Safe

THIS INSTRUMENT AND ANY SECURITIES ISSUABLE PURSUANT HERETO HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED IN THIS SAFE AND UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION THEREFROM.

The document states that the securities or investments involved in this agreement between Acme Corporation and CashCowVC are not officially registered under the Securities Act of 1933, or under certain state laws. This means that these securities cannot be offered, sold, transferred, promised or used as collateral unless allowed by the agreement itself, the aforementioned Act, or state laws. These actions can only be taken if the securities are officially registered or if there's an exemption allowing it.

ACME CORPORATION

This is about a company named Acme Corporation.

(Simple Agreement for Future Equity)

This is an agreement about a possible future investment. Acme Corporation and CashCowVC have agreed that CashCowVC will give the company money now, and in exchange, they might get ownership in the company later. This will only happen if certain events take place, like the company being sold or a new round of investment. The amount of ownership CashCowVC will get depends on how much money they gave and the value of the company when the event happens.

THIS CERTIFIES THAT in exchange for the payment by CashCowVC (the “Investor”) of $1,000,000 (the “Purchase Amount”) on or about December 1, 2023, Acme Corporation a Delaware corporation (the “Company”), issues to the Investor the right to certain shares of the Company’s Capital Stock, subject to the terms described below.

This document confirms that CashCowVC (the investor) paid $1,000,000 to Acme Corporation (the company) around December 1, 2023. In return for this payment, Acme Corporation gives CashCowVC the right to own some of its company shares under certain conditions.

This Safe is one of the forms available at http://ycombinator.com/documents and the Company and the Investor agree that neither one has modified the form, except to fill in blanks and bracketed terms.

Acme Corporation and CashCowVC have agreed to use a standard form for their agreement, which they found on a specific website. They assure each other that they haven't changed anything in that document, except for filling in the empty spaces and terms within brackets.

The “Post-Money Valuation Cap” is $10,000,000. See Section 2 for certain additional defined terms.

The maximum value of Acme Corporation after investment, referred to as the "Post-Money Valuation Cap", is set at $10,000,000. For more specific definitions related to this, Section 2 of the document should be checked.

(a) Equity Financing. If there is an Equity Financing before the termination of this Safe, on the initial closing of such Equity Financing, this Safe will automatically convert into the greater of: (1) the number of shares of Standard Preferred Stock equal to the Purchase Amount divided by the lowest price per share of the Standard Preferred Stock; or (2)

If Acme Corporation decides to raise more money through selling shares before the end of this current agreement with CashCowVC, this agreement will automatically change. It will turn into either: (1) the number of preferred shares that equals the original investment divided by the cheapest price per share of the same preferred shares; or (2) the next part of the agreement that isn't mentioned here will give the details.

the number of shares of Safe Preferred Stock equal to the Purchase Amount divided by the Safe Price.

Acme Corporation will give CashCowVC a certain number of Safe Preferred Stock. This number is figured out by dividing the amount CashCowVC is paying (Purchase Amount) by the price of each stock (Safe Price).

In connection with the automatic conversion of this Safe into shares of Standard Preferred Stock or Safe Preferred Stock, the Investor will execute and deliver to the Company all of the transaction documents related to the Equity Financing; provided, that such documents (i) are the same documents to be entered into with the purchasers of Standard Preferred Stock, with appropriate variations for the Safe Preferred Stock if applicable, and (ii) have customary exceptions to any drag-along applicable to the Investor, including (without limitation) limited representations, warranties, liability and

When the Safe automatically turns into shares of Standard Preferred Stock or Safe Preferred Stock, CashCowVC must sign and give all related documents to Acme Corporation. These documents must be the same as those given to buyers of Standard Preferred Stock, with some changes if they relate to Safe Preferred Stock. There should also be usual exceptions to any drag-along that applies to CashCowVC, like limited guarantees, promises, and responsibility.

indemnification obligations for the Investor.

The investor, CashCowVC, has responsibilities to compensate or protect the company, Acme Corporation, from financial harm or loss.

