About Our Services - Standard Transaction Documentation

Overview | Standard Transaction Documentation | Escrow Services

PipeFund Documents constitute a standard set of common terms and conditions which are incorporated into all transactions, decimating the amount of time and pages typically required in drafting and negotiating transaction documentation for PIPE Transactions and Registered Direct Offerings.

Standard Documents - Incorporation by Reference

PipeFund Documents consists of two types of documents:

  • PipeFund Forms, which are templates in Microsoft Word® for draftspersons to utilize in creating the main Transaction Documents.
  • PipeFund Standard Transaction (PST) Documents, which are fixed PDF documents containing standard terms and conditions which are incorporated by reference into the Transaction Documents.

All current PipeFund Documents, as well as historical versions of PST Documents, are available for viewing, printing and downloading by clicking on the applicable tab above. Check back frequently as additional standard templates and PST Documents will be added for your convenience and existing PipeFund Documents are monitored and updated to conform to changing regulations and market conditions.

As provided in the PipeFund Forms, the main Transaction Documents incorporate by reference the PST Documents. This means that all the terms, provisions, conditions and definitions contained in the PST Documents are deemed to be included in the Transaction Documents as if they were stated in such documents directly. For example the Securities Purchase Agreement (SPA) incorporates by reference PST Document GTC (General Terms and Conditions) (which includes registration rights) and PST Document DEF (Definitions), enabling the SPA to run as little as 4-5 pages, as compared to 70-80 pages for a typical securities purchase agreement and registration rights agreement. Similarly, the form of Warrant incorporates by reference PST Document WAR (Warrant), enabling Investors to negotiate and take custody of a simple 2-page Warrant instead of a 15-20 page document.

Once a PipeFund Transaction participant becomes familiar with the PST Documents, the drafting, review and negotiation of PIPE or RD transaction documents can be done in a fraction of the time, significantly reducing the time until Closing and transaction expenses. Whereas typically it can take about 8-10 hours to prepare an initial draft of transaction documents for a basic PIPE Transaction, with PipeFund Documents this can be done in less than an hour. This permits an even greater time savings in the review of and commenting on documents, as well as saving countless hours of negotiation. More importantly, PIPE participants can focus more on dealing with the idiosyncrasies of a particular transaction or further requisite diligence on an Issuer or Investors, rather than reviewing and rehashing what have become customary and standard provisions.

Flexibility

Although PipeFund's PST Documents in unmodified form provide the most clear, comprehensive and reasonable PIPE and RD documentation, the greatest power in the PST Documents is their flexibility. The PipeFund Documents are drafted to accommodate almost all types of situations and structures with little or no drafting. For example, the documentation provides for all different types of securities issuances, different types of Investors, single or multiple Closings, various status/listing of Issuers, different registration requirements, etc. By simply completing the PipeFund Form of Securities Purchase Agreement, all or most issues contemplated for the transaction should be addressed.

More importantly, the provisions contained in the Securities Purchase Agreement, Warrants and other transaction agreements trump those contained in the PST Documents, similar to a legal rider. Therefore, any representation, covenant, condition or term contained in any PST Document can be modified or deleted, and any representation, covenant, condition, term or ancillary document can easily be added. By highlighting variances in the much shorter transaction documents, PipeFund transaction participants and attorneys can better focus on these key provisions and issues and thus improve the quality of drafting for deal-specific terms. Read more...

The standard documentation is specifically constructed to facilitate and expedite modification and insertion of deal-specific terms. In particular, with well over 200 detailed definitions, it is easy and quick to change terms by simply changing or eliminating a default definition or figure, such as the minimum and/or maximum aggregate investment amount, eligible exchanges/markets for listing or quotation, securities purchase agreement termination date, requisite percent of investors to approve changes, various registration deadlines, defaults and damages, anti-dilution adjustments, maximum beneficial ownership percentage, and cashless exercise, just to name a few significant areas. Similarly, with the support of the detailed definitions and PST Document provisions, some terms may be inserted into the documentation with a mere sentence instead of drafting one or more paragraphs to be negotiated.

