This model document is the work product of a national coalition of attorneys who represent investors, issuers and bank placement agents in PIPE financings. This document should be tailored to meet your specific requirements, and should not be construed as legal advice for any particular facts or circumstances.¹
¹ These model PIPE documents (for a US issuer) have not been tailored for use in connection with a reverse merger, a deSPAC transaction or a financing requiring stockholder approval under NYSE or Nasdaq rules.
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS WARRANT (THE “SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS (I) SUCH SECURITIES HAVE BEEN REGISTERED FOR SALE PURSUANT TO THE SECURITIES ACT, (II) SUCH SECURITIES MAY BE SOLD PURSUANT TO RULE 144 UNDER THE SECURITIES ACT, (III) THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO IT THAT SUCH TRANSFER MAY LAWFULLY BE MADE WITHOUT REGISTRATION UNDER THE SECURITIES ACT, OR (IV) THE SECURITIES ARE TRANSFERRED WITHOUT CONSIDERATION TO AN AFFILIATE OF SUCH HOLDER OR A CUSTODIAL NOMINEE (WHICH FOR THE AVOIDANCE OF DOUBT SHALL REQUIRE NEITHER CONSENT NOR THE DELIVERY OF AN OPINION).
FORM OF PRE-FUNDED WARRANT TO PURCHASE COMMON STOCK²
² Company should have its outside auditor review and sign-off on the accounting treatment of the Pre-Funded Warrant.
Warrant No. [warrant number]
Number of Shares: [number of shares] (subject to adjustment)
Original Issue Date: [original issue date]
[company name], a [incorporation state] corporation (the “Company”), hereby certifies that, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, [holder name] or its registered assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company up to a total of [number of shares] shares of common stock, $[par value] par value per share (the “Common Stock”), of the Company (each such share, a “Warrant Share” and all such shares, the “Warrant Shares”) at an exercise price per share equal to $[exercise price] (the “Exercise Price”), in each case as adjusted from time to time as provided in Section 9, upon surrender of this Pre-Funded Warrant to Purchase Common Stock (including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement hereof, the “Warrant”) at any time and from time to time on or after the date hereof (the “Original Issue Date”).
Definitions. For purposes of this Warrant, the following terms shall have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediates, controls, is controlled by or is under common control with such Person.
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About this template
What is this template?
This document is a pre-funded warrant for common stock issued in a private placement. It is not a standard option or a purchase warrant with a full strike price, but rather an instrument where the exercise price is nominal because it has been paid upfront. It contains specific buy-in remedies and beneficial ownership blockers to comply with Section 13(d) of the Exchange Act.
When should you use it?
Use this document when an investor in a PIPE transaction wants the economic exposure of stock but needs to remain below specific regulatory ownership thresholds. If the investor is paying the exercise price upon exercise rather than upfront, use a standard Form of Warrant instead.
What's inside
| Clause | Name | What it does |
|---|---|---|
| 4 | Exercise of Warrants | The Holder may exercise the warrant at any time after the Original Issue Date by delivering an Exercise Notice and the Exercise Price. |
| 5 | Delivery of Warrant Shares | The Company must deliver shares via DTC or book-entry within the Standard Settlement Period, which is currently defined as T+1. |
| 9 | Certain Adjustments | The Number of Warrant Shares multiplies by a specific fraction if the Company subdivides outstanding shares or pays a stock dividend. |
| 10 | Payment of Exercise Price | The Holder may satisfy the Exercise Price through a cashless exercise formula based on the Closing Sale Price and Section 3(a)(9). |
| 11 | Limitations on Exercise | The Company cannot effect exercises if the Holder would beneficially own more than the 4.99% Maximum Percentage of outstanding Common Stock. |
| 15(f) | Governing Law; Jurisdiction | New York law governs all construction and enforcement, with exclusive jurisdiction in State and Federal courts sitting in Manhattan. |
Who it's for
- a US issuer conducting a PIPE financing with institutional investors
- an investor requiring a pre-funded warrant to manage beneficial ownership caps
- a public company issuing warrants where accounting treatment is reviewed by outside auditors
How long it runs and how it's signed
Law it's drafted under
United States note
This version is drafted for US law generally. Contract, employment and consumer rules vary by state — for example on non-competes and at-will employment. Tell GitLaw which state applies and it adjusts the draft.
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