(b) Liquidity Event. If there is a Liquidity Event before the termination of this Safe, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds, due and payable to the Investor immediately prior to, or concurrent with, the consummation of such Liquidity Event, equal to the greater of (i) the Purchase Amount (the “Cash-Out Amount”) or (ii) the amount payable on the number of shares of Common Stock equal to the Purchase Amount divided by the Liquidity Price (the “Conversion Amount”). If any of the

Liquidity Event: If a Liquidity Event happens before this agreement ends, CashCowVC (investor) will automatically get a part of the proceeds. This payment will happen immediately before or at the same time as the Liquidity Event. The amount they receive will be either (i) the Purchase Amount or (ii) a sum based on the number of Common Stock shares, calculated by dividing the Purchase Amount by the Liquidity Price.

Company’s securityholders are given a choice as to the form and amount of Proceeds to be received in a Liquidity Event, the Investor will be given the same choice, provided that the Investor may not choose to receive a form of consideration that the Investor would be ineligible to receive as a result of the Investor’s failure to satisfy any requirement or limitation generally applicable to the Company’s securityholders, or under any applicable laws.

If Acme Corporation gives its security holders a choice about how and how much they receive in a significant event like a sale or merger, CashCowVC will have the same option. However, CashCowVC can't choose a form of payment that it doesn't qualify for due to certain rules that apply to all security holders of Acme Corporation, or according to any laws.

Notwithstanding the foregoing, in connection with a Change of Control intended to qualify as a tax-free reorganization, the Company may reduce the cash portion of Proceeds payable to the Investor by the amount determined by

If Acme Corporation changes ownership in a way that's meant to be tax-free, they have the right to lower the amount of money they need to pay to CashCowVC by a specific amount.

its board of directors in good faith for such Change of Control to qualify as a tax-free reorganization for U.S. federal income tax purposes, provided thatsuch reduction (A) does notreduce the totalProceeds payable to such Investor and (B) is applied in the same manner and on a pro rata basis to all securityholders who have equal priority to the Investor under Section 1(d).

If Acme Corporation decides to restructure in a way that wouldn't require them to pay federal income tax (a tax-free reorganization), they must get approval from their board of directors. Any decrease in the amount due to the investor, CashCowVC, from this restructuring should not lessen the total amount CashCowVC is supposed to receive. This decrease should also be applied equally and proportionally to all parties who have the same rights as CashCowVC under Section 1(d) of the agreement.

(c) Dissolution Event. If there is a Dissolution Event before the termination of this Safe, the Investor will automatically be entitled (subject to the liquidation priority set forth in Section 1(d) below) to receive a portion of Proceeds equal to the Cash-Out Amount, due and payable to the Investor immediately prior to the consummation of the Dissolution Event.

If Acme Corporation ends its business before the termination of this agreement, CashCowVC will automatically have the right to receive a part of the money made from the sale of the company's assets. This amount, known as the Cash-Out Amount, should be paid to CashCowVC just before the company is officially dissolved. This payment is subject to the priority order mentioned in Section 1(d) of this agreement.

(d) Liquidation Priority. In a Liquidity Event or Dissolution Event, this Safe is intended to operate like

In case of a major event like selling the company (Liquidity Event) or closing down the business (Dissolution Event), the Safe is planned to function like standard preferred stock. This means that the investor (CashCowVC) will first get back their invested money before the company (Acme Corporation) distributes any remaining amount among the other shareholders.

standard non-participating Preferred Stock. The Investor’s right to receive its Cash-Out Amount is: (i) Junior to payment of outstanding indebtedness and creditor claims, including contractual claims for paymentand convertible promissory notes (to the extentsuch convertible promissory notes are notactually or notionally

The investor, CashCowVC, is entitled to receive a certain Cash-Out Amount from Acme Corporation's standard non-participating Preferred Stock. However, this right is secondary to the payment of any outstanding debts, creditor claims, including contractual payment claims, and convertible promissory notes that Acme Corporation has. These payments must be settled first before the investor can receive their Cash-Out Amount.

converted into Capital Stock); (ii) On par with payments for other Safes and/or Preferred Stock, and if the applicable Proceeds are insufficient to permit full payments to the Investor and such other Safes and/or Preferred Stock, the applicable Proceeds

If the company, Acme Corporation, needs to pay the investor, CashCowVC, and others who hold Safes or Preferred Stock, everyone will receive an equal amount. If there's not enough money to pay everyone in full, they will divide up what's available proportionally.

will be distributed pro rata to the Investor and such other Safes and/or Preferred Stock in proportion to the full payments that would otherwise be due; and (iii) Senior to payments for Common Stock.

