adviser representative has provided investment advice for which the
				  investment adviser or investment adviser representative received
				  compensation.
(ii) For purposes of
				  §
											404.012 (relating to cash payment
				  for client solicitation), the term includes a prospective client.
(iii) For purposes of §
											404.011, the term includes each
				  limited partner of a limited partnership, each member of a limited liability
				  company and each beneficiary of a trust if the investment adviser is the
				  general partner of the limited partnership, manager of the limited liability
				  company or trustee of the trust.
Commission
-Any form of compensation
					 received by any person for effecting the purchase or sale of a security.
Comparative financial statement
-A document
					 which includes financial statements for 2 years or more presented in adjacent
					 columnar form.
Compensation
-Receipt, directly or
					 indirectly, of any payment or consideration, whether or not in the form of
					 cash, or any economic benefit.
Confidential information
-Records and other
					 information in the Department's possession which are not available for public
					 inspection and copying under the Right-to-Know Law (65 P.S. §§
												67.101-67.3104) or section 603(c) of the act
					 (70
					 P.S. §
												1-603(c)).
Control
-
(i) As defined in section 102(g) of the
				  act.
(ii) For purposes of §
											304.012 and §
											404.014 (relating to custody
				  requirements for investment advisers), the term includes the power, directly or
				  indirectly, to direct the management or policies of a person whether through
				  ownership of securities, by contract, or otherwise, including the following
				  presumptions:
(A) Each of the investment
				  adviser's officers, partners or directors exercising executive responsibility
				  (or persons having similar status or functions) is presumed to control the
				  investment adviser.
(B) A person is
				  presumed to control a corporation if either of the following apply:
(I) The person directly or indirectly has the
				  right to vote 25% or more of a class of the corporation's voting
				  securities.
(II) The person has the
				  power to sell or direct the sale of 25% or more of a class of the corporation's
				  voting securities.
(C) A
				  person is presumed to control a partnership if the person has the right to
				  receive on dissolution, or has contributed, 25% or more of the capital of the
				  partnership.
(D) A person is
				  presumed to control a limited liability company if any of the following apply:
(I) The person directly or indirectly has the
				  right to vote 25% or more of a class of the interests of the limited liability
				  company.
(II) The person has the
				  right to receive on dissolution, or has contributed, 25% or more of the capital
				  of the limited liability company.
(III) The person is an elected manager of the
				  limited liability company.
(E) A person is presumed to control a trust
				  if the person is a trustee or managing agent of the trust.
Convicted
-A verdict, judgment or plea of
					 guilty, or a finding of guilt on a plea of nolo contendere if the verdict,
					 judgment, plea or finding has not been reversed, set aside or withdrawn,
					 whether or not a sentence has been imposed.
Cooperative business association
-A person
					 organized exclusively as a retail or wholesale cooperative which admits to
					 membership only persons that legitimately
engage, in whole or in part, in the line of business for
					 which the cooperative was organized.
Custody
-
(i) For purposes of a person, directly or
				  indirectly holding client funds or securities, with authority to obtain
				  possession of them or the ability to appropriate them.
(ii) For purposes of an investment adviser,
				  if a related person holds directly or indirectly, client funds or securities,
				  or has authority to obtain possession of them, in connection with advisory
				  services the investment adviser provides to clients.
(iii) For purposes of subparagraphs (i) and
				  (ii), the term includes:
(A) Possession of
				  client funds or securities, unless the investment adviser receives them
				  inadvertently and returns them to the sender promptly but in any case within 3
				  business days of receiving them.
(B) Any arrangement (including a general
				  power of attorney) under which the investment adviser is authorized or
				  permitted to withdraw client funds or securities maintained with a custodian on
				  the investment adviser's instruction to the custodian.
(C) Any capacity (such as general partner of
				  a limited partnership, managing member of a limited liability company or a
				  comparable position or another type of pooled investment vehicle, or trustee of
				  a trust) that gives the investment adviser or its supervised person legal
				  ownership of or access to client funds or securities.
(iv) For purposes of subparagraphs (i) and
				  (ii), the term does not include:
(A) An
				  investment adviser that has inadvertently held or obtained a client's
				  securities or funds and returned them to the client within 3 business days or
				  has forwarded third-party checks within 24 hours, provided that the adviser
				  keeps a ledger or other listing of all securities or funds held or obtained in
				  this manner as required under § 304.012(a)(22).
(B) An investment adviser acting as a trustee
				  for a beneficial trust in which the beneficial owners of the trust are a
				  parent, step-parent, grandparent, step-grandparent, spouse, brother,
				  step-brother, sister, step-sister, grandchild or step-grandchild of the
				  investment adviser if the investment adviser maintains the records required
				  under § 304.012(c)(8).
Customer
-
(i) As defined in
				  17 CFR
				  240.15c3-3 (relating to
				  customer protection-reserves and custody of securities).
(ii) For the purpose of §§
											303.041 and
				  304.061 (relating to broker-dealer
				  capital requirements; and free credit balances), every person other than the
				  broker-dealer.
