Equity Private Placement (EPP) Glossary

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).

List of Terms

Accredited Investor
American Depositary Receipt (ADR)
Affiliate
NYSE American Stock Exchange ("NYSE American")
Blank Check Preferred Stock
Bond
Certificate of Incorporation (or Articles of Incorporation)
Common Stock
Convertible Debt
Convertible Preferred Stock
Convertible Security
Corporate Insiders
Covenants
Debenture
Demand Registration Rights
Due Diligence
EDGAR
Exchangeable Debt
Equity Line
Equity Private Placement
Equity and Equity-Linked Securities
FASB
Follow-On Offering
GAAP
Hedge Fund
Investor Legal Counsel Profile
Investors
Investment Fund
Investment Fund Profile
Investment Manager
Investment Manager Profile
Investing Public
Issuer Legal Counsel Profile
Issuer
Issuer Profile
Legal Counsel
Market Capitalization
Maturity
Mezzanine Financing
NASD
NASDAQ
NASDAQ Global Select Market (NASDAQ - GS)
NASDAQ Global Market (NASDAQ - GM)
NASDAQ Capital Market (NASDAQ - CM)
New Issue
New York Stock Exchange (NYSE)
Options
Over-the-Counter (OTC)
Over-the-Counter Bulletin Board (OTC BB)
Placement Agent
Placement Agent Profile
Placement Profile
Placement Status
Preferred Stock
Primary Offering
Principal
Private Placement
Prospectus
Public Float
Qualified Institutional Buyer
Registered Direct
Registration Statement
Regulation D
Regulation S
Registered Securities
Restricted Securities
Rule 144
Rule 144A
Secondary Offering
Securities Act of 1933
Securities and Exchange Commission ("SEC")
Term Sheet
Treasury Stock
Warrants
Warrants (Prepaid)

Glossary - A

Accredited Investor

Any person or institution deemed capable of understanding and affording the financial risks associated with the purchase of Restricted Securities. The Securities and Exchange Commission ("SEC") recognizes the following entities/parties as being accredited:

Individuals

Any person who individually or jointly with their spouse has a net worth of at least $1 million.

An person who has had income in excess of $200,000 for the immediately preceding two years and has an expectation of such income in the current year, or any person and their spouse who has had a joint income in excess of $300,000 for such periods. Any director, officer or general partner of the Issuer.

Institutions

A financial institution such as bank, broker/dealer, insurance company or business development company.

A trust or business partnership, with assets in excess of $5 million, that wasn't formed for the purpose of acquiring the unregistered securities.

Any entity wholly owned by accredited investors.

American Depositary Receipt (ADR)

A receipt for shares of foreign-based companies that entitles the holder of an ADR to all dividends and capital gains related to the Issuer. ADRs allow U.S. Investors to buy shares of foreign-based corporations' securities through U.S. stock markets and exchanges instead of having to buy shares through a foreign-based companies' primary stock exchange.

Affiliate

A person or entity that directly, or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with an Issuer.

American Stock Exchange ("NYSE Amex")

A national U.S. stock market exchange.

Glossary - B

Blank Check Preferred Stock

Preferred Stock that has been authorized, but not yet issued, by an Issuer. The specific rights and preferences of the Preferred Stock being issued, including liquidation preferences, dividend rates, and voting rights, are established by the board of directors during completion of an Equity Private Placement. Blank Check Preferred Stock lets an Issuer's board structure and negotiate terms directly with Investors without additional stockholder authorization.

Bond (Debt: non-Convertible)

A certificate of indebtedness. The Issuer promises to pay the bondholder a specified amount of interest ("coupon") for a specified time period and to repay the debt at the end of a specified period (the "maturity of the bond").

A secured bond is one that is backed by collateral that may be sold if the Issuer fails to pay interest and principal when they are due.

An unsecured bond (a "Debenture") is only backed by the full faith and credit of the Issuer.