The money will be shared evenly among CashCowVC and other parties with similar investment agreements or preferred stock, based on the total amount they're supposed to receive. This will happen before any payments are made to common stockholders.

The Investor’s right to receive its Conversion Amount is (A) on par with payments for Common Stock and other Safes and/or Preferred Stock who are also receiving Conversion Amounts or Proceeds on a similar as-converted to Common Stock basis, and (B) junior to payments described in clauses (i) and (ii) above (in the latter case, to the extent such

CashCowVC's entitlement to get its Conversion Amount is on the same level as payments for Common Stock and other Safes and/or Preferred Stock who are also getting Conversion Amounts or Proceeds in a similar way. However, it is less important than the payments described in clauses (i) and (ii) above.

payments are Cash-Out Amounts or similar liquidation preferences).

Acme Corporation has to pay CashCowVC a certain amount of money during specific events like the company being sold. These payments are known as Cash-Out Amounts or sometimes referred to as liquidation preferences.

(e) Termination. This Safe will automatically terminate (without relieving the Company of any obligations arising from a prior breach of or non-compliance with this Safe) immediately following the earliest to occur of: (i) the issuance of Capital Stock to the Investor pursuant to the automatic conversion of this Safe under Section 1(a); or (ii) the payment, or setting aside for payment, of amounts due the Investor pursuant to Section 1(b) or Section 1(c).

The agreement between Acme Corporation and CashCowVC will automatically end when one of two things happen. First option, when Acme Corporation gives CashCowVC shares as a result of automatically changing this agreement under Section 1(a). The second option, when Acme Corporation pays or sets aside money to pay CashCowVC according to Section 1(b) or Section 1(c). This end does not excuse Acme Corporation from any responsibilities due to previous breaches or non-compliance with this agreement.

2. Definitions

This section of the document explains the specific meaning of certain terms used in the agreement. For example, it will clarify what is meant by words or phrases like 'Acme Corporation' or 'CashCowVC'. This is done to avoid any misunderstandings or confusion later on.

“Capital Stock” means the capital stock of the Company, including, without limitation, the “Common Stock” and the “Preferred Stock.”

"Capital Stock" refers to all types of shares that Acme Corporation owns, which includes both "Common Stock" and "Preferred Stock".

“Change of Control” means (i) a transaction or series of related transactions in which any “person” or “group” (within the meaning of Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended), becomes the “beneficialowner” (as defined in Rule 13d-3 under theSecurities Exchange Actof 1934, asamended), directly or indirectly,

"Change of Control" refers to a situation where a person or group gains ownership of the Acme Corporation, either directly or indirectly. This person or group could gain control through a single transaction or a series of related transactions. The terms 'person', 'group', and 'beneficial owner' are defined under specific sections and rules of the Securities Exchange Act of 1934.

of more than 50% of the outstanding voting securities of the Company having the right to vote for the election of members of the Company’s board of directors, (ii) any reorganization, merger or consolidation of the Company, other than a transaction or series of related transactions in which the holders of the voting securities of the Company outstanding immediately prior to such transaction or series of related transactions retain, immediately after such transaction or series of related transactions, at least a majority of the total voting power represented by the outstanding voting securities of the Company or such other surviving or resulting entity or (iii) a sale, lease or other disposition of all or substantially all of the

This text refers to three potential major changes involving Acme Corporation. First, it discusses the possibility of someone obtaining over 50% of the company's voting shares, which would give them the power to influence who sits on the company's board. Second, it mentions the possibility of a reorganization, merger, or consolidation of the company, but only if the existing shareholders retain the majority of voting power. Lastly, it refers to the possibility of Acme Corporation selling, leasing, or otherwise transferring nearly all of its assets.

assets of the Company.

The things that the Acme Corporation owns.

“Company Capitalization” is calculated as of immediately prior to the Equity Financing and (without double • counting, in each case calculated on an as-converted to Common Stock basis):

"Company Capitalization" refers to the total value of Acme Corporation, which is determined just before the Equity Financing. This value is calculated based on the total number of common shares that would exist if all other types of shares were converted to common shares, ensuring that no share is counted twice.

