Convertible Promissory Note

This Convertible Promissory Note (the "Note") is issued by company_name (the "Company") to investor_name (the "Investor" or "Holder") as of the date of execution below.

FOR VALUE RECEIVED, the Company hereby promises to pay to the order of the Investor the principal amount of principal_amount (the "Principal Amount"), together with accrued interest thereon, subject to the terms and conditions set forth herein. This Note is being issued in connection with a seed financing or bridge financing round and is intended to convert into equity securities of the Company upon the occurrence of certain events described below.

1. Principal and Interest

1.1 Principal

The Principal Amount of this Note is principal_amount. The Principal Amount shall be funded by the Investor to the Company by wire transfer or other immediately available funds within five (5) business days of the execution of this Note.

1.2 Interest Rate

This Note shall bear simple interest at the rate of interest_rate per annum (the "Interest Rate"), computed on the basis of a 365-day year and actual days elapsed. Interest shall accrue from the date of funding and shall not be compounded. Accrued interest shall not be paid in cash but shall be added to the Principal Amount and shall convert into equity securities together with the Principal Amount upon conversion as described in Section 3.

1.3 No Prepayment

The Company may not prepay this Note, in whole or in part, without the prior written consent of the Holder. If the Holder consents to prepayment, the prepayment amount shall include all accrued and unpaid interest through the date of prepayment.

2. Maturity

2.1 Maturity Date

Unless earlier converted or repaid, the outstanding Principal Amount and all accrued interest shall be due and payable on the date that is twenty-four (24) months from the date of issuance of this Note (the "Maturity Date"). The Maturity Date may be extended by mutual written agreement of the Company and the Holder.

2.2 Payment at Maturity

If this Note has not been converted prior to the Maturity Date, the Holder may, at its sole option, either: (a) demand repayment of the outstanding Principal Amount and accrued interest in cash; or (b) convert the outstanding Principal Amount and accrued interest into shares of the Company's common stock at a conversion price based on the Valuation Cap divided by the Company's fully diluted capitalization as of the Maturity Date.

3. Conversion

3.1 Automatic Conversion Upon Qualified Financing

Upon the closing of a Qualified Financing (as defined below), the outstanding Principal Amount and all accrued interest shall automatically convert into shares of the same class and series of equity securities issued in the Qualified Financing (the "Conversion Shares") at a conversion price equal to the lesser of: (a) the price per share paid by the investors in the Qualified Financing multiplied by the Discount Rate (as defined below); or (b) the Valuation Cap Price (as defined below).

3.2 Qualified Financing

A "Qualified Financing" means a bona fide equity financing in which the Company issues and sells shares of its preferred stock (or equivalent equity securities) to one or more investors for aggregate gross proceeds of at least one million dollars ($1,000,000), excluding the conversion of this Note and any other convertible instruments.

3.3 Discount Rate

The "Discount Rate" means eighty percent (80%), representing a twenty percent (20%) discount to the price per share paid by the investors in the Qualified Financing. The Discount Rate reflects the early-stage risk assumed by the Holder.

3.4 Valuation Cap

The "Valuation Cap" for this Note is valuation_cap. The "Valuation Cap Price" means the Valuation Cap divided by the Company's fully diluted capitalization immediately prior to the Qualified Financing (excluding any shares reserved for issuance under the Company's equity incentive plan and any shares issuable upon conversion of this Note and other convertible instruments).

3.5 Conversion Upon Change of Control

If a Change of Control (as defined below) occurs prior to the Maturity Date and prior to a Qualified Financing, the Holder may, at its option, either: (a) receive a cash payment equal to two times (2x) the outstanding Principal Amount plus all accrued interest; or (b) convert the outstanding Principal Amount and accrued interest into shares of the Company's common stock at a conversion price based on the Valuation Cap Price, and participate in the Change of Control transaction on the same terms as other shareholders.

3.6 Change of Control

A "Change of Control" means: (a) any merger, consolidation, or reorganization in which the Company's shareholders immediately prior to the transaction hold less than fifty percent (50%) of the voting power of the surviving entity; (b) the sale, transfer, or other disposition of all or substantially all of the Company's assets; or (c) the acquisition by any person or group of more than fifty percent (50%) of the Company's outstanding voting securities.

3.7 Optional Conversion

At any time prior to the Maturity Date and prior to an automatic conversion event, the Holder may elect to convert the outstanding Principal Amount and accrued interest into shares of the Company's common stock at a conversion price equal to the Valuation Cap Price. The Holder shall exercise this option by delivering written notice to the Company.

3.8 Conversion Mechanics

Upon conversion, the Company shall issue to the Holder the number of Conversion Shares equal to the outstanding Principal Amount plus accrued interest divided by the applicable conversion price. The Company shall deliver to the Holder a stock certificate or membership certificate representing the Conversion Shares, together with any applicable shareholder or operating agreements for execution by the Holder.

3.9 Most Favored Nation

If the Company issues any convertible notes or other convertible instruments after the date of this Note and prior to a Qualified Financing on terms more favorable to the holders thereof than the terms of this Note (including a lower valuation cap or a higher discount), the Holder shall have the right to amend this Note to incorporate such more favorable terms, upon written notice to the Company.

