INVESTOR SIDE LETTER AGREEMENT

DOCUMENT INFORMATION

PRACTICE NOTES

What is a side letter? A side letter is a binding agreement between a company and a specific investor that grants that investor rights beyond what the primary transaction documents provide. Side letters are standard in venture capital — most lead investors and major participants negotiate one.

When to use this template: Alongside any SAFE, convertible note, or priced equity round where an investor requires additional protections, information access, or governance rights not included in the main documents.

Key considerations:
- Side letter rights apply only to the signing investor, not all investors in the round
- Terms must not conflict with the certificate of incorporation or existing stockholder agreements
- Delaware law (8 Del. C. § 122(18)) expressly validates stockholder agreements that modify governance arrangements
- Most Favored Nation (MFN) clauses may require disclosure of side letter terms to other investors
- The SEC's 2023 Private Fund Adviser rules impose disclosure requirements on preferential treatment granted via side letters for registered investment advisers

Checkbox instructions: Mark ☑ next to each provision to be included. Delete or leave unmarked (☐) any provision that does not apply.

SIDE LETTER AGREEMENT

This Side Letter Agreement (this "Side Letter") is entered into as of [__/__/____] (the "Effective Date"), by and between:

PARTIES

Company:

Investor:

RECITALS

Select the applicable financing instrument:

☐ SAFE Financing:
The Company and the Investor are parties to that certain Simple Agreement for Future Equity dated [__/__/____] (the "SAFE"), pursuant to which the Investor has agreed to invest $[AMOUNT] in the Company at a Post-Money Valuation Cap of $[AMOUNT] / Pre-Money Valuation Cap of $[AMOUNT] / with a Discount Rate of [____]%.

☐ Convertible Note Financing:
The Company and the Investor are parties to that certain Convertible Promissory Note dated [__/__/____] (the "Note"), in the principal amount of $[AMOUNT], bearing interest at [____]% per annum, with a maturity date of [__/__/____] and a conversion cap of $[AMOUNT].

☐ Priced Equity Round:
The Company and the Investor are parties to that certain Series [____] Preferred Stock Purchase Agreement dated [__/__/____] (the "Purchase Agreement"), and the related Investors' Rights Agreement (the "IRA"), Voting Agreement (the "VA"), and Right of First Refusal and Co-Sale Agreement (the "ROFR Agreement") each dated [__/__/____] (collectively, the "Transaction Documents").

In connection with the Investor's investment in the Company, the Company has agreed to provide the Investor with certain additional rights as set forth in this Side Letter.

NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1: DEFINITIONS

1.1 Defined Terms

As used in this Side Letter:

(a) "Board" means the Company's Board of Directors.

(b) "Capital Stock" means all shares of common stock and preferred stock of the Company on an as-converted, fully diluted basis, including all shares reserved under any equity incentive plan, outstanding warrants, outstanding convertible securities (including SAFEs and convertible notes), and any other rights to acquire shares.

(c) "Company Capitalization" means the sum of all shares of Capital Stock, calculated on an as-converted, fully diluted basis.

(d) "Equity Financing" means a bona fide transaction or series of related transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells its equity securities.

(e) "Investor's Ownership Percentage" means the ratio of (i) the number of shares of Capital Stock owned by or issuable to the Investor (including upon conversion of the SAFE, Note, or other convertible securities held by the Investor) to (ii) the Company Capitalization.

(f) "Key Financing Terms" means the valuation, price per share, liquidation preference, dividend rights, anti-dilution protections, protective provisions, and any other material economic or governance terms of a financing.

(g) "Liquidity Event" means (i) a Change of Control, (ii) an initial public offering (IPO), or (iii) a direct listing.

(h) "Material Contract" means any contract or agreement involving (i) obligations or payments in excess of $[50,000/100,000] in any twelve-month period, (ii) any exclusive dealing or non-compete obligations, (iii) any indebtedness for borrowed money, or (iv) any related party transactions.