Date of filing
-The date on which an
					 application, registration statement, notice filing, financial statements,
					 reports, correspondence or other documents filed or required to be filed
					 directly with the Department, or any material amendment thereto, are received
					 in the Harris-burg office of the Department.
Development stage company
-A company
					 devoting substantially all of its efforts to establishing a new business if
					 planned principal operations have not commenced, or have commenced, but there
					 has not been significant revenue therefrom.
Direct participation program
-A program
					 which provides for flow-through tax consequences regardless of the structure of
					 the legal entity or vehicle for distribution including, but not limited to, oil
					 and gas programs, real estate programs, real estate investment trusts,
					 agricultural programs, cattle programs, condominium securities and all other
					 programs of a similar nature, regardless of the industry represented by the
					 program, or any combination thereof, except tax qualified pension and profit
					 sharing plans under sections 401 and 403(a) of the Internal Revenue Code of
					 1986 (26 U.S.C.A.
					 §§
												401 and
					 403(a)) and
					 individual retirement plans under section 408 of the Internal Revenue Code of
					 1986 (26 U.S.C.A. §
												408), tax sheltered annuities under section
					 403(b) of the Internal Revenue Code of 1986, and any company including separate
					 accounts, registered with the Securities and Exchange Commission under the
					 Investment Company Act of 1940 (15 U.S.C.A. §§
												80a-1-80 a-64).
Discretionary power
-Effecting a
					 transaction or placing a trade order without specific authorization from the
					 client, not including discretion as to the price at which or the time when a
					 transaction is or is to be effected, if, before the order is given by the
					 investment adviser, the client has directed or approved the purchase or sale of
					 a definite amount of the particular security.
EFD
-The electronic filing depository
					 operated by NASAA, and any successor thereto.
Engaged in agriculture
-Farming, dairying,
					 livestock raising, poultry raising, floriculture, mushroom growing, beekeeping,
					 horticulture and allied occupations.
Entity
-A corporation, partnership,
					 association, joint stock company, limited liability company, trust, estate or
					 unincorporated association.
Equity security
-
(i) A stock or similar security (including
				  interests in a limited liability company).
(ii) A security convertible, with or without
				  consideration, into a stock or similar security, or carrying a warrant or right
				  to subscribe to or purchase a security described in subparagraph (i); or a
				  warrant or right.
(iii) For
				  purposes of §
											203.091, the term includes:
(A) Common stock, preferred stock and nondebt
				  securities convertible into common or preferred stock.
(B) Nontransferable warrants to purchase any
				  of the foregoing.
(C) Transferable
				  warrants exercisable within not more than 90 days of issuance to purchase any
				  of the foregoing.
Equity security holder
-
(i) Persons who at the time of offers and
				  sales under the exemption in section 203(n) of the act are holders of equity
				  securities.
(ii) The term does not
				  include persons who are holders of equity securities issued in violation of or
				  without compliance with the act and the regulations adopted under the
				  act.
Examination
-When used in regard to
					 financial information, the review or verification of financial and other
					 information by an independent certified public accountant for the purpose of
					 expressing an opinion thereon.
Executive officer
-Each person serving as
					 chief executive officer, chief operating officer or chief financial officer of
					 a person.
Experienced private placement investor
-An
					 individual, or spouse purchasing as a joint tenant or tenant by the entireties,
					 who purchased a minimum of $450,000.
securities within the past 3 years in private placement
					 offerings exclusive of the purchase of securities of an issuer of which the
					 individual, or spouse, was an affiliate at the time of purchase.
FINRA
-The Financial Industry Regulatory
					 Authority, Inc., and any successor thereto.
Fair value
-The price that would be
					 received to sell an asset or paid to transfer a liability in an orderly
					 transaction between market participants at the measurement date, as set forth
					 and interpreted in Financial Accounting Standards Board Accounting Standards
					 Codification Topic 820.
Feasibility study
-An analysis of a
					 proposed investment or course of action which may involve the preparation of a
					 financial forecast or a financial projection.
Financial forecast
-A prospective financial
					 statement which:
(i) Presents, to the
				  best of the responsible party's knowledge and belief, an entity's expected
				  financial position, results of operations and changes in financial
				  position.
(ii) Is based on the
				  responsible party's assumptions reflecting conditions it expects to exist and
				  the course of action it expects to take.
Financial institution
-A Federal or State
					 chartered bank, savings and loan association, savings bank or credit union, and
					 any service corporation affiliated with these entities.
Financial projection
-A prospective
					 financial statement which:
(i)
				  Presents, to the best of the responsible party's knowledge and belief, an
				  entity's expected financial position, results of operations and changes in
				  financial position.
(ii) Is based
				  on the responsible party's assumptions reflecting conditions it expects would
				  exist and the course of action it expects would be taken, given one or more
				  hypothetical assumptions.
Financial statements
-A balance sheet,
					 statement of income, statement of stockholders' equity and statement of cash
					 flow and accompanying notes.
Firm member
-All partners and principals in
					 the firm and all professional employees participating in an audit or located in
					 an office of the firm participating in a significant part of an audit.
