Are electronic signatures valid?

Yes. Electronic signatures are legally binding in interstate transactions under the ESIGN Act (15 U.S.C. §7001) and under UETA in most states, provided intent, consent, attribution, and record retention are satisfied.

Do convertible notes count as securities?

Often yes. Convertible notes can be securities for federal and state laws; issuers should confirm exemption eligibility and document investor accreditation to reduce regulatory risk.

Is notarization required for enforceability?

Not typically. Most states do not require a notarized signature for loan agreements, but notarization or a recorded instrument may be needed for certain security interests or when state-specific rules apply.

Can I amend a signed note?

Yes, by mutual written amendment signed by all parties. Document changes clearly, update cap table impact, and obtain any required corporate approvals before relying on an amendment.

How do I cancel or revoke a note?

Revocation usually requires agreement by the issuer and investor; unilateral cancellation without contractual basis can be a breach. Follow amendment or termination clauses in the note.

Who should review the note before signing?

Corporate counsel for the issuer and independent counsel for investors are recommended to evaluate securities compliance, corporate authority, tax implications, and conversion mechanics.

Electronic Signature
Templates
Finance
Convertible Note Purchase Agreement

Convertible Note Purchase Agreement

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CONVERTIBLE NOTE PURCHASE AGREEMENT

Parties

Company Name Company Address

Company Contact Phone

Company Contact Email

Purchaser Name Purchaser Address

Purchaser Phone

Purchaser Email

Recitals

This Convertible Note Purchase Agreement (the Note Agreement) is made as of , by and between Company and Purchaser.

The Company desires to issue and sell, and the Purchaser desires to purchase, a convertible promissory note (the Note) on the terms set forth herein in consideration of the payment by Purchaser of the principal amount specified below.

Section 1. Purchase and Issuance

Purchaser agrees to advance to the Company the principal sum of (Principal). The Principal shall be evidenced by a promissory note substantially in the form attached hereto as Exhibit A and shall be issued on the Closing Date.

Closing Date: , .

Section 2. Note Terms

Interest Rate: The Note shall bear interest at a rate of per annum, computed on the basis of a 365-day year and actual days elapsed, and shall accrue from the date of issuance until conversion or payment in full.

Maturity Date: The Note shall mature on , (Maturity Date). On the Maturity Date, the outstanding Principal and accrued but unpaid interest shall be payable in cash unless converted pursuant to the conversion provisions below.

Prepayment: The Note shall not be prepayable by the Company without the prior written consent of the Holder, except as otherwise provided in this Agreement.

Section 3. Conversion

Automatic Conversion upon Qualified Financing: In the event that the Company consummates an equity financing (a Qualified Financing) resulting in gross proceeds to the Company of at least (the Qualified Financing Minimum), the outstanding Principal and accrued interest on the Note shall automatically convert into shares of the Company’s capital stock upon the terms set forth below.

Conversion Consideration: Upon conversion, the Holder shall receive that number of shares equal to the quotient of (A) the outstanding Principal and accrued interest divided by (B) the Conversion Price. Conversion Price shall be determined as follows (select applicable provisions and complete fields):

Conversion Terms (select all that apply) Discount to Qualified Financing Price: the Conversion Price shall be the price per share paid by investors in the Qualified Financing multiplied by (1 - ). Valuation Cap: in lieu of or in addition to the discount, the Conversion Price shall be based on a pre-money valuation cap of divided by the Fully Diluted Capitalization immediately prior to the Qualified Financing. Holder Optional Conversion: at or prior to the Maturity Date, the Holder may elect to convert the Note into shares of common stock at a Conversion Price equal to per share.

Section 4. Payments, Default and Remedies

Default Interest: Upon the occurrence of an Event of Default, the outstanding Principal and interest shall bear interest at a default rate of per annum, compounded as permitted by applicable law, from the date of default until paid in full.

Events of Default: The following shall constitute Events of Default: (a) final adjudication that the Company has become insolvent or bankrupt; (b) failure by the Company to pay Principal or interest within ten (10) days after such amounts are due; (c) material breach of any representation, warranty or covenant that remains uncured for thirty (30) days after notice; (d) dissolution, winding up, or cessation of business of the Company.

Remedies: Upon an Event of Default, the Holder shall be entitled to exercise all remedies available at law or in equity, including acceleration, specific performance, injunctive relief, and recovery of costs and expenses, including reasonable attorneys' fees.

Section 5. Representations and Warranties

Company represents and warrants to the Purchaser that, as of the date hereof and the Closing Date, the Company is duly organized, has the corporate power to execute this Agreement, and the execution and delivery of this Agreement and the performance hereof have been duly authorized by all necessary corporate action. The issuance of the Note, and the conversion of the Note into shares in accordance with this Agreement, will not violate the Company’s organizational documents and will be duly authorized and validly issued, subject to restrictions imposed by securities laws.