Glossary - C

Certificate of Incorporation (or Articles of Incorporation)

An Issuer's basic organizational document, filed with the Secretary of State in the state of incorporation. It includes the name, location, and purpose of a company; the number, classification, rights, and preferences of an Issuer's capital stock; and voting authority of the directors with respect to related party transactions and redemptions.

Common Stock

Common stock represents an ownership stake in the Issuer. Common stock is the most junior security that may be offered by an Issuer (i.e, holders of preferred stock, subordinated debt, secured debt, and trade payables all get paid before common stockholders in the event of a liquidation of the Issuer). There can be different classes or series of common stock with different rights, including voting or dividend differences.

Convertible Debt (Debt: Convertible)

Debt that can be converted into equity, usually at the option of the debt holder. Convertible Debt is similar to Convertible Preferred Stock, but it ranks senior to Preferred Stock in the event of a liquidation of the company.

Convertible Preferred Stock (Preferred Stock: Convertible)

A form of Preferred Stock that grants an Investor the right (but not the obligation) to convert the Preferred Stock into the common stock of the Issuer.

Convertible Security (Other: Convertible)

Any security - other than Preferred Stock, Debt or a Warrant - that permits an Investor to acquire an ownership stake in the Issuer by converting the original security, typically, into Common Stock (e.g., Trust Preferred Securities).

Corporate Insiders

Officers, director, or anyone individual owning 10% or more of the outstanding securities of an Issuer.

Covenants

Agreements made by an Issuer with specified Investors in relation to Equity Private Placements. Affirmative covenants detail positive actions that an Issuer intends to perform. Negative covenants specify actions that an Issuer will not take without consent of such Investors. If an Issuer breaches a covenant, it is considered to be in default, giving specified default rights to Investors.

Glossary - D

Debenture

A type of Bond that is not collateralized by another asset of the Issuer. An indenture agreement sets forth the terms of the Bond.

Demand Registration Rights

An Investor's contractual right to demand that the Issuer file and get effective a Registration Statement for the securities issued in an Equity Private Placement so that Investors may resell such securities to public.

Due Diligence

The research efforts of an Investor to evaluate a potential investment opportunity.

Glossary - E

EDGAR

Electronic Data Gathering, Analysis and Retrieval. The SEC system for electronically handling documents from reporting Issuers (e.g, 10-Ks, 10-Qs, 8-Ks, etc.).

Exchangeable Debt

A Bond that gives the holder the right to exchange it for securities of a firm other than the Issuer of the original security.

Equity Line

An Equity Line financing structure allows an Issuer to "draw-down" on a pre-determined amount of capital committed to by an Investor during a specified time period (typically 24 to 36 months). The Issuer "draws down" on the Equity Line by making periodic sales of its securities (typically Common Stock) to the Investors.

Equity Private Placement

A Private Placement of Equity or Equity-Linked Securities by an Issuer.

Equity and Equity-Linked Securities

Equity and Equity-Linked Securities are securities sold by an Issuer which provide either (i) a direct ownership stake via common stock or (ii) an ownership stake based upon conversion or exercise of a security into the common stock of the Issuer. Common examples of Equity and Equity-Linked Securities are Common Stock, Convertible Preferred Stock, Convertible Debt, Warrants, Prepaid Warrants, Preferred Stock (non-convertible) with Warrants, Debt (non-convertible) with Warrants and Options.

Glossary - F

FASB

Acronym for Financial Accounting Standards Board.

Follow-On Offering

The sale of Common Stock by an Issuer through a public offering after it is already a public company.

Glossary - G

GAAP

Abbreviation for "Generally Accepted Accounting Principles." The FASB is the body that determines what accounting procedures are generally accepted.

Glossary - H

Hedge Fund

Hedge funds are private investment partnerships among a number of Accredited Investors. Hedge funds are exempt from the regulations governing mutual funds.

Glossary - I

Investor Legal Counsel Profile

Investor Legal Counsel Profiles provide comprehensive and detailed summaries on the historical Investor representation activity of a specific Legal Counsel.

Investors

Any Investment Fund or Investment Manager (see definitions below) that makes investments in Equity Private Placements.