Fiscal year
-
(i) The annual accounting period when a
				  closing date is adopted.
(ii) The
				  calendar year ending on December 31 when a closing date is not
				  adopted.
Franchise
-An agreement involving a
					 continuing commercial relationship by which a person (franchisee) is permitted
					 by another person (franchisor) the right to offer the goods manufactured,
					 processed or distributed by the franchisor, or the right to offer services
					 established, organized, directed or approved by the franchisor, under
					 circumstances when the franchisor continues to exert any control over the
					 method of operation of the franchisee, particularly, but not exclusively,
					 through trademark, trade name or service mark licensing, or structural or
					 physical layout of the business of the franchisee.
Going concern disclosure
-The disclosure of
					 substantial doubt in the auditor's report, based on the criteria in the
					 Statement on Auditing Standard 126 promulgated by the American Institute of
					 Certified Public Accountants, regarding the ability of the issuer to continue
					 as a going concern during the ensuing fiscal year.
Guarantor
-A person who executes a
					 guaranty.
Guaranty
-A duly executed written
					 agreement, which cannot be bought, sold or traded as a security or otherwise
					 realized on by a bondholder separately from the bondholder's interest in the
					 bonds, wherein a person, not the issuer, in connection with offer and sale of
					 bonds in this Commonwealth, guarantees the prompt payment of the principal of,
					 and interest on, the bonds whether at the stated maturity, at redemption before
					 maturity or otherwise, and premium, if any, when and as the principal and
					 interest shall become due.
Hypothetical assumption
-An assumption used
					 in a financial projection to present a condition or course of action that is
					 not necessarily expected to occur, but is consistent with the purpose of the
					 projection.
IARD
-The Internet-based Investment Adviser
					 Registration Depository operated by FINRA, and any successor thereto.
Impersonal investment advisory services
-As defined in 17 CFR
					 275.206(4)-3(d)(3) (relating
					 to cash payments for client solicitations).
Independent
-As defined in Rule 101 of the
					 Code of Professional Ethics of the American Institute of Certified Public
					 Accounts, Inc. or the interpretations adopted thereunder, regardless of whether
					 the person is a certified public accountant or not.
Independent certified public accountant
-As set forth in section 2-01(b) and (c) of Regulation S-X (
					 17 CFR
					 210.2-01(b) and (c) )
					 (relating to qualifications of accountants).
Independent party
-A person who meets all
					 of the following:
(i) Is engaged by an
				  investment adviser with respect to payment of fees, expenses or capital
				  withdrawals from a pooled investment vehicle in which the investment adviser
				  has custody solely as a result of serving as a general partner, manager of a
				  limited liability company or a person occupying a similar status or performing
				  a similar function which gives the investment adviser or its supervised person
				  legal ownership or access to client funds or securities.
(ii) Does not control, is not controlled by
				  and is not under common control with the investment adviser.
(iii) Did not derive 5% or more of its gross
				  revenues from the investment adviser who hired the person to be an independent
				  party, including the amount to be received from the investment adviser under
				  the terms of the independent party engagement, within the preceding consecutive
				  12-month period.
Independent representative
-A person
					 who:
(i) Acts as agent for an advisory
				  client, including in the case of a pooled investment vehicle, for limited
				  partners or a limited partnership, members of a limited liability company, or
				  other beneficial owners of another type of pooled investment vehicle and by law
				  or contract is obliged to act in the best interest of the advisory client or
				  the limited partners, members or other beneficial owners.
(ii) Does not control, is not controlled by
				  and is not under common control with investment adviser.
(iii) Does not have, and has not had within
				  the past 2 years, a material business relationship with the investment
				  adviser.
Individuals controlling
-A general partner
					 and, in the case of a corporation, the president and other officers responsible
					 for making investment decisions with respect to the purchase of the securities
					 described in subparagraph (iv) of the definition of "institutional investor,"
					 if the person is currently engaged in that capacity.
Industrial loan association
-For purposes
					 of section 202(d) of the act (70 P.S. §
												1-202(d)), an institution
					 organized as an industrial loan association under the applicable laws of the
					 Commonwealth, the business of which is:
(i) Substantially confined to the industrial
				  loan business.
(ii) Examined and
				  supervised as an industrial loan association by the appropriate Commonwealth
				  authorities having supervision over the institution.
Industrial loan business
-The making and
					 discounting of secured and unsecured loans to bona fide members of the
					 association.
Insolvent
or
insolvency
-Except in the case of entities required under law or regulation to submit an
					 auditor's report if the auditor's report does not contain a going concern
					 disclosure, the terms mean either of the following:
(i) The inability to pay debts as they fall
				  due in the person's usual course of business.
(ii) Liabilities in excess of the fair value
				  of the person's assets.
Institutional investor
-As defined in
					 section 102(k) of the act, including the following:
(i) A corporation, partnership, trust, estate
				  or other entity (excluding individuals), or a wholly-owned subsidiary of the
				  entity, which has been in existence for at least 18 months and which had a
				  tangible net worth on a consolidated basis of $25 million or more.
