Example Investor Side Letter Agreement

[Date]

Re: Your investment in [Company], a [Delaware] corporation

Dear Investor:

Thank you for your investment in [Name of Company], a [Delaware] corporation (referred to as the “Company” or as “us” and “we” in this letter). We very much appreciate your support and trust. This letter agreement will confirm the agreement between us and you (“you” or the “Investor”), effective as of the execution of your securities purchase agreements with us. [Insert description of securities purchased.] In consideration for your investment in us, you are hereby entitled to the following rights, in addition to any other rights you are entitled to under law or as provided in the other agreements you entered into with us:

Information Rights.

Upon your request, the Company shall deliver to you, for so long as you hold our securities (unless this letter agreement otherwise terminates per below), [in each case to the extent that the Company has prepared such financial statements,] the following information:

(a) Copies of our balance sheet as of the end of such fiscal year and our statements of income, changes in financial position and shareholders’ equity for such fiscal year, prepared in accordance with U. S. generally accepted accounting principles (“GAAP”) (all unaudited unless our financial statements are otherwise audited, in which case we will send you the audited statements);

(b) Copies of our balance sheet and statement of income for each quarter, prepared in accordance with GAAP and subject to routine year-end adjustments; and

(c) Such other information relating to the financial condition, business or corporate affairs of the Company as you may from time to time reasonably request, including but not limited to information prepared by the Company for its quarterly Board of Directors meetings; provided, however, that the Company shall not be obligated under this Section 1 to provide information that (i) it deems in good faith to be a trade secret or highly confidential information, or (ii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

You agree to maintain the confidentiality of all of the information provided under this Section 1, and agree not to use such information other than for a purpose reasonably related to your investment in the Company or as requested by the Company.

Section 4(a)(7).

For so long as you hold our securities, upon request we agree to furnish promptly to you any information required for you to claim exemption for resale of the securities under Section 4(a)(7) of the Securities Act of 1933, as amended (or any successor or replacement provision thereto, the “Resale Exemption”), including, without limitation:

(a) The current address of the Company’s executive offices;

(b) A current capitalization table of the Company reflecting the number of shares outstanding by class as of the end of the Company’s most recent fiscal year prior to the date of the request;

(c) Name and address of the transfer agent, corporate secretary or other person responsible for transferring the Securities;

(d) A brief statement of the nature of the business of the Company and the products and services it offers;

(e) Names of the current officers and directors of the Company;

(f) Financial statements for the Company prepared in accordance with US generally accepted accounting principles [or IFRS for a non-US company] that satisfy the requirements of the Resale Exemption, including balance sheets and profit and loss or income statements, covering the 2 most recent prior fiscal years of operation (or such shorter period as the Company has been in operation) and any interim period that has been prepared by the Company; and

(g) Such other information relating to the Company as you may request that is reasonably necessary for you to transfer the securities in accordance with the Resale Exemption.

Pro Rata Rights.

You shall have the right (but not the obligation) to purchase your [pro rata share/up to $[insert dollar amount] of equity securities issued by the Company in the next financing in which we are raising capital (the “Next Financing”), on the same terms as such equity securities are offered to other investors who do not purchase such equity securities via the conversion of indebtedness; provided, however, that you will demonstrate to the Company’s reasonable satisfaction that you are at the time of the proposed issuance of such equity securities an “accredited investor” as such term is defined in Regulation D under the Securities Act of 1933, as amended. For the avoidance of doubt, you shall not have a pro rata right in the Company’s next convertible note or convertible equity financing.

