Convertible Note Agreement

1. Important Note

A convertible note is a real debt instrument with interest, a maturity date, and significant legal/tax consequences. This template is a simplified starting point — have a startup attorney prepare or review the final version before using it to actually raise money.

2. Parties & Principal

This Convertible Note ("Note") is entered into as of [Effective Date] between [Company Name] ("Company") and [Investor Name] ("Investor"), for a principal amount of [Amount].

3. Interest & Maturity

The Note accrues interest at [Rate]% per year and matures on [Maturity Date], at which point it becomes due unless converted before then.

4. Conversion

The Note converts into equity upon a qualified equity financing of at least [Threshold Amount], at a price based on [Valuation Cap of [Amount] and/or Discount Rate of [Percentage]%, whichever is more favorable to Investor].

5. Change of Control or Maturity Without Conversion

If a change of control occurs, or the Note reaches maturity without a qualifying financing, Investor is entitled to [repayment of principal plus accrued interest, or conversion at the Valuation Cap, at Investor’s election, or as otherwise negotiated].

6. Representations

Company represents it is duly organized and has the authority to enter into this Note. Investor represents they are acquiring this Note for investment purposes and, where required, that they qualify as an accredited investor under applicable securities law.

7. Governing Law & Signatures

This Note is governed by the laws of the State of [State / Jurisdiction], including any applicable usury limits on the interest rate.

Company Representative Signature: _______________________ Date: _______________

Investor Signature: _______________________ Date: _______________