(i) "Qualified Small Business Stock" or "QSBS" means stock qualifying under Section 1202 of the Internal Revenue Code, as amended by the One Big Beautiful Bill Act (OBBBA), signed into law on August 5, 2025.

ARTICLE 2: INFORMATION RIGHTS

☐ Information Rights Included

2.1 Financial Reporting

For so long as the Investor holds securities of the Company (including unconverted SAFEs or Notes), the Company shall provide the Investor with the following:

(a) Annual Financial Statements:
☐ Audited financial statements, within [90/120] days after each fiscal year end
☐ Unaudited financial statements (reviewed by CPA), within [90] days after each fiscal year end
☐ Unaudited internally prepared financial statements, within [60] days after each fiscal year end

(b) Periodic Reports:
☐ Quarterly financial statements (income statement, balance sheet, cash flow), within [45] days after quarter end
☐ Monthly financial statements, within [30] days after month end
☐ Weekly or bi-weekly operating metrics dashboard (metrics to include: [SPECIFY — e.g., MRR, ARR, burn rate, runway, customer count, churn])

(c) Budget and Projections:
☐ Annual operating budget and financial projections, no later than [30] days after the start of each fiscal year
☐ Notification of any material deviation from budget (greater than [15/20/25]%)

2.2 Capitalization Information

☐ Updated capitalization table, within [5/10] business days of any change to the Company's capitalization
☐ Access to cap table management platform (e.g., Carta, Pulley, AngelList) on an ongoing basis

2.3 Material Events Notification

The Company shall promptly (and in any event within [5] business days) notify the Investor of:

☐ Any proposed Equity Financing or debt financing
☐ Any material litigation, arbitration, or regulatory investigation (actual or threatened)
☐ Any Material Contract entered into or terminated
☐ Any change in the Company's executive officers (CEO, CFO, CTO, COO)
☐ Any change in the Company's independent auditor
☐ Receipt of any bona fide acquisition offer, letter of intent, or term sheet for a Change of Control
☐ Any event that would cause the Company's stock to fail to qualify as QSBS under IRC § 1202
☐ Any breach or default under any Material Contract or financing agreement
☐ Any material intellectual property developments (patent issuance, infringement claims, licensing)

2.4 Inspection Rights

Pursuant to 8 Del. C. § 220 and the terms of this Side Letter, the Investor (or its designated representative) shall have the right, upon [5] business days' written notice and during normal business hours, to inspect and copy the Company's books and records, including financial statements, minute books, stock ledgers, and material contracts.

2.5 Data Room Access

☐ The Company shall maintain a virtual data room and provide the Investor with continuous access to the following: corporate governance documents, financial records, material contracts, cap table, IP filings, and employee/contractor agreements.

2.6 Tax Reporting

The Company shall provide the Investor with all information reasonably necessary for the Investor to prepare and file its federal and state tax returns, including Schedule K-1s (if applicable), QSBS attestation letters, and Section 83(b) election documentation, within [90] days after each fiscal year end or upon request.

ARTICLE 3: PRO-RATA AND PARTICIPATION RIGHTS

☐ Pro-Rata Rights Included

3.1 Pro-Rata Participation Right

(a) The Investor shall have the right to purchase its Pro-Rata Share of any equity securities offered by the Company in any Equity Financing (each, a "New Issuance"), on the same terms and at the same price as other investors in such Equity Financing.

(b) "Pro-Rata Share" means the Investor's Ownership Percentage calculated as of immediately prior to the New Issuance.

(c) Application:
☐ This right applies only to the next Equity Financing in which the SAFE or Note converts (single round)
☐ This right applies to all subsequent Equity Financings for so long as the Investor holds securities of the Company (perpetual pro-rata)
☐ This right applies to the next [2/3] Equity Financings following the Effective Date

3.2 Super Pro-Rata Right

☐ If other investors entitled to pro-rata rights do not fully exercise their rights, the Investor shall have the right to purchase, on the same terms, up to an additional [____]% of the unexercised pro-rata allocation (the "Super Pro-Rata Right").

