Multiple Investors (noteholders)

Often Convertible Notes are issued to more than one Investor. In that case it is better for the Company to issue Convertible Notes on substantially the same terms to each Investor, or else it could get very confusing and expensive down the road.

Where there are multiple Investors, the Convertible Notes are sometimes issued under a single master note purchase agreement (NPA) signed by each of the Investors. Investors holding a majority interest in the Notes under the NPA constitute the group that can approve changes or modifications under all Notes without having to get every single Investor to agree.

You can issue multiple Convertible Notes without an NPA as well, in which case you’d need to include representations and warranties and other key provisions from the NPA in the Convertible Notes themselves. But if you issue Convertible Notes without an NPA, it can lead to confusion in the future as to whether Convertible Notes are similar enough to be considered the same for purposes of allowing the majority in interest to approve changes or modifications without approval of all Investors.