(ii) A college, university or other public or
				  private institution which has received exempt status under section 501(c)(3) of
				  the Internal Revenue Code of 1986 (26 U.S.C.A. §
												501(c)(3)) and which has a
				  total endowment or trust funds, including annuity and life income funds, of $5
				  million or more according to its most recent audited financial statements;
				  provided that the aggregate dollar amount of securities being sold to the
				  person under the exemption in section 203(c) of the act and this title may not
				  exceed 5% of the endowment or trust funds.
(iii) A wholly-owned subsidiary of a bank as
				  defined in section 102(d) of the act.
(iv) A person, except an individual or an
				  entity whose security holders consist entirely of one individual or group of
				  individuals who are related, which is organized primarily to purchase, in
				  nonpublic offerings, securities of corporations or issuers engaged in research
				  and development activities in conjunction with a corporation and which complies
				  with one of the following:
(A) Has purchased
				  $5 million or more of the securities excluding both of the following:
(I) A purchase of securities of a corporation
				  in which the person directly or beneficially owns more than 50% of the
				  corporation's voting securities, unless the purchase occurred under a leveraged
				  buyout financing in which the person does not intend to provide direct
				  management to the issuer.
(II) A
				  dollar amount of a purchase of securities of a corporation which investment
				  represents more than 20% of the person's net worth.
(B) Is capitalized at $2.5 million or more
				  and is controlled by a person which meets the criteria in clause (A).
(C) Is capitalized at $10 million or more and
				  has purchased $500,000 or more of the securities, excluding a purchase of
				  securities of a corporation in which the person directly or beneficially owns
				  more than 50% of the corporation's voting securities.
(D) Is capitalized at $250,000 or more and is
				  a side-by-side fund.
(v)
				  A small business investment company as the term is defined in section 103 of
				  the Small Business Investment Act of 1958 (15 U.S.C.A. §
												662) which either:
(A) Has a total capital of $1 million or
				  more.
(B) Is controlled by
				  institutional investors as defined in section 102(k) of the act or this
				  section.
(vi) A seed
				  capital fund as defined in section 2 and authorized in section 6 of the Small
				  Business Incubators Act (73 P.S. §§
												395.2 and
				  395.6).
(vii) A business development credit
				  corporation as authorized by the Business Development Credit Corporation Law
				  (7
				  P.S. §§
												6040-1-6040-16).
(viii) A person whose security holders
				  consist solely of institutional investors or broker-dealers.
(ix) A person as to which the issuer
				  reasonably believed qualified as an institutional investor under this section
				  at the time of the offer or sale of the securities on the basis of written
				  representations made to the issuer by the purchaser.
(x) A qualified institutional buyer as
				  defined in 17 CFR
				  230.144A (relating to private resales of
				  securities to institutions) or any successor rule.
(xi) A qualified pension and profit sharing
				  and stock bonus plan under section 401 of the Internal Revenue Code of 1986 and
				  all plans under section 408 of the Internal Revenue Code of 1986 if the plan
				  has either of the following:
(A) Plan assets
				  of $5 million or more.
(B)
				  Investments of $500,000 or more in securities and retained, on an ongoing
				  basis, the services of an investment adviser registered under section 301 of
				  the act (70 P.S. §
													1-301) or a
				  Federally covered adviser to give professional investment management
				  advice.
Insurance holding company
-A person
					 engaged, either directly or indirectly, primarily in the business of owning
					 securities of one or more insurance companies for the purpose and with the
					 effect of exercising control.
Investment adviser representative
-
(i) As defined in section 102(j.1) of the
				  act.
(ii) For purposes of §
				  304.012(a)(12), the term includes:
(A) A
				  partner, officer or director of the investment adviser.
(B) An employee who participates in any way
				  in the determination of which recommendations shall be made.
(C) An employee of the investment adviser
				  who, in connection with assigned duties, obtains information concerning which
				  securities are being recommended before the effective dissemination of the
				  recommendations.
(D) Any of the
				  following individuals who obtain information concerning securities
				  recommendations being made by the investment adviser before the effective
				  dissemination of the recommendations:
(I) An
				  individual in a control relationship to the investment adviser.
(II) An affiliated individual of a
				  controlling person.
(III) An
				  affiliated individual of an affiliated person.
(iii) For purposes of §
											304.012(a)(13),
				  when used in connection with a company primarily engaged in a business or
				  businesses other than advising investment advisory clients:
(A) A partner, officer, director or employee
				  of the investment adviser who participates in any way in the determination of
				  which recommendations shall be made.
(B) An employee who, in connection with
				  assigned duties, obtains information concerning which securities are being
				  recommended before the effective dissemination of the
				  recommendations.
(C) Any of the
				  following individuals who obtain information concerning securities
				  recommendations being made by the investment adviser before the effective
				  dissemination of the recommendations as follows:
(I) An individual in a control relationship
				  to the investment adviser.
(II) An
				  affiliated individual of a controlling person.
(III) An affiliated individual of an
				  affiliated person.
Investment supervisory services
-The giving
					 of continuous advice as to the investment of funds on the basis of the
					 individual needs of each client.