3.3 Notice and Exercise

(a) The Company shall provide the Investor with written notice of any proposed New Issuance at least [15/20] business days prior to the anticipated closing, which notice shall include the Key Financing Terms, the expected closing date, and the Investor's Pro-Rata Share allocation.

(b) The Investor shall have [10/15] business days from receipt of such notice to exercise its pro-rata right by delivering written notice to the Company.

(c) If the Investor does not respond within such period, the Investor shall be deemed to have waived its right with respect to that particular New Issuance only.

3.4 Exclusions

The pro-rata right shall not apply to issuances of:

(a) Shares pursuant to the Company's equity incentive plan approved by the Board (not to exceed [____]% of outstanding shares);
(b) Shares issued in connection with a bona fide acquisition approved by the Board;
(c) Shares issued to strategic partners in connection with commercial relationships approved by the Board;
(d) Shares issued upon conversion of convertible securities outstanding as of the Effective Date.

ARTICLE 4: BOARD OBSERVER RIGHTS

☐ Board Observer Rights Included

4.1 Observer Appointment

For so long as the Investor (together with its affiliates) holds at least [____] shares of Capital Stock (or securities convertible into at least [____] shares), the Investor shall have the right to designate one (1) individual (the "Observer") to attend all meetings of the Board in a non-voting, observer capacity.

4.2 Observer Rights

The Observer shall be entitled to:

(a) Receive notice of all Board meetings at the same time as Board members;
(b) Receive copies of all materials, presentations, and information provided to the Board;
(c) Attend all Board meetings in person or by video/teleconference;
(d) Receive copies of all Board minutes and written consents.

4.3 Exclusions from Meetings

The Company may exclude the Observer from portions of Board meetings (and withhold related materials) only where:

(a) The Board reasonably determines in good faith that the Observer's presence would result in a waiver of attorney-client privilege;
(b) The matter involves a direct conflict of interest between the Investor and the Company;
(c) The matter involves a competing transaction in which the Investor or its affiliates are participants.

The Company shall notify the Observer of any such exclusion and provide a general description of the excluded matter to the extent permissible.

4.4 Expenses

☐ The Company shall reimburse the Observer for reasonable travel expenses incurred in attending Board meetings in person, consistent with the Company's director reimbursement policy.

4.5 Confidentiality

The Observer shall be subject to the confidentiality provisions of Article 11 of this Side Letter with respect to all information received in connection with Board attendance.

ARTICLE 5: CO-INVESTMENT AND FOLLOW-ON RIGHTS

☐ Co-Investment Rights Included

5.1 Co-Investment Opportunity

The Company shall provide the Investor with a right of first offer to participate in any co-investment opportunity that arises in connection with investments made by the Company or any of its subsidiaries.

5.2 Follow-On Investment Right

(a) In any Equity Financing following the Effective Date, the Investor shall have the right (but not the obligation) to invest up to:

☐ $[AMOUNT] per financing round
☐ [____]% of the total round size
☐ An amount sufficient to maintain the Investor's Ownership Percentage (i.e., full anti-dilution follow-on)

(b) The Investor's follow-on investment shall be on the same terms and conditions as the lead investor(s) in such Equity Financing.

5.3 SPV Co-Investment

☐ The Investor shall have the right to form and invest through a special purpose vehicle (SPV) for co-investments, provided such SPV is controlled by the Investor and disclosed to the Company.

ARTICLE 6: MOST FAVORED NATION (MFN)

☐ MFN Provision Included

6.1 MFN Right

(a) If the Company enters into any side letter, supplemental agreement, or amendment with any other investor in connection with the same financing round (or any subsequent financing round occurring within [12/18/24] months of the Effective Date) that provides such other investor with rights, terms, or provisions more favorable than those provided to the Investor under this Side Letter, the Company shall:

(i) Promptly (and in no event later than [10] business days) notify the Investor of such more favorable terms; and

(ii) Provide the Investor with a copy of such side letter or supplemental agreement (with the other investor's identity redacted if required by confidentiality obligations).

