Common Stock

Your common stock is a fractional ownership stake in a company and what you hold after exercising vested options. Common stock typically varies from Preferred Stock in that it may have fewer rights, which may include voting rights, liquidation preference, and distribution priority.

Liquidity Event

A liquidity event is a triggering event that generally allows an employee with vested equity in a company to sell, transfer, or otherwise dispose of the equity. Liquidity events can include IPOs, direct listings, de-SPAC transactions, acquisitions, and mergers.

Lockup Period

A lockup period is the time between a company liquidity event like an IPO and when employees can sell their vested RSUs and vested and exercised options. Lockup periods are typically six months post IPO.

RSUs

Restricted Stock Units (RSUs) are issued by companies as a form of equity compensation. They vary from common stock in several ways, commonly including the conditions required for the RSU to “vest” and functionally convert into shares of common stock.

Variable Base Rate

The variable base rate is calculated monthly using the 3 month term Secured Overnight Financing Rate (SOFR) on the last business day of the month or 1%, whichever is greater. SOFR is a finance industry benchmark that tracks the cost to borrow funds backed by Treasury securities. SOFR rises when interest rates rise and falls when interest rates fall.

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