Investment Fund

An Investment Fund is typically a private investment fund ("Hedge Fund") or mutual fund that makes investments in Equity Private Placements. Investment Funds may be controlled by an Investment Manager. "Investment Fund" can also refer to any public/private corporate entity, Corporate Insiders, or individual Accredited Investors that invest in Equity Private Placements.

Investment Fund Profile

Investment Fund Profiles provide comprehensive and detailed summaries on the historical investing activity of a specific Investment Fund.

An Investment Fund is typically a private investment fund ("Hedge Fund") or mutual fund that makes investments in Equity Private Placements.

However, for the purposes of Investment Fund Profiles, Investment Fund can also refer to any public/private corporate entity, Corporate Insiders, or individual Accredited Investors that invest in Equity Private Placements.

Notes:

In the case of Corporate Insiders, Investment Fund Profiles are aggregated at the "Corporate Insider" level to denote the collective participation of corporate insiders across all Equity Private Placements.

In the case of individual Accredited Investors, Investment Fund Profiles are aggregated at the "Individual Investor" level to denote the collective participation of individual investors across all Equity Private Placements.

Relevant Investment Fund Profiles are automatically updated as each new placement is entered into the Equity Private Placement (EPP) DatabaseTM.

Investment Manager

An Investment Manager is an entity which controls/manages an Investment Fund. An Investment Manager typically controls/manages several Investment Funds. "Investment Manager" can also refer to any public/private corporate entity, Corporate Insiders, or individual Accredited Investors that invest in Equity Private Placements.

Investment Manager Profile

Investment Manager Profiles provide comprehensive and detailed summaries on the aggregate, historical investing activity of all of the Investment Funds controlled by a specific Investment Manager.

Notes:

In the case of a corporate entity that invests in Equity Private Placements, such corporation is considered to be an Investment Manager (e.g., Microsoft)

In the case of Corporate Insiders, Investment Manager Profiles are aggregated at the "Corporate Insider" level to denote the collective participation of corporate insiders across all Equity Private Placements.

In the case of individual Accredited Investors, Investment Manager Profiles are aggregated at the "Individual Investor" level to denote the collective participation of individual investors across all Equity Private Placements.

Relevant Investment Manager Profiles are automatically updated as each new placement is entered into the Equity Private Placement (EPP) DatabaseTM.

Investing Public

All institutional and individual investors who buy and sell common shares of publicly-traded corporations through open market transactions.

Issuer

Any public corporation that has the authority to issue and distribute securities through Equity Private Placements. Issuers are required to describe material financings (e.g., Equity Private Placements) through timely disclosure in any of the following documents filed with the SEC:

Form 8-K

The report that a publicly-held Issuer must file reporting on defined "material" events (e.g., Equity Private Placements) that might affects its financial situation or the value of its assets or shares.

Form 10-Q

A comprehensive overview of the state of Issuer's business and financial health which must be filed with the SEC on a quarterly basis.

Form 10-K

A comprehensive overview of the state of an Issuer's business and financial health which must be filed with the SEC within 90 days of the company's fiscal year-end.

Issuer Legal Counsel Profile

Issuer Legal Counsel Profiles provide comprehensive and detailed summaries on the historical Issuer representation activity of a specific Legal Counsel.

Issuer Profile

Issuer Profiles provide comprehensive and detailed summaries on the placement history of a specific Issuer.

Glossary - J

There are no definitions in this section.

Glossary - K

There are no definitions in this section.

Glossary - K

Legal Counsel

Legal Counsel act as legal advisors during execution of an Equity Private Placements. Legal Counsel may represent an Issuer or Investor.

Glossary - M

Market Capitalization (Equity)

The aggregate value of an Issuer's common shares as determined by the market. Equity Market Capitalization is calculated by multiplying the total number of common shares outstanding by the current share price.

Maturity

The date on which the principal amount of a Bond, Convertible Debt, Preferred Stock, Convertible Preferred Stock or any other Convertible Security is to be paid in full.