First-Rate Documentation

The PST Documents, together with the standard template PipeFund Forms, constitute what PipeFund considers the most robust, reliable and flexible documentation for effecting PIPE and RD transactions. By scouring numerous well-regarded forms of agreements used over the years for documenting transactions and adopting and honing the best standard provisions and clauses, PipeFund has meticulously and methodically developed its "best-in-breed" PST Documents to provide:

  • Standard "Market" Provisions.
    All provisions which have become typical or pervasive in PIPE and RD transactions with sophisticated or institutional investors are incorporated, including customary language and the manner in which used.

  • Comprehensive Drafting.
    Each provision is broadly drafted to encompass the widest possible scenarios in terms of both the structuring of the transaction as well as the potential future events which could affect the Issuer or the transaction. For example, in determining anti-dilution adjustments for subsequent issuances of securities, virtually all potential implications covered in the most specific PIPE transaction documents are included.

  • Detailed, Concise and Clear Wording and Styling.
    In achieving comprehensive documentation, clauses are as detailed as practical for the circumstances, often adhering to the most detailed forms currently used with respect to a particular provision. At the same time, the PipeFund documentation strives to remain concise and easy to read and understand. These parameters promote documentation that reflects a clearer understanding among the parties and a greater consistency and clarity across PIPE and RD transactions. For example, the documents include very specific and all necessary and appropriate clauses for determining beneficial ownership limitations.

  • Strong Investor Protection.
    The documentation includes virtually all customary Issuer representations, warranties, covenants and conditions necessary or desirable to protect Investors from numerous potential adverse past and future events. The provisions and clauses constitute an amalgamation of those which are often requested or required by sophisticated Investors but which are not so unreasonably aggressive as to be inappropriate for the typical PIPE or RD transaction.

  • Satisfaction of Issuer Concerns.
    The documentation includes virtually all typical Investor representations, warranties and covenants which are often reasonably requested by Issuers and all exceptions, carve-outs and provisions which may reasonably be requested by Issuer counsel and would typically be acceptable to Investors. Inclusion of these Issuer-favorable terms and conditions facilitates execution of the transaction documentation on an expedited basis without compromising Investor protection.

  • Conformity with Latest Regulations and Market Circumstances.
    In addition to honing and clarifying provisions which have become "standard" in sophisticated PIPE or RD documentation, PipeFund constantly endeavors to update and maintain the PST Documents to conform to the latest regulatory environment and current commonly accepted provisions. For example, the PST Documents contemplate the recent Rule 415 interpretations and Rule 144 changes as well as provide for email notices and delivery of PDF signature pages.

  • Thorough Signature Page.
    The PipeFund Form of SPA provides for a consistent and detailed signature page, enabling Investors to clearly and correctly indicate (1) the investment amount, (2) the capacity of the signatory, (3) a desired Maximum Ownership Percentage, (4) a multitude of addresses for legal notices, copies of notices, deliveries of Common Stock and deliveries of other securities, and (5) jurisdiction of organization/residence (for securities law purposes) and tax identification number (for tax purposes if applicable/desired). Note that items (4) and (5) are on page 2 which is not for public dissemination.

Short, Simple, Easy


Sidestep Term Sheet

The PipeFund Securities Purchase Agreement is so short, simple and easy to prepare that in most cases it can replace the term sheet stage entirely. Not only does this save time, but the understanding among the parties is more precise and reduces any potential disconnect caused by ambiguities in a term sheet. In fact, many provisions in the SPA can actually be shorter than in a term sheet, but at the same time encapsulate the full understanding of the parties as contained in the PST Documents, such as:

  • Anti-Dilution Protection.
    Instead of describing full-ratchet or weighted-average anti-dilution adjustment for dilutive securities issuances, these concepts are now defined terms which contain all the protections and circumstances included in the most robust of PIPE transaction documents.
     