Your “pro rata share” means, with respect to Next Financing securities, the sum of: (i) if you hold any convertible promissory notes issued by us, the ratio of the principal amount under any such notes to the pre-money valuation at which such Next Financing securities are issued, plus (ii) the ratio of the number of shares of capital stock of the Company then held by you (calculated on an as-converted to Common Stock basis) to the number of fully diluted shares immediately prior to the issuance of such Next Financing securities. Following the conversion or repayment in full of the outstanding amount under your Note, your “pro rata share” shall mean the ratio of the number of shares of capital stock of the Company then held by you (calculated on an as-converted to Common Stock basis) to the number of fully diluted shares immediately prior to the issuance of Next Financing securities. The number of fully diluted shares assumes full conversion and exercise of all options and other outstanding convertible and exercisable securities, calculated as of immediately prior to the issuance of the Next Financing securities. If we propose to issue equity securities covered under this pro rata right, we shall promptly give you written notice of our intention, describing the Next Financing equity securities, the price, the terms and conditions upon which we propose to issue the same, and your pro rata number of Next Financing equity securities (the “Notice”). [Our determination of your pro rata share of the Next Financing equity securities shall be binding on you.] In order to exercise this right, you must give the Company notice of your intent to exercise this right within ten (10) days of receiving the Notice and you shall invest and fund the purchase price for the equity securities and execute the principal financing documents for such Next Financing within ten (10) days after the initial closing of the Next Financing.

Most Favored Nation. You will be entitled to receive the benefit of any more favorable terms or conditions that we provide to other convertible debt lenders or convertible equity investors in any convertible debt or convertible equity financing that we consummate before your [note/SAFE] is converted into shares of our stock; provided, however, that if we are accepted into an accelerator or incubator program and in addition to any equity financing we obtain from such accelerator or incubator we are also provided substantial services, or space, any such equity financing will not be considered a convertible debt financing triggering this most favored nations clause.

Board Observer Right.

[As long as you own not less than _____ percent (____%) of the shares of the [Series A] Preferred Stock you are purchasing under the Purchase Agreement (or an equivalent amount of Common Stock issued upon conversion thereof).]

[In the event of any breach of this letter agreement, a default under the note, or a breach or default of or under any agreement between you and us], then you or your representative shall thereafter have the right to attend all of our Board of Directors meetings in a nonvoting observer capacity and, in this respect, we shall give you or your representative copies of all notices, minutes, consents, and other materials that we provide to our directors [at the same time and in the same manner as provided to such directors]; provided, however, that you and/or your representative shall agree to hold in confidence and trust and to act in a fiduciary manner with respect to all information so provided; and provided further, that we reserve the right to withhold any information and to exclude you and/or your representative from any meeting or portion thereof if access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel or result in disclosure of trade secrets or a conflict of interest, or if you or your representative is a competitor of the Company.

Attorneys’ Fees.

The prevailing party in any action to enforce this letter agreement will be entitled to its attorneys’ fees and costs.

Termination of this Letter Agreement.

The contractual rights set forth above shall terminate and be of no further force or effect upon (a) the consummation of the sale of the Company’s securities pursuant to a registration statement filed by the Company under the Securities Act of 1933, as amended, in connection with the firm commitment underwritten offering of its securities to the general public; (b) the consummation of a merger or consolidation of the Company that is effected (i) for independent business reasons unrelated to extinguishing such rights and (ii) for purposes other than (A) the reincorporation of the Company in a different state or (B) the formation of a holding company that will be owned exclusively by the Company’s stockholders and will hold all of the outstanding shares of capital stock of the Company’s successor; (c) our liquidation and dissolution; or (d) when you cease holding the Convertible Promissory Note or after conversion of the Note you cease to hold at least 1% of our issued and outstanding stock.

Waiver and Amendments.

Any provision of this letter agreement may only be amended, waived or modified only upon the written consent of the Company and the Investor.

General.

To the extent that this letter agreement conflicts with any of the other documents or agreements entered into by and between the parties, including the [Convertible Promissory Note], this letter agreement will control. This letter agreement shall be governed by and construed in accordance with the laws of the State of [__________] (regardless of its or any other jurisdiction’s choice-of-law principles). This letter agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Sincerely yours, [Company]

___________________________ _____________, President

Agreed and Accepted:

___________________________

(print name of investor)

___________________________

Name: ____________________

Title: ___________________