Help with Alchemist Standard Convertible Note: One of our investors want out (no qualified financing since the note was signed), are we legally obliged to pay the debt back as cash in such a situation?

Of what is written in the paper, it looks like the only 2 options are convert into shares (Common or Preferred) or extend maturity. However be careful with 2 things, the document does mention "payment in full" and "principal and accrued but unpaid interest", as if some form of payment has been executed. Remember that a note is above all debt, and convertibility is usually (depending on the details of course) an option for the debt-holder. Look for past judgements on topics like this, in the jurisdiction you corporation has been incorporated (usually Delaware).