Purchaser represents and warrants that it is acquiring the Note for investment for its own account and not with a view to or for sale in connection with any distribution, and that it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of this investment.

Section 6. Transfer Restrictions and Legends

Transfer Restrictions: The Note and any shares issued upon conversion shall not be transferred except pursuant to a registration statement in effect or an applicable exemption from registration. Any certificates representing shares issued upon conversion shall bear appropriate legends referencing such restrictions.

Section 7. Notices

Company Notice Address Purchaser Notice Address

Notices shall be in writing and shall be deemed given when delivered personally, sent by certified mail return receipt requested, or by nationally recognized overnight courier, to the addresses set forth above or to such other address as either party may designate by notice to the other.

Section 8. Miscellaneous

Governing Law: This Agreement shall be governed by and construed in accordance with the laws of without regard to conflict of laws principles.

Amendments and Waivers: Any term of this Agreement may be amended or waived only with the written consent of the Company and Holders holding a majority in outstanding principal amount of the Notes then outstanding unless a greater percentage is specified in the Note.

Counterparts; Electronic Signatures: This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures delivered by electronic means shall be treated as original signatures for all purposes.

Additional Terms or Special Provisions

Acknowledgment

The parties acknowledge that they have read and understand this Agreement, that they have had the opportunity to consult with legal counsel, and that they intend to be legally bound by its terms.

Company Printed Name:

By:

Date:

Purchaser Printed Name:

By:

Date:

What a Convertible Note Purchase Agreement Is and when it’s used

A Convertible Note Purchase Agreement is a short-form financing contract used when investors loan money to an early-stage company with the option to convert the loan into equity at a later financing round. The agreement records the principal amount, interest, maturity, conversion mechanics, valuation cap, discount, and prepayment or repayment terms. It often includes representations and warranties, conditions to closing, transfer restrictions, and investor rights. For many startups a convertible note is a faster, simpler alternative to an immediate priced equity round, preserving negotiating flexibility until valuation is set.

Why this agreement matters for founders and investors

The Convertible Note Purchase Agreement streamlines seed-stage financing by documenting loan terms that can convert into equity later, reducing negotiation time and legal complexity while preserving core economic and governance protections for both parties.

Who typically prepares or signs a Convertible Note Purchase Agreement

Founders, corporate counsel, angel investors, and early-stage venture funds are the primary users who draft, negotiate, or sign these agreements.

Founders and executives: Negotiate conversion economics and investor protections; ensure capitalization table implications are tracked.
Angel investors and seed funds: Document principal, discount, and valuation cap; protect priority and information rights.
Company counsel and advisors: Draft and review provisions for securities compliance, payment, and conversion mechanics.

Accurate, consistent completion helps avoid conversion disputes later and simplifies cap table management at the next equity financing.

Authorized signers and typical signatory roles

Founder / CEO

Company founders or the CEO usually sign for the issuer. The signer should be an officer with authority under the corporate bylaws or board resolution to bind the company to debt and equity conversion terms; board approval may be required depending on the corporate charter.

Investor Representative

An investor signatory may be the individual investor, a fund manager, or an authorized signatory listed in investment documents. The signer must have authority to bind the investing entity and confirm accredited investor status if required.

Core clauses to expect in a professional Convertible Note Purchase Agreement

A complete agreement balances simple financing mechanics with clear conversion rules and investor protections. Each clause affects valuation, control, and future cap table outcomes.

Principal and Interest

Specifies the loan amount, interest rate (if any), and how interest accrues and is paid or converted at maturity or conversion.

Maturity

States the maturity date and consequences if the note is not converted or repaid, including acceleration or renegotiation procedures.

Conversion Terms

Defines triggering events (qualified financing, sale, IPO), conversion formula, valuation cap and discount, and how shares are calculated.

Prepayment and Repayment

Addresses whether the company may repay the note in cash prior to conversion and any applicable fees or conditions.

Securities Compliance

Contains representations about accredited investor status and compliance with federal and state securities laws; may include legend requirements.

Covenants and Defaults

Lists affirmative and negative covenants, events of default, remedies, and any rights to cure or convert upon default.

Step-by-step: completing and executing the agreement

Follow these sequential steps to prepare, review, and sign a convertible note to reduce negotiation friction and ensure compliance.

01

Drafting: Populate issuer, investor, amount, rates, and conversion terms clearly.
02

Legal Review: Have counsel review securities compliance and board approval requirements.
03

Board Authorization: Obtain a board resolution authorizing issuance of the note if required by corporate governance.
04

Execution: Have authorized signers execute the agreement and distribute fully signed copies to each party.

