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e Venturing: Venture capital provided by [inhouse investment funds of] large corporations to further their own strategic interests. Corporation: A legal, taxable entity chartered by a state or the federal government. Ownership of a corporation is held by the stockholders. Two forms: C Corp. and S Corp. the latter of which provides flowthrough taxation. Covenant: A protective clause in an agreement. Cumulative Dividends: Dividends that accrue at a fixed rate until paid are Cumulative Dividends which are payments to shareholders made with respect to an investor39。s Preferred Stock. Generally, holders of Preferred Shares are contractually entitled to receive dividends prior to holders of Common Stock. Dividends can accumulate at a fixed rate (for example 8%) or simply be payable as and when determined by a pany39。s Board of Directors in such amount as determined by the board. Because venture backed panies typically need to conserve cash, the use of Cumulative Dividends is customary with the result that the Liquidation Preference increases by an amount equal to the Cumulative Dividends. Cumulative Dividends are often waived if the Preferred Stock converts to Common Stock prior to an IPO but may be included in the aggregate value of Preferred Stock applied to the Conversion Ratio for other purposes. Dividends that are not cumulative are generally called when, as and if declared dividends. Cumulative Preferred Stock: A stock having a provision that if one or more dividend payments are omitted, the omitted dividends (arrearage) must be paid before dividends may be paid on the pany39。s mon stock. Cumulative Voting Rights: When shareholders have the right to pool their votes to concentrate them on an election of one or more directors rather than apply their votes to the election of all directors. For example, if the pany has 12 openings to the Board of Directors, in statutory voting, a shareholder with 10 shares casts 10 votes for each opening (10x12= 120 votes). Under the cumulative voting method however, the shareholder may opt to cast all 120 votes for one nominee (or any other distribution he might choose). Compare Statutory Voting.6 / 6