A structure whereby the eventual equity allocations between the groups of shareholders depend on either the future performance of the company or the rate of return achieved by the venture capital firm. This allows management shareholders to increase their stake if the company performs particularly well (see paragraph 2, Section IV above).

Is a structure that determines the plan of equity allocation between groups of shareholders. A ratchet allows a management teams to increase its share of equity in a company if the company is performing well.

An anti-dilution provision where the investor is granted additional shares of stock without charge if the company later sells the shares at a lower price. [Early Capital Glossary, 2001] http://www.earlycapital.com/private_equity_glossary.htm