• Includes all shares of Capital Stock issued and outstanding; • Includes all Converting Securities; • Includes all (i) issued and outstanding Options and (ii) Promised Options; and

This section refers to everything Acme Corporation owns. It includes all the shares of the company that have been given out, all securities that can be converted into other types of securities, and all the options that the company has issued and promised to issue. It's like taking into account every piece of the company that can be owned or turned into ownership.

• Includes the Unissued Option Pool, except that any increase to the Unissued Option Pool in connection with the Equity Financing will only be included to the extent that the number of Promised Options exceeds the Unissued Option Pool prior to such increase.

The text refers to the Unissued Option Pool, which includes all the stock options not yet given to employees. If Acme Corporation decides to grow this pool as part of the equity financing deal with CashCowVC, only the number of promised options that are more than the existing pool before the increase, will be included.

“Converting Securities” includes this Safe and other convertible securities issued by the Company, including but not limited to: (i) other Safes; (ii) convertible promissory notes and other convertible debt instruments; and (iii)

"Converting Securities" refers to this Safe, along with other securities that the company, Acme Corporation, can change into a different form. This includes other Safes, promissory notes that can be converted, and other types of convertible debt instruments.

convertible securities that have the right to convert into shares of Capital Stock.

Acme Corporation has certain types of investments, known as convertible securities, that CashCowVC can change into shares of the company's capital stock if they choose to do so.

“Direct Listing” means the Company’s initiallisting of its Common Stock (other than shares of Common Stock not eligible for resale under Rule 144 under the Securities Act) on a national securities exchange by means of an effective registration statement on Form S-1 filed by the Company with the SEC that registers shares of existing capital stock of the Company for resale, as approved by the Company’s board of directors. For the avoidance of doubt, a Direct Listing will not be deemed to be an underwritten offering and will not involve any underwriting services.

"Direct Listing" refers to the first time Acme Corporation offers its common stock (except those that cannot be resold under Rule 144 of the Securities Act) on a national securities exchange. This is done through filing a Form S-1 registration statement with the SEC that allows the resale of the company's existing shares. This process has to be approved by the company's board of directors. It's important to know that a Direct Listing does not count as an underwritten offering and there will be no underwriting services involved.

“Dissolution Event” means (i) a voluntary termination of operations, (ii) a general assignment for the benefit of the Company’s creditors or (iii) any other liquidation, dissolution or winding up of the Company (excluding a Liquidity Event), whether voluntary or involuntary.

"Dissolution Event" refers to when Acme Corporation decides to stop its business operations, assigns its assets to pay off its creditors, or undergoes any form of closure or wind-up process. However, this does not include a 'Liquidity Event', which is a separate condition. This can happen on Acme Corporation's own accord or be forced upon them.

“Dividend Amount” means, with respectto any date on which the Company pays a dividend on its outstanding Common Stock, theamountof suchdividend thatis paid per shareof Common Stockmultiplied by (x) the PurchaseAmount divided by (y) the Liquidity Price (treating the dividend date as a Liquidity Event solely for purposes of calculating such

The term "Dividend Amount" is used to refer to the money a company, in this case Acme Corporation, pays out as dividends on each share of its common stock. The amount is calculated by taking the dividend per share and multiplying it by the Purchase Amount, then dividing that by the Liquidity Price. This calculation is done every time dividends are paid, treating the payment date as a special event only for this calculation.

Liquidity Price).

The term "Liquidity Price" refers to the value of a company's shares during a liquidity event such as the sale of the company, an Initial Public Offering (IPO), or any other event where the shares can be easily converted to cash. For instance, if Acme Corporation decides to sell the company or go public, the Liquidity Price is the value of each share of Acme Corporation at that specific time. CashCowVC will consider this price when deciding how much they could potentially earn from their investment.

“Equity Financing” meansa bonafide transaction orseries of transactions with the principalpurpose of raising capital, pursuant to which the Company issues and sells Preferred Stock at a fixed valuation, including but not limited to, a pre-money or post-money valuation.

"Equity Financing" refers to a real deal or multiple deals where Acme Corporation's main goal is to raise money. In these deals, Acme Corporation sells Preferred Stock at a set value, which can be determined before or after the money is raised. This includes any similar transactions.