(b) Upon written request by the Investor delivered within [30] days of receiving such notice, the Company shall amend this Side Letter to incorporate such more favorable terms for the Investor's benefit.

6.2 MFN Scope

This MFN provision applies to:

☐ All investors in the current financing round only
☐ All investors in the current financing round and any subsequent financing round closing within [____] months
☐ Only investors purchasing at least $[THRESHOLD] of securities

6.3 MFN Carve-Outs

The MFN right shall not extend to:

(a) Board designation rights (which are tied to specific ownership thresholds or lead investor status);
(b) LPAC appointment rights granted to institutional investors;
(c) Provisions required to address specific legal, regulatory, or tax compliance matters unique to a particular investor;
(d) Fee or carry arrangements between a fund and its limited partners.

ARTICLE 7: ANTI-DILUTION AND PREEMPTIVE RIGHTS ENHANCEMENTS

☐ Enhanced Anti-Dilution Provisions Included

7.1 Anti-Dilution Top-Up Right

If the Company issues additional securities at a price per share (or implied price per share, in the case of convertible securities) lower than the effective price per share at which the Investor's securities were purchased or are convertible (a "Down Round"), the Investor shall have the right (but not the obligation) to purchase additional shares at the Down Round price sufficient to maintain the Investor's Ownership Percentage, subject to:

(a) The Investor exercising such right within [30] days of written notice from the Company of the Down Round;
(b) The Investor purchasing at least $[MINIMUM AMOUNT] of additional securities.

7.2 Enhanced Preemptive Right Threshold

☐ Notwithstanding any "Major Investor" threshold in the IRA or other Transaction Documents, the Investor shall be entitled to all preemptive rights and information rights granted to Major Investors regardless of the number of shares held.

7.3 Fully Diluted Calculation

☐ The Investor's pro-rata share for purposes of preemptive rights shall be calculated on a fully diluted basis (including all outstanding options, warrants, convertible notes, and SAFEs) rather than on an outstanding shares basis.

ARTICLE 8: LIQUIDITY AND TRANSFER RIGHTS

☐ Liquidity Provisions Included

8.1 Secondary Sale Right

(a) Beginning [12/18/24] months after the Effective Date, the Investor may request that the Company use commercially reasonable efforts to facilitate the Investor's sale of some or all of its shares in a secondary transaction, provided:

(i) The proposed purchaser is reasonably acceptable to the Company;
(ii) The sale would not cause the Company to become subject to SEC reporting obligations;
(iii) The Investor provides the Company with at least [30] days' prior written notice.

(b) The Company shall have a right of first refusal to purchase any shares proposed for secondary sale at the same price and on the same terms as the proposed transaction.

8.2 IPO Piggyback Registration

☐ In connection with a Liquidity Event involving a registered offering of the Company's securities, the Investor shall have piggyback registration rights and shall be entitled to include its shares, subject to customary underwriter cutback provisions (provided the Investor shall not be cut back below [____]% of the shares requested for inclusion).

8.3 Tag-Along Right Enhancement

☐ Notwithstanding any threshold in the ROFR Agreement, the Investor shall have tag-along rights with respect to any proposed transfer of shares by any founder, officer, or holder of more than [5/10]% of the Company's Capital Stock.

8.4 Lock-Up Limitation

☐ In connection with an IPO, the Investor shall not be subject to a lock-up period exceeding [90/180] days, and the Investor's lock-up shall be no longer than the lock-up applicable to the Company's founders and executive officers.