Mezzanine Financing

Financing that ranks above equity, but below debt in the capital structure of an Issuer.

Glossary - N

NASD

The National Association of Securities Dealers is a self-regulating organization that is responsible for regulating its members. Most broker-dealers are members. The NASD operates the NASDAQ stock markets.

NASDAQ

Abbreviation for National Association of Securities Dealers Automated Quotation System. The system is designed to facilitate over-the-counter stock trading.

NASDAQ Global Select Market (NASDAQ - GS)

A major national stock market that uses computers and telecommunications for trading securities. Newly created effective 7/3/06.

NASDAQ Global Market (NASDAQ - GM)

A major national stock market that uses computers and telecommunications for trading securities of compnaies that do not qualify for inclusion in the NASDAQ Global Select. Renamed from NASDAQ National Market System (NASDAQ - NM) effective 7/3/06.

NASDAQ Captial Market (NASDAQ - CM)

NASDAQ market for the trading of securities of generally smaller, less-well capitalized companies that do not qualify for inclusion in the NASDAQ Global Market. Renamed from NASDAQ SmallCap Market (NASDAQ - SC) effective 9/27/05.

New Issue

A security being offered to the public for the first time by an Issuer. New issues may be initial public offerings by private companies going public or additional securities of Issuers that already public.

New York Stock Exchange (NYSE)

The oldest and largest national stock exchange. Commonly referred to as the "Big Board".

Glossary - O

Options

An Investors' or Issuers' right (but not obligation) to buy (or sell) Equity and Equity-Linked Securities or require the other party to buy (or sell) Equity and Equity-Linked Securities.

Over-the-Counter (OTC)

Also known as Pink Sheets. Companies that do not meet the minimum listing criteria for the OTC BB.

Over-the-Counter Bulletin Board (OTC BB)

Companies that do not meet the minimum listing criteria for the national stock exchanges or the NASDAQ stock market.

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 Agent Profile

Placement Agent Profiles provide comprehensive and detailed summaries on the historical placement activity of a specific Placement Agent.

Placement Profile

Placement Profiles provide detailed summaries of Equity Private Placements, with varying Placement Status, based on publicly available information. Important pricing elements of a transaction are highlighted in the form of a Term Sheet. In addition, relevant Investor, Placement Agent and Legal Counsel information is provided.

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.

Glossary - S

Secondary Offering

In contrast to a Primary Offering where the seller of securities is the Issuer, in a Secondary Offering the seller is any entity other than the Issuer. In a Secondary Offering, the Issuer that originally issued the securities does not receive any proceeds.

Securities Act of 1933

An act of Congress which governs the issuance of New Issues of securities. It requires the registration of securities, disclosure of pertinent information relating to new issues so that investors may make informed decisions. The oversight of this function is the responsibility of the Securities and Exchange Commission ("SEC").

Securities and Exchange Commission ("SEC")

The Securities and Exchange Commission is the federal agency created to administer various acts that constitute the federal securities laws.

Glossary - T

Term Sheet

A summary of the key financial terms and conditions to be included in an agreement about a proposed Equity Private Placement. Such details would typically include, amount of investment/financing, interest or dividend payments, value per share, agents, fees, conditions, closing dates, etc.

Treasury Stock

Common shares that have been repurchased by the Issuer. These common shares are included in the count of the number of shares issued but they are not counted as shares outstanding. They may eventually be retired or they may be reissued by the company.

Glossary - U

There are no definitions in this section

Glossary - V

There are no definitions in this section

Glossary - W

Warrants

A security issued by an Issuer entitling the holder to buy a certain number of shares of a specified security (typically Common Stock) at a specified price during a specified time period. A Warrant may be issued separately or together with other Equity Private Placement securities (e.g., Convertible Preferred Stock)

Warrants (Prepaid)

A Warrant issued by an Issuer entitling the holder to exercise into a specified number of different securities, for no additional financial consideration, during a specified time period.

Glossary - X

There are no definitions in this section

Glossary - Y

There are no definitions in this section

Glossary - Z

There are no definitions in this section

Close Window