Convertible Loan Agreement Template – US

Disclaimer

The information provided is intended solely as an example for documentation concerning convertible debt arrangements. It does not constitute legal advice and should not be relied upon as a substitute for consulting a qualified attorney with expertise in corporate finance or contractual law. Regulations and legal requirements may differ based on jurisdiction, and adjustments may be necessary to ensure compliance with local laws. The use of this template is at the user’s own risk, and no liability is assumed for any errors, omissions, or consequences resulting from its use without professional legal review.

Please note: This is a sample Convertible Loan Agreement template for the United States, provided for illustrative purposes only. Actual terms may vary depending on specific negotiations and applicable laws.

Convertible Loan Agreement (Sample US Version)

Parties Involved:

Lender: ABC Financial Corp.
Address: 123 Main Street, New York, NY 10001

Borrower: XYZ Startup LLC
Address: 456 Business Ave, San Francisco, CA 94109

Loan Description:

The lender agrees to provide a convertible loan to the borrower, with the principal amount of $100,000, which may convert into equity under the terms specified herein.

Conversion Terms:

The loan shall automatically convert into shares of the borrower’s equity at a valuation cap of $5 million or at a discount rate of 20%, upon the occurrence of a qualified financing event or as specified in this agreement.

Repayment Terms:

If not converted, the principal amount, along with accrued interest at 8% per annum, shall be payable in full no later than two years from the disbursement date, unless otherwise agreed.

Parties’ Responsibilities:

The lender shall disburse funds after signing this agreement. The borrower shall utilize the funds for the purposes outlined, and shall provide periodic updates regarding the company’s performance and financing progress.

Governing Law:

This agreement shall be governed by the laws of the State of New York. Disputes arising hereunder shall be resolved in the courts of New York County.

Additional Provisions:

• Any amendments to this agreement must be in writing and signed by both parties.
• This agreement supersedes any prior understandings or agreements relating to the loan.
• The borrower shall provide notice of any material events that could affect the loan or its conversion.

New York, ______________________