Majority-owned subsidiary
-A subsidiary
					 more than 50% of whose outstanding voting shares is owned by its parent or the
					 parent's other majority owned subsidiaries, or both.
Most recent audited financial statements
-Audited financial statements dated not more than 16 months before the date of
					 the transaction in which the person proposed to purchase securities in reliance
					 on the exemption in section 203(c) of the act.
NASAA
-The North American Securities
					 Administrators Association, Inc.
National securities association
-An
					 association of brokers and dealers registered with the Securities and Exchange
					 Commission under section 15A of the Securities Exchange Act of 1934
					 (15 U.S.C.A. §
												78o-3).
National securities exchange
-Any exchange
					 as defined in section 3(a)(1) of the Securities Exchange Act of 1934
					 (15 U.S.C.A. §
												78c) which is registered with the Securities
					 and Exchange Commission under section 6 of the Securities Exchange Act of 1934
					 (15 U.S.C.A. §
												78f).
Nationally recognized statistical rating
					 organization
- As defined in section 3(a)(62) of the Securities
					 Exchange Act of 1934.
Net capital
-As defined in
					 17 CFR
					 240.15c3-1, promulgated
					 under the Securities Exchange Act of 1934.
Net worth
-The excess of assets over
					 liabilities as determined by generally accepted accounting principles reduced
					 by:
(i) Prepaid expenses except items
				  properly classified as current assets under generally accepted accounting
				  principles.
(ii) Deferred
				  charges.
(iii) Goodwill,
				  franchises, organizational expenses, patents, copyrights, marketing rights,
				  unamortized debt discount and expense, and all other intangible
				  assets.
(iv) Home furnishings,
				  automobiles and any other personal items not readily marketable in the case of
				  an individual.
(v) Advances or
				  loans to:
(A) Stockholders and officers in the
				  case of a corporation.
(B) Members
				  and managers in the case of a limited liability company.
(C) Partners in the case of a
				  partnership.
(vi)
				  Receivables from any affiliate, unless enforceable by contract.
Networking arrangement or brokerage affiliate
					 arrangement
-A contractual agreement between a broker-dealer registered
					 under section 301 of the act and a financial institution by which the
					 broker-dealer effects transactions in securities for the account of customers
					 of the financial institution and the general public which transactions are
					 effected on, or emanate from, the premises of a financial institution.
Nonbranch office
-A location at which a
					 broker-dealer is conducting a securities business that does not come within the
					 definition of "office of supervisory jurisdiction" or "branch office."
Note
or
footnote
-A clear
					 and concise disclosure of information, including information necessary to make
					 an item or entry in the financial statement not misleading, cross-referenced
					 specifically, if practicable, to an item or entry in a financial
					 statement.
Office of supervisory jurisdiction
-As
					 defined in FINRA Rule 3110(e) or any successor thereto.
PCAOB
-The Public Company Accounting
					 Oversight Board, and any successor thereto.
Parent
-An affiliate controlling a
					 specified person directly or indirectly through one or more
					 intermediaries.
Pooled investment vehicle
-
(i) A limited partnership, limited liability
				  company or an entity with a similar legal status and performing similar
				  functions.
(ii) The term does not
				  include an investment company that has filed a registration statement under the
				  Investment Company Act of 1940.
Portfolio management
-The process of
					 determining or recommending securities transactions for any part of a client's
					 portfolio.
Prime quality
-A description for commercial
					 paper rated in one of the top three rating categories by a Nationally
					 recognized statistical rating organization.
Principal
-
(i) The chairperson, president, chief
				  executive officer, general manager, chief operating officer, chief financial
				  officer, vice president or other officer in charge of a principal business
				  function (including sales, administration, finance, marketing, research and
				  credit), secretary, treasurer, controller and any other natural person who
				  performs similar functions of one of the following:
(A) The issuer.
(B) A wholly-owned subsidiary of the
				  issuer.
(C) A corporation,
				  partnership or other entity which owns the voting stock or other voting equity
				  interest of the issuer.
(D) A
				  corporation, partnership or other entity which serves as a general partner of
				  the issuer.
(ii) A
				  director, general partner or comparable person charged by law with the
				  management of one of the following:
(A) The
				  issuer.
(B) A wholly-owned
				  subsidiary of the issuer.
(C) A
				  corporation, partnership or other entity which owns the voting stock or other
				  voting equity interest of the issuer.
(D) A corporation, partnership or other
				  entity which serves as a general partner of the issuer.
(iii) A beneficial owner of 10% or more of an
				  outstanding class of voting stock or other voting equity interest of one of the
				  following:
(A) The issuer.
(B) A corporation, partnership or other
				  entity which serves as a general partner of the issuer.
(C) A promoter of the issuer as defined in
				  section 102(o) of the act.
(D) A
				  relative of a person specified in clauses (A)-(C), if "relative" means one of
				  the following:
(I) A spouse.
(II) A parent.
(III) A grandparent.
(IV) An aunt, uncle, child, child of a
				  spouse, sibling, mother-in-law, father-in-law, brother-in-law, sister-in-law,
				  son-in-law or daughter-in-law.