ARTICLE 9: OPERATIONAL COVENANTS

9.1 QSBS Qualification Covenant

☐ QSBS Covenant Included

(a) Covenant: The Company shall use commercially reasonable efforts to cause its stock to qualify as Qualified Small Business Stock under IRC § 1202, as amended by the One Big Beautiful Bill Act (OBBBA, signed August 5, 2025). This includes:

(i) Maintaining its status as a domestic C corporation;
(ii) Ensuring its aggregate gross assets do not exceed $75,000,000 at and immediately after any stock issuance (the threshold applicable to stock issued after July 4, 2025, adjusted for inflation for tax years beginning after 2026);
(iii) Ensuring that at least 80% of the Company's assets (by value) are used in an active qualified trade or business during substantially all of the Investor's holding period;
(iv) Not engaging in any "excluded trade or business" as defined in IRC § 1202(e)(3) (including health, law, engineering, architecture, accounting, actuarial science, performing arts, consulting, athletics, financial services, or brokerage services);
(v) Not redeeming stock in a manner that would disqualify outstanding stock under the redemption rules of IRC § 1202(c)(3).

(b) Attestation: The Company shall provide the Investor with a QSBS attestation letter (in the form of Exhibit B) within [30] days of the issuance of stock to the Investor and upon reasonable request thereafter.

(c) Notification: The Company shall promptly notify the Investor if it becomes aware of any event or circumstance that has caused or is reasonably likely to cause the Company's stock to fail to qualify as QSBS.

(d) Tax Benefit Summary (Informational):
Under IRC § 1202 as amended by the OBBBA, for stock issued after July 4, 2025:
- 3+ years holding: 50% gain exclusion (up to greater of $15M or 10x basis)
- 4+ years holding: 75% gain exclusion
- 5+ years holding: 100% gain exclusion
- Aggregate gross asset limit: $75,000,000 (indexed for inflation after 2026)

9.2 D&O Insurance Covenant

☐ D&O Insurance Covenant Included

The Company shall maintain directors' and officers' liability insurance with coverage limits of at least $[1,000,000 / 2,000,000 / 5,000,000] and shall:

(a) Name the Investor's Observer (if any) as an additional insured under such policy;
(b) Provide the Investor with an annual certificate of insurance;
(c) Not reduce or cancel coverage without [30] days' prior written notice to the Investor.

9.3 Key Person Provision

☐ Key Person Provision Included

(a) For so long as the Investor holds securities of the Company, each of the following individuals (the "Key Persons") shall devote substantially all of their professional time and attention to the Company:

(b) If any Key Person ceases to be employed by or provide services to the Company for any reason (whether voluntary or involuntary), the Company shall:

(i) Notify the Investor within [5] business days;
(ii) Use commercially reasonable efforts to identify and retain a qualified replacement within [90] days.

(c) Optional: ☐ If a Key Person departure is not remedied within [90/120/180] days, the Investor shall have the right to [SPECIFY REMEDY: accelerate conversion / require redemption / appoint a Board observer].

9.4 Founder Lock-Up

☐ Founder Lock-Up Included

The founders listed in Exhibit A shall not sell, transfer, pledge, hypothecate, or otherwise dispose of any shares of the Company's Capital Stock for a period of [12/18/24] months following the Effective Date without the prior written consent of the Investor, except for:

(a) Transfers to a revocable trust for estate planning purposes, provided the founder retains voting control;
(b) Transfers to immediate family members, provided the transferee agrees in writing to be bound by this restriction;
(c) Sales approved by the Board in connection with a tender offer or secondary sale program.

9.5 Spending and Hiring Covenants

☐ Operational Spending Covenants Included

Without the prior written consent of the Investor, the Company shall not:

(a) Incur any single expenditure in excess of $[AMOUNT] outside the approved annual budget;
(b) Hire any executive officer with total annual compensation (including base, bonus, and equity) in excess of $[AMOUNT];
(c) Enter into any related party transaction with a value in excess of $[AMOUNT];
(d) Change the Company's principal line of business.

9.6 Non-Compete / Exclusivity

☐ Exclusivity Provision Included

For a period of [12/18/24] months following the Effective Date, the Company shall not enter into any financing, strategic, or commercial transaction with [COMPETITOR NAME(S)] or their affiliates without the prior written consent of the Investor.