How conversion and post-closing mechanics typically operate

This summary shows the usual flow from funding to conversion and cap table adjustment after a qualifying financing event.

Funding: Investor wires principal to issuer; funds recorded and note delivered to investor.
Qualified Financing: When a defined financing occurs, the note converts per the agreed formula.
Conversion Calculation: Apply valuation cap or discount to determine conversion price per share.
Cap Table Update: Issue shares, update ownership percentages, and provide schedules to investors.

Setting up an e-sign and review workflow for the note

Configure these fields and settings in your e-sign platform to ensure correct routing, authentication, and recordkeeping.

Field	Configuration
Signer Order	Issuer signs first \| Investor countersigns
Authentication	Email + SMS code for investor \| optional KBA for extra verification
Audit Trail	Enable timestamps, IP capture, and downloadable certificate
Document Versioning	Lock final PDF after signing \| store prior drafts separately

Digital signing and storage requirements for legal validity

Use an e-sign solution that captures intent, attribution, and a reliable audit trail to meet ESIGN/UETA standards.

Authentication: Email, SMS, or higher-assurance methods available.
Audit Trail: Timestamps, IP, and action log retained.
Export Formats: PDF/A and original DOCX export supported.

Preserve signed copies and the audit trail in encrypted storage and retain records according to regulatory guidance and your document retention policy.

eSignature vendor comparison for executing Convertible Note Purchase Agreements

Compare basic pricing and compliance features relevant to contract execution and recordkeeping; signNow is listed first per platform naming rules.

	signNow	DocuSign	Adobe Sign	PandaDoc	HelloSign
Starting Price	$8/user/mo	$15/user/mo	$14/user/mo	$19/user/mo	$15/user/mo
Free Trial	7-day free trial	No	No	Yes, limited	Yes, limited
Bulk Send	Yes	Yes	Yes	Yes	No
Audit Trail	Yes	Yes	Yes	Yes	Yes
HIPAA Compliant	Yes	Yes	Yes	No	No

Timing considerations and common deadline triggers

Track critical dates: funding, conversion events, maturity, and any notice periods that can affect rights or default remedies.

Funding Date:

Date investor wires funds; often the agreement's effective date for accruals.

Qualified Financing Window:

Defines the financing size and timing that trigger automatic conversion.

Maturity Date:

When the loan is due if not converted; check cure and extension rights.

Notice Periods:

Look for required investor or issuer notice timing for conversion or prepayment.

Board Approval Deadline:

If board consent is required, note the date by which approval must be obtained.

Common preparation pitfalls to avoid

Mismatched party names or incomplete legal names that complicate enforcement and transfer of rights.
Vague or missing conversion formulas causing ambiguity when calculating share issuance at conversion.
Failing to document investor accreditation or securities-law exemptions, which can create compliance exposure.
Not securing required corporate approvals or failing to update capitalization tables after conversion events.

Legal and financial risks of incorrect or incomplete agreements

Securities Violation: Civil and administrative penalties

Tax Exposure: Late or incorrect reporting penalties

Enforceability: Risk of conversion disputes

Creditor Claims: Priority disputes on repayment

Investor Litigation: Breach and fiduciary claims

Cap Table Errors: Dilution miscalculations and downstream funding issues

Frequently asked questions about Convertible Note Purchase Agreements

Answers to common legal and practical questions about signing, enforcing, and modifying convertible notes; consult counsel for transaction-specific advice.

Need help? Contact support

Are electronic signatures valid?
Yes. Electronic signatures are legally binding in interstate transactions under the ESIGN Act (15 U.S.C. §7001) and under UETA in most states, provided intent, consent, attribution, and record retention are satisfied.
Do convertible notes count as securities?
Often yes. Convertible notes can be securities for federal and state laws; issuers should confirm exemption eligibility and document investor accreditation to reduce regulatory risk.
Is notarization required for enforceability?
Not typically. Most states do not require a notarized signature for loan agreements, but notarization or a recorded instrument may be needed for certain security interests or when state-specific rules apply.
Can I amend a signed note?
Yes, by mutual written amendment signed by all parties. Document changes clearly, update cap table impact, and obtain any required corporate approvals before relying on an amendment.
How do I cancel or revoke a note?
Revocation usually requires agreement by the issuer and investor; unilateral cancellation without contractual basis can be a breach. Follow amendment or termination clauses in the note.
Who should review the note before signing?
Corporate counsel for the issuer and independent counsel for investors are recommended to evaluate securities compliance, corporate authority, tax implications, and conversion mechanics.

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