  • Exempt Issuances.
    Customary exemptions from anti-dilution adjustments are already included in the PST Documents so they do not need to be stated in the SPA/term sheet.
     
  • Registration Rights.
    Using defined terms, PIPE Transaction participants merely need to specify that the Filing Deadline is X days and the Effectiveness Deadline is Y days for registration, and all language incident to such registration requirements is automatically included in the PipeFund standard documentation. Alternatively, participants can remain silent in the SPA/term sheet to rely on the typical 30-day filing deadline and 90-day (120-day with review) effectiveness deadline.
     
  • Liquidated Damages.
    Instead of describing instances of liquidated damages and the amount, PipeFund Transaction participants only need to specify that the Liquidated Damages Percentage is X%, or they can specify various percentages for particular pre-defined defaults or remain silent in the SPA/term sheet to rely on 1.5% liquidated damages as the default scenario. In addition, the details concerning application, payment, calculation, etc. for such amounts are all provided for in the PST Documents, obviating the need to detail in the SPA/term sheet.
     
  • 20% Rule.
    Cap provisions with consequential actions are already covered in the PST Documents (aside from unusual circumstances which may require special attention).
     

These examples are only a small sampling of the numerous ways in which the PipeFund Documents enable transaction participants to sidestep weeks of term sheet and document turning to execute a transaction in a matter of hours.

Straightforward Drafting

PipeFund's user-friendly templates allow for any deal participant to easily and quickly complete the terms of a contemplated PIPE or RD transaction, although we strongly recommend legal counsel review, drafting or advice prior to executing any documents. Initial drafts of transaction documents can be completed in a fraction of the time typically spent simply due to the reduction of "conforming changes" required to be made to adopt a prior deal's documents to the current transaction documents. In addition to greatly reducing the actual number of pages to be drafted, reviewed and negotiated, PipeFund strives to reduce the number of documents to be reviewed in order to minimize the time associated with downloading, reviewing, printing and assembling multiple documents. Read more...

PipeFund has significantly reduced, if not eliminated in some cases, the need to make conforming changes in preparing documents. For example, references to recent SEC reports and other dates do not require updating, capitalization figures do not need to be inserted into the Securities Purchase Agreement, the names and/or types of securities do not need to be conformed, the applicable trading market does not need to be conformed, single or multiple closings can be effectuated, different types of investors can be accommodated, and beneficial ownership limitation percentages can be varied - PST Document GTC covers everything without requiring conformation. To reduce the number of separate transaction documents, PipeFund recommends that any form of convertible securities or additional documents, such as the 2-page Form of Warrant, the Form of Convertible Note, or a Security Agreement, simply be attached as an exhibit to the Securities Purchase Agreement. Although typically unwieldy, this is preferable given the significantly reduced page count for the SPA, Warrant and Convertible Note. Moreover, the registration rights agreement is included within PST Document GTC to further diminish the length of the documentation, the repetition of provisions and words, and the time spent printing and executing an additional document.

Post-Closing Convenience

For Investors and Legal Counsel who engage in multiple PIPE or RD Transactions, having the same standard provisions incorporated into every deal greatly reduces the time spent locating and poring over deal documents to determine the parties' rights and obligations as issues arise.

Also, PipeFund provides templates in Microsoft Word® for certain exhibits to be completed, such as a Warrant Exercise Notice and a Note Conversion Notice - maintaining a standard form of these Notices eliminates the hassle of retrieving a copy of the applicable security and copying, conforming and/or handwriting the Notice(s).

Conclusion

After becoming familiar with PipeFund Documents, we are confident that all PipeFund participants will enjoy the ease, speed and enhanced quality of effecting PIPE and RD transactions using the Pipefund platform. If you need any assistance or have any questions with respect to the completion of the PipeFund Forms or how the PipeFund platform works, please contact us so that we may assist you and/or refer you to experienced counsel.