Principal place of business
-The executive
					 office of the business from which the officers, partners or managers of the
					 business direct, control and coordinate the activities of the business.
Private fund adviser
-An investment adviser
					 who provides advice solely to one or more qualifying private funds.
Private placement offering of securities
-An offering of securities made in reliance on an exemption from the
					 registration provisions of section 5 of the Securities Act of 1933
					 (15 U.S.C.A. §
												77e) under section 3(b) of the Securities Act
					 of 1933 or section 4(a)(2) of the Securities Act of 1933 (15 U.S.C.A. §
												77d(a)(2)).
Pro rata
-
(i) An offering made in this Commonwealth
				  proportionately on the basis of the number of shares owned by the existing
				  equity security holder or the equity security-holder's percentage ownership
				  interest in the issuer.
(ii) The
				  term includes the issuer offering:
(A) Its
				  existing equity security holder an opportunity to purchase one new share of
				  stock for each five shares owned as of a record date.
(B) An existing equity security holder owning
				  3% of the issuer's stock as of a record date the opportunity to purchase 3% of
				  the issuer's current offering.
Professional corporation
-
(i) The term includes either of the
				  following:
(A) A corporation incorporated
				  under the 15 Pa.C.S. Part II, Subpart B (relating to Business Corporation Law
				  of 1988) or a corporation included within the scope of that act by virtue of
				  15 Pa.C.S. §
													2904 or
				  § 2905 (relating to election of an existing business corporation to become
				  a professional corporation; and election of professional associations to become
				  professional corporations).
(B) A
				  professional association organized under the 15 Pa.C.S. Chapter 93 (relating to
				  Professional Association Act of 1988), if "shares" includes the interest of an
				  associate in a professional association.
(ii) The term does not include an entity
				  which has as a principal purpose, object or activity, whether expressed in its
				  articles of incorporation or other organic documents, that is other than the
				  rendition of the professional services for which the professional corporation
				  is organized and activities which are in fact incidental thereto.
Promotional securities
-The term includes
					 any of the following:
(i) Securities
				  issued:
(A) Within the 5-year period
				  immediately preceding the date of the filing of a registration statement for a
				  consideration substantially different from the proposed public offering price
				  and for which price differential there is no commensurate change in the
				  earnings or financial position of the issuer.
(B) In consideration for services.
(C) In consideration for tangible or
				  intangible property, such as patents, copyrights, licenses or
				  goodwill.
(D) Within the 5-year
				  period immediately preceding the date of the filing of a registration statement
				  to a promoter or proposed to be issued to a promoter at a price substantially
				  lower than or on terms and conditions substantially more favorable than those
				  on which securities of the same or a similar class or series have been or are
				  to be sold to public investors.
(ii) Securities subject to an order by the
				  Department finding that the securities are promotional securities.
Prospective financial statement
-A
					 financial forecast or financial projection, including the summaries of
					 significant assumptions and accounting policies.
Publish
-As defined in section 102(p) of
					 the act, together with any form of electronic communication, including Internet
					 and e-mail.
Purchase of securities by an experienced private
					 placement investor
-The sale of securities for cash or for an
					 unconditional obligation to pay cash which obligation is to be discharged
					 within 5 years from the date of the sale of the securities to the experienced
					 private placement investor.
Qualified custodian
-The term
					 includes:
(i) A bank as that term is
				  defined in section 102(d) of the act.
(ii) A Federally covered adviser as that term
				  is defined in section 102(f.1) of the act.
(iii) A broker-dealer registered with the
				  Securities and Exchange Commission and the Department under section 301 of the
				  act.
(iv) A futures commission
				  merchant registered under section 4f(a) of the Commodity Exchange Act
				  (7 U.S.C.A. §
												6f(a)), holding the client
				  assets in customer accounts, but only with respect to clients' funds and
				  security futures, or other securities incidental to transactions in contracts
				  for the purchase or sale of a commodity for future delivery and options
				  thereon.
(v) A foreign financial
				  institution that customarily holds financial assets for its customers, provided
				  that the foreign financial institution keeps the advisory clients' assets in
				  customer accounts segregated from its proprietary assets.
Qualifying private fund
-A private fund as
					 defined in section 202(a)(29) of the Investment Advisers Act of 1940
					 (15 U.S.C.A. §
												80b-2(a)(29)) that
					 meets the definition of "qualifying private fund" in Securities and Exchange
					 Commission Rule 203(m)-1 ( 17 CFR
					 275.203(m)-1 ) (relating to
					 private fund adviser exemption).
Registrant
-The issuer of the securities
					 for which an application, a registration statement or a report is filed.
Related
-A relative by marriage residing in
					 the same household or a blood relative.
Related parties
-
(i) The registrant and its affiliates,
				  principal owners (the owners of record or known beneficial owners of more than
				  10% of the voting interests of the reporting entity), management (a person
				  having responsibility for achieving the objectives of the organization and the
				  concomitant authority to establish the policies and to make the decisions by
				  which the objectives are to be pursued) and members of their immediate
				  families.
(ii) Entities for which
				  investments are accounted for by the equity method.
