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Convertible Note and Warrant Purchase Agreement

Convertible Note and Warrant Purchase Agreement 2026

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The document is a Convertible Note and Warrant Purchase Agreement between COMPANY NAME HERE, Inc. and its investors, outlining the terms for the sale and purchase of convertible promissory notes and warrants. It details the issuance of securities, closing procedures, representations and warranties from both the company and purchasers, including investment intent and compliance with securities laws.

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What is warrant coverage on a convertible note?

What Is a Warrant Coverage on a Convertible Note? On a convertible note, a warrant coverage allows the holder to purchase additional shares of a company. The amount that is allowed to be purchased is a percentage based on the loan principal.

Why would I buy warrants instead of stock?

Key considerations on stock warrants Stock warrants can be very profitable for investors, allowing them to buy stock at a discount or sell stock for far more than the market price. For the right investor, they can represent an excellent investment opportunity.

What is warrant coverage on a loan?

Warrant Coverage is a ratio of a) the aggregate exercise price of warrants received by investors in a financing to b) the aggregate investment amount of the financing.

What does 200% warrant coverage mean?

Warrant Coverage Value means a value of $. 125 for each 100% of Warrant Coverage. For purposes of example only, and not by way of limitation, if the Warrant Coverage for the Notes is 200%, the Warrant Coverage Value would be $. 25 (i.e., 200% multiplied by $.

What is the difference between warrants and convertible notes?

Convertible bonds carry the option of conversion into common stock at a specified price during a particular period. Stock purchase warrants are given with bonds or preferred stock as an inducement to the investor, because they permit the purchase of the companys common stock at a stated price at any time.

What is a convertible note purchase agreement?

convertible debt; convertible stock. A convertible note is a short-term debt instrument or agreement that converts from debt to equity at a future date, usually when one of three key events occurs: The company raises enough capital to docHub a pre-determined benchmark. The term of the loan expires. The company is sold.

What is the warrant coverage on a convertible note?

Warrant coverage refers to the amount of equity exposure an investor receives through warrants relative to their investment. For example, a 20% warrant coverage on a $500,000 convertible note would entitle the investor to $100,000 worth of equity at a predetermined strike price.

What happens to convertible notes in an acquisition?

Investors offer founders convertible notes in exchange for equity in the company. At some later point, such as a future fundraising round or liquidation event (acquisition, IPO, etc.), those notes will convert to equity (in other words, an ownership stake in the company)usually in the form of preferred shares.

Convertible Note and Warrant Purchase Agreement 2026

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