ARTICLE 10: DRAG-ALONG AND TAG-ALONG MODIFICATIONS

☐ Drag-Along / Tag-Along Modifications Included

10.1 Drag-Along Opt-Out

☐ The Investor shall not be subject to any drag-along obligation unless the consideration to be received per share in the drag-along transaction equals or exceeds:

☐ [____]x the Investor's original purchase price per share (or effective conversion price)
☐ $[AMOUNT] per share
☐ A valuation equal to or greater than $[AMOUNT]

10.2 Drag-Along Floor Price

☐ In any drag-along transaction, the Investor shall receive per-share consideration no less than the Investor's original purchase price (or effective conversion price), regardless of any liquidation waterfall.

10.3 Enhanced Tag-Along

☐ The Investor's tag-along right shall extend to all proposed transfers by any stockholder holding more than [____]% of the Company's Capital Stock, not solely founders.

ARTICLE 11: PAY-TO-PLAY MODIFICATION

☐ Pay-to-Play Modification Included

11.1 Waiver or Reduction

Notwithstanding any pay-to-play provision in the Transaction Documents:

☐ The Investor shall be fully exempt from any pay-to-play requirement.
☐ The Investor's minimum participation threshold for purposes of avoiding pay-to-play penalties shall be reduced from [____]% to [____]% of its pro-rata share.
☐ If the Investor fails to participate in a future round, the penalty shall be conversion to common stock (not forfeiture of rights).

ARTICLE 12: ADVISORY BOARD AND STRATEGIC ENGAGEMENT

☐ Advisory / Strategic Provisions Included

12.1 Advisory Board Seat

☐ The Investor shall have the right to designate one (1) representative to serve on the Company's advisory board, if one exists or is created.

12.2 Strategic Introductions

☐ The Company shall use commercially reasonable efforts to facilitate introductions to the Investor's portfolio companies, customers, or partners as reasonably requested by the Investor, subject to mutual agreement and confidentiality considerations.

ARTICLE 13: EXPENSE REIMBURSEMENT

☐ Expense Reimbursement Included

13.1 Closing Costs

The Company shall reimburse the Investor for reasonable, documented legal fees and out-of-pocket expenses incurred in connection with the negotiation, documentation, and closing of this investment, not to exceed $[AMOUNT] in the aggregate.

13.2 Ongoing Costs

☐ The Company shall reimburse the Investor for reasonable legal fees incurred in connection with future financing rounds in which the Investor participates, subject to a cap of $[AMOUNT] per round.

ARTICLE 14: CONFIDENTIALITY

14.1 Confidential Treatment

The existence and terms of this Side Letter shall be treated as confidential by both parties, except as follows:

(a) As required by applicable law, regulation, or legal process;
(b) To the extent the Company is required to disclose side letter terms to other investors pursuant to MFN provisions, SEC reporting obligations, or the SEC's Private Fund Adviser preferential treatment rules;
(c) To each party's respective legal, financial, tax, and accounting advisors, subject to customary confidentiality obligations;
(d) To the Investor's limited partners, fund investors, or co-investors, subject to confidentiality obligations at least as protective as those contained herein;
(e) In connection with a due diligence process for a bona fide acquisition, merger, or financing of the Company, subject to an executed NDA.

14.2 Investor Confidentiality Obligations

The Investor shall maintain in confidence all non-public information received from the Company pursuant to this Side Letter and shall not disclose such information except as permitted in Section 14.1 above or with the Company's prior written consent.

14.3 Disclosure to Other Investors

☐ The Company shall disclose the existence (but not the specific terms) of this Side Letter to other investors in the current financing round.
☐ The Company may disclose the terms of this Side Letter to other investors who hold MFN rights.
☐ The Company shall not disclose the existence or terms of this Side Letter to any other investor without the Investor's prior written consent (subject to legal and regulatory requirements).