(iii) Any other party with which the
				  reporting entity may deal when one party has the ability to significantly
				  influence the management or operating policies of the other to the extent that
				  one of the transacting parties might be prevented from fully pursuing its own
				  separate interests.
(iv) Another
				  entity with the ability to significantly influence the management or operating
				  policies of the transacting parties.
(v) Another entity with an ownership interest
				  in one of the transacting parties and the ability to significantly influence
				  the other to the extent that one or more of the transacting parties might be
				  prevented from fully pursuing its own separate interests.
Related person
-A person that is an
					 affiliate of an investment adviser.
Rental pool arrangement
-The term
					 includes:
(i) A device by which a
				  person, whether or not the seller, undertakes to rent the property on behalf of
				  the owner during periods of time when the property is not in use by its owner,
				  the rents received from all properties participating in the pool and the
				  expenses attributable to the rents being combined with each property owner
				  receiving a ratable share of the rental proceeds regardless of whether his
				  particular property actually was rented.
(ii) Other devices having like attributes.
Review
-An analysis of the financial
					 statements by a certified public accountant in accordance with the Statements
					 on Standards for Attestation Engagements promulgated by the American Institute
					 of Certified Public Accountants.
Review report
-An accountant's document in
					 which the certified public accountant indicates that a review has been
					 performed and, on the basis of that review, the accountant is not aware of any
					 material modifications that should be made to the financial statements for the
					 financial statements to be in conformity with generally accepted accounting
					 principles, except for those modifications, if any, described in the review
					 report.
Securities and Exchange Commission
-The
					 United States Securities and Exchange Commission.
Securities issued by a credit union
-For
					 the purpose of section 202(d) of the act, securities issued by a credit union
					 means only those securities which are issued by an entity directly engaged in
					 the credit union business and may not include securities issued by a credit
					 union holding company or other similar entity.
Securities issued by an industrial loan
					 association
-
(i) Securities
				  issued by an entity directly engaged in the industrial loan business.
(ii) The term does not include securities
				  issued by an industrial loan holding company or other similar entity.
Security
or
securities
-
(i) As defined in section 102(t) of
				  the act, including:
(A) The offer and sale of
				  real property if any of the following exists:
(I) The purchaser of the property is required
				  under the terms of the purchase or by reason of acquiring title to do either of
				  the following:
(-a-) Use the seller to perform services in connection with
					 a sale, lease or license of the property purchased.
(-b-) Hold the property available to persons other than the
					 purchaser for the other person's lease, license or other use for a specified
					 period of time or for a period of time when the property is not in use by the
					 owner.
(II) The purchaser is
				  required under the terms of the purchase or by reason of acquiring title to
				  participate in a rental pool arrangement.
(B) A franchise where the arrangement between
				  the franchisor and the franchisee:
(I) Is such
				  that the right to engage in the business of offering, selling or distributing
				  goods or services is exercised under a marketing plan or system prescribed in
				  substantial part by the franchisor.
(II) Is such that the franchisee is not
				  required to make significant managerial efforts in the operation of the
				  business that may be expected to affect the success or failure of the
				  franchisee's business.
(III) Arises
				  as a result of an investment of money, notes or other things of value by or on
				  behalf of the franchisee.
(ii) For purposes of §
											203.183 (relating to agricultural
				  cooperative associations), membership agreements, capital stock, membership
				  certificates and an instrument or form of advice which evidences either of the
				  following:
(A) A member's equity in a fund,
				  capital investment or other asset of the agricultural cooperative
				  association.
(B) The apportionment,
				  distribution or payment to a member or patron of the net proceeds or savings of
				  the agricultural cooperative association.
(iii) For purposes of §
											203.188 (relating to Cooperative
				  Business Associations Exemption), an equity or debt security, membership
				  agreement, membership certificate, patronage dividend or form of advice which
				  evidences either of the following:
(A) A
				  member's interest in a fund, capital investment or other asset of a cooperative
				  business association.
(B) The
				  apportionment, distribution or payment to a member of the net proceeds or
				  savings of a cooperative business association.
Self-regulatory organization
-As defined in
					 section 3(a)(26) of the Securities Exchange Act of 1934.
Share
-Stock in a corporation or unit of
					 interest in an unincorporated person.
Side-by-side fund
-A person which
					 is:
(i) Promoted and controlled by
				  individuals controlling a person meeting the criteria in subparagraph (iv)(A),
				  (B) or (C) of the definition of "institutional investor."
(ii) Formed exclusively to purchase
				  securities of issuers in various amounts and on the same terms and conditions
				  as the person described in subparagraph (i).
Significant subsidiary
-A subsidiary, or a
					 subsidiary and its subsidiaries meeting any of the conditions in subparagraphs
					 (i)-(iii) based on the most recent annual financial statements including
					 consolidated financial statements of the subsidiary which would be required to
					 be filed if the subsidiary were a registrant and the most recent annual
					 consolidated financial statements of the registrant being filed.
(i) The parent's and its other subsidiaries'
				  investments in and advances to, or their proportionate share based on their
				  equity interests of the total assets of, the subsidiary exceed 10% of the total
				  assets of the parent and its consolidated subsidiaries.