4. Events of Default

4.1 Events of Default

The occurrence of any of the following events shall constitute an "Event of Default" under this Note: (a) the Company fails to pay any amount due under this Note when due; (b) the Company breaches any material representation, warranty, or covenant in this Note; (c) the Company files for bankruptcy, is adjudicated bankrupt, or makes an assignment for the benefit of creditors; (d) a receiver, trustee, or similar official is appointed for the Company or a substantial portion of its assets; (e) the Company ceases to conduct business in the ordinary course; or (f) the Company fails to maintain its corporate existence in good standing.

4.2 Remedies Upon Default

Upon the occurrence and during the continuance of an Event of Default, the Holder may, by written notice to the Company, declare the entire outstanding Principal Amount and all accrued interest immediately due and payable. Upon acceleration, the Company shall pay the accelerated amount within ten (10) business days. In addition, the Holder shall be entitled to pursue any and all remedies available at law or in equity.

4.3 Default Interest

Upon the occurrence of an Event of Default, the Interest Rate shall automatically increase by five percent (5%) per annum (the "Default Rate") for the period during which the Event of Default continues. The Default Rate shall apply in addition to, and not in lieu of, any other remedies available to the Holder.

5. Representations and Warranties

5.1 Company Representations

The Company represents and warrants that: (a) it is duly organized and in good standing; (b) it has the authority to issue this Note and to perform its obligations hereunder; (c) the issuance of this Note does not conflict with any agreement or law; (d) the shares issuable upon conversion will be duly authorized, validly issued, and fully paid; and (e) the Company is not in default under any material agreement.

5.2 Investor Representations

The Investor represents and warrants that: (a) the Investor is an accredited investor; (b) the Investor is acquiring this Note for investment purposes only; (c) the Investor understands the risks of the investment; (d) the Investor has had the opportunity to conduct due diligence; and (e) the Investor is not relying on any representations other than those set forth herein.

6. Covenants

6.1 Affirmative Covenants

The Company covenants that, for so long as any amount remains outstanding under this Note, it shall: (a) maintain its corporate existence in good standing; (b) comply with all applicable laws and regulations; (c) maintain adequate insurance coverage; (d) promptly notify the Holder of any Event of Default; (e) provide the Holder with annual financial statements within ninety (90) days of the end of each fiscal year; and (f) use the proceeds of this Note solely for legitimate business purposes.

6.2 Negative Covenants

The Company covenants that, without the prior written consent of the Holder, it shall not: (a) declare or pay any dividends or distributions to shareholders; (b) repurchase or redeem any equity securities; (c) incur additional indebtedness in excess of amounts set forth in this Note; (d) make any loans or advances to officers, directors, or affiliates; (e) enter into any transaction with affiliates on terms less favorable than arm's length; or (f) change its business in any material respect.

7. Subordination

This Note is unsecured. The obligations of the Company under this Note are subordinated to any senior indebtedness of the Company that may be outstanding from time to time, to the extent and in the manner provided in any subordination agreement between the Holder and the holders of such senior indebtedness. The Company shall not incur any senior indebtedness without providing the Holder with reasonable prior notice.

8. Information Rights

For so long as this Note is outstanding, the Company shall provide the Holder with: (a) annual financial statements within ninety (90) days of the end of each fiscal year; (b) quarterly financial statements within thirty (30) days of the end of each quarter; (c) prompt notice of any Qualified Financing, Change of Control, or Event of Default; and (d) such other information as the Holder may reasonably request from time to time.

9. Confidentiality

Each Party shall maintain the confidentiality of the terms of this Note and all non-public information received from the other Party. Neither Party shall disclose such information to any third party without prior written consent, except as required by law or to the Party's professional advisors bound by confidentiality obligations. This obligation survives repayment or conversion of this Note for a period of two (2) years.

10. Waiver

The Company hereby waives presentment, demand, notice of dishonor, protest, and all other demands and notices in connection with the delivery, acceptance, performance, and enforcement of this Note. No failure or delay by the Holder in exercising any right under this Note shall operate as a waiver thereof.

11. Transfer

This Note may not be transferred or assigned by the Holder without the prior written consent of the Company, except to an affiliate of the Holder or in connection with the Holder's estate planning. Any purported transfer without consent shall be void. The Company may not assign its obligations under this Note without the Holder's consent.

12. General Provisions

12.1 Governing Law

This Note shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflict of laws principles.

12.2 Dispute Resolution

Any dispute arising out of this Note shall be resolved through binding arbitration conducted in accordance with the rules of the American Arbitration Association.

12.3 Severability

If any provision is held invalid, the remaining provisions shall continue in full force and effect.

12.4 Entire Agreement

This Note constitutes the entire agreement between the Parties regarding the subject matter hereof.

12.5 Amendments

This Note may be amended only by written instrument signed by both the Company and the Holder.

12.6 Notices

All notices shall be in writing and deemed given when delivered personally, by confirmed email, or by overnight courier.

12.7 Counterparts

This Note may be executed in counterparts. Electronic signatures shall be deemed original signatures.

IN WITNESS WHEREOF, the Company and the Investor have executed this Convertible Promissory Note as of the date last signed below.

Company

company_name

[Electronic signature will be collected via zsign]

[Date will be recorded automatically]

Investor

investor_name

[Electronic signature will be collected via zsign]

[Date will be recorded automatically]