ARTICLE 15: REPRESENTATIONS AND WARRANTIES

15.1 Company Representations

The Company represents and warrants to the Investor that, as of the Effective Date:

(a) The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of [Delaware / ____________];

(b) The execution, delivery, and performance of this Side Letter have been duly authorized by all necessary corporate action, including Board approval;

(c) This Side Letter constitutes the legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms;

(d) The execution and delivery of this Side Letter do not conflict with or violate (i) the Company's certificate of incorporation or bylaws, (ii) any existing stockholder agreement, investor rights agreement, or voting agreement to which the Company is a party, or (iii) any applicable law, rule, or regulation;

(e) No consent, approval, or authorization of any third party or governmental authority is required in connection with the execution and delivery of this Side Letter, other than those that have been obtained;

(f) ☐ As of the Effective Date, the Company's stock qualifies as QSBS under IRC § 1202 and the Company's aggregate gross assets (as defined in IRC § 1202(d)) do not exceed $75,000,000.

15.2 No Conflict with Transaction Documents

The parties acknowledge that this Side Letter is supplemental to, and not in lieu of, the SAFE, Note, Purchase Agreement, and/or Transaction Documents (as applicable). In the event of any conflict between this Side Letter and the SAFE, Note, Purchase Agreement, or Transaction Documents with respect to the Investor, the terms of this Side Letter shall control.

15.3 Investor Representations

The Investor represents and warrants that:

(a) The Investor has the legal capacity and authority to execute and perform this Side Letter;
(b) The Investor is acquiring securities of the Company for investment purposes and not with a view to distribution;
(c) The Investor is an "accredited investor" as defined in Rule 501(a) of Regulation D under the Securities Act of 1933.

ARTICLE 16: GENERAL PROVISIONS

16.1 Term and Termination

This Side Letter shall remain in effect until the earliest of:

(a) The closing of the Company's initial public offering of its equity securities pursuant to an effective registration statement under the Securities Act of 1933;
(b) The Investor (and its affiliates) ceasing to hold any securities of the Company (including unconverted SAFEs, Notes, or other convertible instruments);
(c) A merger, consolidation, or sale of substantially all of the Company's assets in which the Company's stockholders receive cash or publicly traded securities;
(d) Mutual written agreement of the parties to terminate this Side Letter;
(e) ☐ [____] years from the Effective Date, unless renewed by mutual written agreement.

16.2 Assignment

(a) The Investor may assign its rights under this Side Letter to:

(i) Any affiliate of the Investor;
(ii) Any transferee who acquires all or substantially all of the Investor's securities of the Company, provided such transferee agrees in writing to be bound by the terms of this Side Letter;
(iii) Any successor fund managed by the same general partner or management company as the Investor.

(b) The Company may not assign this Side Letter without the Investor's prior written consent.

16.3 Amendment and Waiver

This Side Letter may be amended, modified, or waived only by a written instrument signed by both parties. No failure or delay by either party in exercising any right hereunder shall operate as a waiver thereof.

16.4 Governing Law

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

16.5 Dispute Resolution and Jurisdiction

(a) Each party irrevocably submits to the exclusive jurisdiction of the Court of Chancery of the State of Delaware (or, if the Court of Chancery declines jurisdiction, any state or federal court in the State of Delaware) for any action or proceeding arising out of or relating to this Side Letter.

(b) ☐ Alternative — Arbitration: Any dispute arising out of or relating to this Side Letter shall be finally settled by binding arbitration administered by [JAMS / AAA] in [CITY, STATE], in accordance with [JAMS Comprehensive / AAA Commercial] Arbitration Rules.

16.6 Jury Waiver

EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SIDE LETTER.

16.7 Entire Agreement

This Side Letter, together with the SAFE, Note, Purchase Agreement, and/or Transaction Documents (as applicable), constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, and agreements relating thereto.

16.8 Severability

If any provision of this Side Letter is held to be invalid, illegal, or unenforceable, such provision shall be modified to the minimum extent necessary to make it enforceable, and the remaining provisions shall continue in full force and effect.

16.9 Counterparts and Electronic Execution

This Side Letter may be executed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. Signatures transmitted by PDF, DocuSign, or other electronic means shall be deemed original signatures for all purposes.