(ii) The parent's and its other subsidiaries'
				  proportionate share based on their equity interests of the total sales and
				  revenues, after intercompany eliminations, of the subsidiary exceeds 10% of the
				  total sales and revenues of the parent and its consolidated
				  subsidiaries.
(iii) The parent's
				  and its other subsidiaries' equity in the income before income taxes and
				  extraordinary items of the subsidiary exceeds 10% of the income of the parent
				  and its consolidated subsidiaries. If the income of the parent and its
				  consolidated subsidiaries is at least 10% lower than the average of the income
				  for the last 5 fiscal years, the average income may be substituted in the
				  determination.
Solicitor
-A person or entity who receives
					 direct or indirect compensation for soliciting a client for, or referring a
					 client to, an investment adviser.
Sponsor
-An investment adviser that is
					 compensated under a wrap fee program for either of the following:
(i) Administering, organizing or sponsoring
				  the program.
(ii) Selecting or
				  providing advice to clients regarding the selection of other investment
				  advisers in the program.
Standby commission
-The commission payable
					 to a broker-dealer registered under the act for its firm commitment to purchase
					 securities offered to existing security holders which are not purchased by the
					 security holders.
Subsidiary of a specified person
-An
					 affiliate controlled by the person directly or indirectly through one or more
					 intermediaries.
Supervised person
-As defined in section
					 202(a)(25) of the Investment Advisers Act of 1940.
Tangible book value of a company's common
					 shares
- The excess of total assets over total liabilities as
					 determined by generally accepted accounting principles of the company reduced
					 by the following:
(i) Liquidating
				  value, including any premium of excess over par or stated value, payable on
				  involuntary liquidation, of any capital obligations, preferred shares or shares
				  having a seniority in rank, or any degree of preference or priority over the
				  issue of common shares for which book value is being computed, including
				  accrued and unpaid dividends to the extent entitled to recognition and
				  preference in the event of liquidation.
(ii) An amount equal to any appraisal capital
				  from revaluation of properties or any similar account title to the extent that
				  the appraisal increase has not been fully depreciated in the
				  accounts.
(iii) Deferred charges
				  including debt issue costs.
(iv)
				  Prepaid expenses except as to items properly classified as current assets under
				  generally accepted accounting principles.
(v) All other intangible assets including
				  goodwill, patents, copyrights, franchises, distribution rights, intellectual
				  property rights, leasehold improvements, licensing agreements, noncompete
				  covenants, customer lists, trade names, trademarks and organization
				  costs.
Tangible net worth
-Net worth less the
					 amount of all items of goodwill, preoperating, deferred or development
					 expenses, patents, trademarks, licenses or other similar accounts.
Totally-held subsidiary
-A
					 subsidiary:
(i) Whose parent or the
				  parent's other totally-held subsidiaries, or both, owns substantially all of
				  the subsidiary's outstanding equity securities.
(ii) Not indebted to any person other than
				  its parent or the parent's other totally-held subsidiaries, or both, in an
				  amount which is material in relation to the particular subsidiary, excluding
				  indebtedness:
(A) Incurred in the ordinary
				  course of business which is not overdue and which matures within 1 year from
				  the date of its creation, whether evidenced by securities or not.
(B) Secured by its parent by guarantee,
				  pledge, assignment or otherwise.
Trade or professional association
-
(i) For purposes of section 202(e) of the
				  act, an association of persons having some common business or professional
				  interest, the purpose of which is to promote, on behalf of the association's
				  members generally, the common interest and not to engage in a regular business
				  or profession of a kind ordinarily carried on for profit.
(ii) The term includes an association where
				  the activities of the association are specifically directed to the improvement,
				  on behalf of the association's members generally, of business or professional
				  conditions of one or more lines of business or professions as distinguished
				  from the performance of particular services for individuals or
				  entities.
(iii) The term does not
				  include an association whose purpose is to engage in a regular business of a
				  kind ordinarily carried on for profit, even though the business is conducted on
				  a cooperative basis or produces only sufficient income to be
				  self-sustaining.
Trustee for the bondholders
-The person
					 designated in the trust indenture, mortgage, deed of trust or similar agreement
					 to act as trustee for the bonds.
Venture capital fund
-A private fund
					 meeting the definition of "venture capital fund" in Securities and Exchange
					 Commission Rule 203(l)-1 ( 17 CFR
					 275.203(l)-1.
Voting shares
-The sum of either of the
					 following:
(i) All rights, other than
				  as affected by events of default, to vote for election of directors of an
				  incorporated person.
(ii) All
				  interests in an unincorporated person.
Wholly-owned subsidiary
-A subsidiary
					 substantially all of whose outstanding voting shares are owned by its parent or
					 the parent's other wholly-owned subsidiaries, or both.
Wrap fee program
-A program under which a
					 client is charged a specified fee or fees not based directly on transactions in
					 a client's account for investment advisory services (which may include
					 portfolio management or advice concerning the selection of other investment
					 advisers) and execution of client transactions.