Sign a convertible note online

Convertible Note Agreement

1. The parties

2. Key terms

3. Subscription

The Investor subscribes for one convertible note with a principal amount equal to the investment amount below, and pays that amount to the Company's account within 5 business days of the Company countersigning. The Investor types the investment amount here in its own signing session, so the principal recorded on this page is the Investor's own entry. The note is issued, and the Company enters it in its register of convertible notes, when the money clears.

4. Use of the money

The Company will use the investment amount for engineering salaries, two pilot deployments of its orchard pruning arm with growers in the Goulburn Valley, and working capital. It will not use it to repay any shareholder loan or to pay a dividend while the note is outstanding.

5. Conversion on a qualifying financing

If the Company completes a qualifying financing before the maturity date, the principal and all accrued interest convert automatically, on completion of that financing, into the same class of shares issued in it. The conversion price is the lower of:

• the price per share paid by the new investors in the qualifying financing, less the 20 per cent discount; and
• the cap price of $0.60 a share.

The number of shares issued is the principal plus accrued interest, divided by the conversion price, rounded down to the nearest whole share. The Company pays any fraction in cash. The Investor signs the shareholders' agreement or deed of accession that the new investors sign, on the same terms, and receives the same rights attached to that class.

6. A worked example

Assume a qualifying financing completes on 12 October 2027, twelve months after issue, and the new investors pay $1.00 a share. Accrued interest is $150,000.00 at 6 per cent for one year, which is $9,000.00.

If the round were priced at $0.70 a share instead, the discounted price of $0.56 would be lower than the cap price, so the note would convert at $0.56 and the Investor would receive 283,928 shares, with $0.32 paid in cash for the fraction. The cap protects the Investor when the round is priced high; the discount rewards it when the round is priced low.

7. Interest

Interest accrues from the issue date on the principal only, is calculated on a 365 day year and is not compounded. It is not paid in cash while the note is outstanding. It converts with the principal under clause 5 or clause 8, or is paid with the principal if the Investor elects repayment under clause 9.

8. Change of control before conversion

If, before the note converts, a person acquires more than 50 per cent of the shares in the Company, or the Company sells all or most of its business or assets, the Investor may elect by notice within 10 business days of being told of the transaction to receive either:

• a cash payment of 1.5 times the principal, which is $225,000.00, in place of the principal and interest; or
• shares at the cap price, issued immediately before the transaction completes, so the Investor participates in it as a shareholder.

The Company gives the Investor at least 15 business days' written notice before such a transaction completes. If the Investor makes no election, it receives the cash payment.

9. At the maturity date

If the note has not converted by 12 October 2028, the Investor may elect by notice given in the 30 days before that date to have the principal and accrued interest:

If the Investor makes no election, the note converts into ordinary shares at the cap price on the maturity date.

10. Events of default

If the Company becomes insolvent, has an administrator, receiver or liquidator appointed, stops carrying on its business, or breaks a material term of this agreement and does not fix it within 20 business days of notice, the Investor may declare the principal and accrued interest immediately repayable in cash. Overdue amounts carry interest at 10 per cent a year from the date of the declaration.

11. The Company's warranties

• The Company is duly registered, has the power to issue the note and has passed every board resolution needed to do so. No shareholder approval is required under its constitution or any shareholders' agreement.
• The capitalisation table given to the Investor on 28 September 2026 is complete and accurate, and shows 10,000,000 shares on a fully diluted basis.
• The Company owns or has the right to use the intellectual property in its pruning arm, including the software and the gripper design, and has received no claim that it infringes anybody else's rights.
• No litigation, tax dispute or regulator investigation is current or, so far as the directors know, threatened.
• The management accounts to 31 August 2026 were prepared in good faith and fairly show the Company's position.

12. The Investor's warranties

• The Investor is a sophisticated investor within section 708(8) of the Corporations Act 2001, and has given the Company a certificate from a qualified accountant dated within the last six months saying so. The note is therefore offered without a disclosure document.
• The Investor has made its own assessment of the Company, has had the opportunity to ask questions of the directors, and does not rely on any forecast.
• The Investor understands that the note is unsecured, that the Company is an early stage business that may fail, and that it could lose the whole investment amount.
• The investment amount does not come from the proceeds of crime, and the Investor will give the Company any identification the Company reasonably needs.

13. Information while the note is outstanding

The Company gives the Investor quarterly management accounts within 45 days of each quarter end, its annual financial statements within 120 days of each financial year end, and prompt notice of any proposed qualifying financing, change of control or event of default. The Investor keeps that information confidential.

While the note is outstanding the Company will not, without the Investor's written consent, issue shares at a price below the cap price other than under the employee option pool, borrow more than $250,000 in total, grant security over its intellectual property, or change the rights attached to its ordinary shares.

14. Participation in the next round

In addition to its converted shares, the Investor may subscribe in the qualifying financing for up to $150,000.00 of new shares at the price the new investors pay, on the same terms, by telling the Company within 10 business days of receiving the term sheet.

15. Ranking and transfer

Until it converts, the note ranks equally with the Company's other unsecured and unsubordinated debts and ahead of any shareholder loan. The Investor may transfer the note only to a related body corporate that is also a sophisticated investor, and only with the Company's written consent, which it will not unreasonably withhold.

16. Costs, tax and stamp duty

Each party pays its own legal and accounting costs. The Company pays any stamp duty on the issue or conversion of the note. The Investor is responsible for its own tax on interest and on any gain, and acknowledges that the Company has given no tax advice.

17. Amendment and waiver

This agreement may be amended only in writing signed by the Company and the Investor. A failure or delay in exercising a right is not a waiver of it, and a waiver is effective only if it is in writing.

18. Notices

Notices may be given by email to harriet@okapiventures.example for the Investor and to board@fernleafrobotics.example for the Company, and are taken to be received on the next business day after they are sent.

19. Governing law and counterparts

This agreement is governed by the law of Victoria, and each party submits to the courts of that state. It may be signed electronically and in counterparts. It is signed in order: the Investor first, then the Company, so the note is offered by the Investor's signature and accepted by the Company's.

20. Entire agreement

This agreement, the capitalisation table and the accountant's certificate referred to in clause 12 are the whole agreement about the note. They replace the term sheet dated 21 September 2026, which was not binding. Where this agreement and the term sheet differ, this agreement applies.

21. Severance

If any part of this agreement is void, unenforceable or illegal in a jurisdiction, it is severed for that jurisdiction only and the rest of the agreement continues in force there and everywhere else.

Execution

Each party executes this agreement under section 127 of the Corporations Act 2001 by a director, the Investor signing first and the Company second. Both companies have a single director who is also the company secretary.

Register entry

The Company's company secretary enters the note in the Company's register of convertible notes on the date the investment amount clears, records the principal as the amount typed on page 1, and gives the Investor a note certificate within 10 business days. The register is kept at the Company's registered office and the Investor may inspect it on reasonable notice.