Note And Warrant Purchase Agreement Template for the United States

A Note And Warrant Purchase Agreement allows your company to raise capital through a hybrid financing structure that combines debt instruments with equity warrants. This arrangement gives investors the security of a promissory note while providing potential equity upside through warrants that can be exercised at predetermined prices and timeframes.

When do you need this document?

You'll need this agreement when conducting bridge financing rounds between major equity fundraises, when seeking capital from investors who prefer debt-equity hybrid structures, or when your company wants to avoid immediate dilution while still offering equity participation. This document is essential for Series A extension rounds, pre-IPO financing, or when strategic investors require both debt security and equity upside potential. Companies often use this structure when traditional bank lending isn't available but straight equity financing would be too dilutive at current valuations.

Key legal considerations

The agreement must carefully balance note terms with warrant provisions, including interest rates, maturity dates, conversion rights, and warrant exercise prices. You need to address anti-dilution protections, registration rights for warrant shares, and acceleration triggers that could affect both instruments. Critical provisions include representations and warranties from both parties, closing conditions, and compliance with securities law exemptions. The document should specify voting rights, information rights, and any board representation tied to the investment. You must also consider how the warrants interact with future financing rounds and whether they include participation rights or liquidation preferences.

Legal requirements in United States

Your agreement must comply with federal securities laws, particularly the Securities Act of 1933 registration requirements or applicable exemptions under Regulation D. Most transactions rely on Rule 506(b) or 506(c) exemptions for accredited investors, requiring proper disclosure and investor qualification procedures. You must satisfy state blue sky law requirements in each jurisdiction where securities are offered, which may require notice filings or merit review. The Investment Company Act of 1940 may apply if your company could be classified as an investment company. Your agreement should include appropriate legends on securities, comply with holding period requirements under Rule 144, and address any applicable disclosure obligations under the Securities Exchange Act of 1934 if your company is a reporting entity.