Resources: EPP Glossary

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Note: Most Glossary terms have been defined with regard to relevance to Equity Private Placements. Definitions are provided solely to facilitate the use of PrivateRaise.com (confer with your legal counsel for additional info).

Glossary - P

Placement Agent

A Placement Agent is any fiduciary agent that assists Issuers in executing Equity Private Placements or Registerd Direct Offerings (e.g., investment banks, broker-dealers, financial advisors, etc.).

Placement Status

Placement Status for Equity Private Placements:

Closed

Securities have been sold by Issuer and funds have been invested/paid by Investors.

Equity Lines are considered to be closed upon mutual execution of investment documentation by Issuer and Investor

144A Debt: Convertible transactions are considered to be closed on the settlement date as disclosed in a press release and/or SEC regulatory filing.

Definitive Agreement

Terms of private placement have been mutually agreed upon by Issuer and Investor and investment documents have been executed (awaiting closing).

Announced

Issuer has publicly and specifically disclosed the existence of ongoing private placement negotiations or efforts.

Intended

Issuer has publicly disclosed its intent to pursue an Equity Private Placement.

Postponed

Issuer has publicly disclosed that is has decided to postpone an intended/in-progress Equity Private Placement.

Cancelled

Issuer has publicly disclosed that it has cancelled an intended/in-progress Equity Private Placement.

Preferred Stock (Preferred Stock: non-Convertible)

A Preferred Stock is a type of capital stock that pays dividends at a set rate. Generally, dividend payments to preferred holders must be made before common stock dividends can be paid. Preferred stocks usually do not have voting rights.

Primary Offering

The sale of securities by an Issuer, as distinct from a Secondary Offering in which the seller of securities is an entity other than the Issuer (e.g., Investors who had made investments prior to an Issuer becoming a public company). In a Primary Offering, the Issuer receives the proceeds from the offering of securities.

Principal

The amount of money that is financed, borrowed, or invested.

Private Placement

A private placement is a private sale of Restricted Securities by an Issuer to a relatively small number of institutions and/or individuals. This private sale of securities is executed under certain exemptions from the registration requirements of the Securities Act of 1933 (e.g., Regulation D, Regulation S, Rule 144A). However, these securities are ineligible for resale into the public market until such time that either (i) a resale Registration Statement has been filed with the SEC and declared effective or (ii) resale is permitted under Rule 144 without the need for an effective registration statement.

Prospectus

Under the Securities Act of 1933, an Issuer of securities must describe the securities issued by it to raise capital in a document called the prospectus. The document must explain the terms, the planned use of the money, historical financial statements and other information that could help an investor decide whether the investment is appropriate. A prospectus must be given to all buyers and potential buyers of the new issue.

Public Float

The number of common shares of an Issuer, or the market value of the number of shares, that are available for trading by the public. Shares held by Corporate Insiders or affiliated companies are not included in the public float.

Glossary - Q

Qualified Institutional Buyer: An entity, acting for its own account or the accounts of other qualified institutional buyers, that in the aggregate owns and invests on a discretionary basis at least $100 million in securities of Issuers that are not affiliated with the entity.

Glossary - R

Registered Direct: A placement of Registered Securities by an Issuer to a limited number of Accredited Investors. The most common Registered Direct Placements involve a placement of Equity and Equity-Linked Securities.
Registration Statement: Document filed with the SEC by an Issuer in order to comply with the registration requirements under the Securities Act of 1933 with regard to (i) offerings of securities to the public and (ii) resale of such securities to the public by purchasers of Restricted Securities (e.g, Equity Private Placements). The most common registration statements filed by Issuers regarding Equity Private Placements are Forms S-1, S-3, SB-1, and SB-2. Issuers must meet varying eligibility requirements in order to use a specific registration statement. Registration statements must be declared effective by the SEC prior to resale of the securities purchased in an Equity Private Placement. Alternatively, Investors may make resales of such securities to the public in accordance with Rule 144.
Regulation D: Regulation D is a series of six rules, rules 501-506, which describe three transactional exemptions from the registration requirements under the Securities Act of 1933 for sales of Equity and Equity-Linked Securities to U.S.-based Investors.
Regulation S: An exemption from the registration requirements under the Securities Act of 1933 for offshore sales of Equity and Equity-Linked Securities by U.S.-based Issuers. These Equity and Equity-Linked Securities are treated as Restricted Securities under Rule 144 with respect to resale of such securities to the public.
Registered Securities: Securities acquired directly or indirectly from an Issuer, or from an affiliate of the Issuer, in a transaction or series of transactions under a valid and effective Registration Statement. Such securities are freely tradeable and do not have any resale limitations.
Restricted Securities: Securities acquired directly or indirectly from an Issuer, or from an affiliate of the Issuer, in a transaction or series of transactions which do not involve a public offering and are subject to resale limitations (e.g., Equity Private Placements).
Rule 144: SEC Rule 144 allows for the resale of Restricted Securities to the public in limited quantities. Rule 144 generally applies to Corporate Insiders and buyers of Private Placement securities that were sold under exemptions from the SEC's registration statement requirements defined in the Securities Act of 1933. Under Rule 144, Restricted Securities may be sold to the public by Corporate Insiders and buyers of Private Placements, prior to a two year holding period, without full registration of such securities under specific conditions and limitations. After a two year holding period, resale of such securities by non-affiliates of the Issuer to the public are unrestricted.
Rule 144A: Rule 144A applies to securities which are offered or sold by a seller (e.g., Qualified Institutional Buyer ("QIB")) only to another QIB or to a purchaser that the seller and any entity acting on behalf of the seller reasonably believes is a QIB.