Sec. 24.05.10.03. Definitions

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) "Act" means Economic Development Article, Title 5, Subtitle 5, inclusive, Annotated Code of Maryland, as amended.

(2) "Applicant" means an enterprise that applies for equity participation financing.

(3) "Authority" means the Maryland Small Business Development Financing Authority.

(4) "Controlling interest" means at least 51 percent of the voting interests of the existing business.

(5) "Department" means the Department of Commerce, a principal department of the State.

(6) "Enterprise" means a business entity, including a sole proprietorship, a partnership, a limited partnership, a corporation, a limited liability company, or a joint venture proposing to carry on a business within the State and meeting the requirements of Regulation .04 of this chapter.

(7) "Equity participation financing" means any financial assistance provided under the Program including investment in a qualified security of an enterprise or guaranty of investment in a qualified security of an enterprise.

(8) "Existing business" means a business whose board of directors or owners approve the sale of the business to an enterprise receiving equity participation financing.

(9) "Franchise" means a contract or agreement, either expressed or implied, whether oral or written, between two or more persons by which:

(a) A franchise or distributorship is created granting the right to engage in the business of offering, selling, or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor or a distributor;

(b) The operation of the franchisee's and distributee's business pursuant to a plan or system is substantially associated with the franchisor's or distributor's trademark, service mark, trade name, logotype, advertising, or other commercial symbol designating the franchisor or distributor or their affiliate; and

(c) The franchisee is required to pay, directly or indirectly, a franchise fee in excess of $100.

(10) "Franchisee" means a person to whom a franchise is granted.

(11) "Franchisor" means a person who grants a franchise.

(12) "Guaranty" means a guaranty of an investment in a qualified security made under the Program.

(13) "Loan" means a loan made or guaranteed under the Program.

(14) "Major owner" means a person or persons who, in the aggregate, owns or own at least 50 percent of the ownership interests in a franchise enterprise or at least 35 percent of the ownership interests in an enterprise acquiring an existing business or a technology-based business.

(15) "Net worth" means the dollar amount determined by subtracting the total liabilities of the enterprise or its principals from the total assets of the enterprise or its principals, excluding any valuation for goodwill.

(16) "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, or unincorporated organization.

(17) "Program" means the Equity Participation Investment Program in the Maryland Small Business Development Financing Authority, as authorized by the Act.

(18) "Qualified security" means any:

(a) Note, bond, debenture, or other evidence of indebtedness;

(b) Stock or other form of equity participation;

(c) Certificate of interest or participation in a profit sharing agreement;

(d) Investment contract;

(e) Certificate of deposit for a security;

(f) Certificate of interest of participation in a patent or patent application or in royalty or other payments under a patent or patent application; or

(g) Interest or instrument commonly known as a "security" or any certificate for, receipt for, guarantee of, or option, warrant, or right to subscribe to or purchase any qualified security.

(19) "Secretary" means the Secretary of Commerce.

(20) "Technology-based business" means a commercial or industrial enterprise engaged in the application of scientific knowledge to practical purposes in a particular field for a profit.