16.10 Notices

All notices, requests, consents, and other communications under this Side Letter shall be in writing and shall be deemed effectively given upon:

(a) Personal delivery;
(b) One (1) business day after deposit with a nationally recognized overnight courier;
(c) Upon confirmed receipt by email (with read receipt or reply confirmation).

If to the Company:

[COMPANY NAME]
[ADDRESS]
[CITY, STATE ZIP]
Attention: [OFFICER NAME], [TITLE]
Email: [EMAIL]

If to the Investor:

[INVESTOR NAME]
[ADDRESS]
[CITY, STATE ZIP]
Attention: [CONTACT NAME], [TITLE]
Email: [EMAIL]

EXECUTION

IN WITNESS WHEREOF, the parties have executed this Side Letter Agreement as of the Effective Date first written above.

COMPANY:

[COMPANY NAME]

By: _____________________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: [TITLE]

Date: [__/__/____]

INVESTOR:

[INVESTOR NAME]

By: _____________________________________________

Name: [AUTHORIZED SIGNATORY NAME]

Title: [TITLE]

Date: [__/__/____]

EXHIBIT A — FOUNDERS SUBJECT TO LOCK-UP

(Complete only if Section 9.4 Founder Lock-Up is included)

Lock-Up Commencement Date: [__/__/____]

Permitted Exceptions: See Section 9.4(a)-(c)

EXHIBIT B — QSBS ATTESTATION LETTER

(Complete only if Section 9.1 QSBS Covenant is included)

[COMPANY LETTERHEAD]

[DATE]

[INVESTOR NAME]
[INVESTOR ADDRESS]

Re: Qualified Small Business Stock Attestation — IRC § 1202

Dear [INVESTOR NAME]:

In connection with your investment in [COMPANY NAME] (the "Company"), we are providing this attestation regarding the Company's Qualified Small Business Stock ("QSBS") status under Section 1202 of the Internal Revenue Code of 1986, as amended (including by the One Big Beautiful Bill Act, signed August 5, 2025).

The Company hereby attests that, as of the date of this letter:

1. C Corporation Status: The Company is a domestic C corporation organized under the laws of the State of [Delaware].

2. Aggregate Gross Assets: The Company's aggregate gross assets (within the meaning of IRC § 1202(d)) did not exceed $75,000,000 at any time before or immediately after the issuance of stock to you.

3. Active Business Requirement: At least 80% of the Company's assets (by value) are used in the active conduct of one or more qualified trades or businesses within the meaning of IRC § 1202(e).

4. No Excluded Business: The Company is not engaged in any trade or business described in IRC § 1202(e)(3) (excluded service, banking, financing, leasing, investing, farming, mining, or hospitality businesses).

5. Original Issuance: The shares issued to you were acquired by you at original issuance (directly or through conversion of a SAFE or convertible note) in exchange for money, other property (not including stock), or as compensation for services.

6. No Disqualifying Redemptions: The Company has not made any stock redemptions described in IRC § 1202(c)(3) that would disqualify your shares.

Important Disclaimers:

• This attestation is based on the Company's records and the Company's good faith understanding of the law as of the date hereof.
• QSBS eligibility depends on facts specific to each stockholder (including holding period and manner of acquisition). You should consult your own tax advisor regarding your eligibility.
• The Company makes no guarantee that the IRS will agree with this assessment or that future events will not affect QSBS eligibility.

Sincerely,

_____________________________________________
[NAME], [TITLE]
[COMPANY NAME]

FILING AND EXECUTION CHECKLIST

SOURCES AND REFERENCES

This template is provided for informational purposes only and does not constitute legal advice. Side letters are binding legal agreements that create enforceable rights and obligations. The provisions in this template interact with complex areas of corporate law, securities law, and tax law. Each investment and each investor's circumstances are unique. You must consult with qualified legal counsel licensed in your jurisdiction before using this template. Do not execute this document without professional legal review. Use of this template does not create an attorney-client relationship.