“InitialPublicOffering”meanstheclosingoftheCompany’sfirstfirmcommitmentunderwritteninitialpublic

"Initial Public Offering" refers to the completion of Acme Corporation's first solid agreement for an initial public offering, where the company's shares are sold to the public for the first time.

offering of Common Stock pursuant to a registration statement filed under the Securities Act.

Acme Corporation is selling shares of its common stock. This sale is being done following the guidelines of a document that has been filed under the Securities Act.

“Liquidity Capitalization” is calculated as of immediately prior to the Liquidity Event, and (without double • counting, in each case calculated on an as-converted to Common Stock basis):

The value of Acme Corporation (also known as "Liquidity Capitalization") will be determined just before the Liquidity Event. This is done without counting anything twice and is calculated based on the worth of the Common Stock of the company.

• Includes all shares of Capital Stock issued and outstanding; • Includes all (i) issued and outstanding Options and (ii) to the extent receiving Proceeds, Promised Options; • Includes allConverting Securities, other than anySafes and other convertible securities (including without limitation shares of Preferred Stock) where the holders of such securities are receiving Cash-Out Amounts or similar liquidation preference payments in lieu of Conversion Amounts or similar “as-converted”

The text discusses the various types of shares involved in a financial transaction between Acme Corporation and CashCowVC. This includes all shares of capital stock that have been issued and are currently outstanding. It also includes all issued and outstanding options, and promised options that are expected to receive proceeds. The text further includes all converting securities except for any Safes and other securities that can be converted (like preferred stock), where the holders are receiving cash payments or similar payments instead of the amounts they would get if the securities were converted.

payments; and • Excludes the Unissued Option Pool.

The company, Acme Corporation, will share its financial information with the investor, CashCowVC, every month. The investor will also get a report every year that shows how well the company is doing. The investor has the right to sell their shares if they want to, but they need to let the company know first. If the company or other investors want to buy those shares, they can do so at a lower price. However, the shares that have not yet been issued as options are not included in this arrangement.

“Liquidity Event” means a Change of Control, a Direct Listing or an Initial Public Offering.

A "Liquidity Event" refers to a situation where either Acme Corporation changes ownership (Change of Control), becomes publicly traded through a direct listing (Direct Listing), or offers its shares to the public for the first time (Initial Public Offering).

“Liquidity Price” means the price per share equal to the Post-Money Valuation Cap divided by the Liquidity Capitalization.

The term "Liquidity Price" refers to the cost of each share. This price is determined by dividing the total value of Acme Corporation after investment (Post-Money Valuation Cap) by the total number of shares available (Liquidity Capitalization).

“Options” includes options, restricted stock awards or purchases, RSUs, SARs, warrants or similar securities, vested or unvested.

"Options" refers to various types of securities that Acme Corporation may offer to CashCowVC. These can include options, stock awards or purchases that have certain restrictions, RSUs, SARs, warrants, or similar financial instruments. It doesn't matter whether these securities have vested (become available for sale) or not.

“Proceeds” means cash and other assets (including without limitation stock consideration) that are proceeds from the Liquidity Event or the Dissolution Event, as applicable, and legally available for distribution.

"Proceeds" refers to the money and other assets (including stock options) that come from either the Liquidity Event or Dissolution Event, as relevant, and can be legally distributed.

“Promised Options” means promised but ungranted Options that are the greater of those (i) promised pursuant to agreements or understandings made prior to the execution of, or in connection with, the term sheet or letter of intent for the Equity Financing or Liquidity Event, as applicable (or the initial closing of the Equity Financing or consummation of

"Promised Options" refers to options that have been promised but not yet given. These options are either those promised in agreements before or during the drafting of the term sheet or letter of intent for the Equity Financing or Liquidity Event. The promised options considered are whichever number is greater.

the Liquidity Event, if there is no term sheet or letter of intent), (ii) in the case of an Equity Financing, treated as outstanding Options in the calculation of the Standard Preferred Stock’s price per share, or (iii) in the case of a Liquidity Event, treated as outstanding Options in the calculation of the distribution of the Proceeds.

If Acme Corporation decides to sell (Liquidity Event), the value of outstanding options (choices to buy shares later) will be considered in two ways. Firstly, if there's no initial agreement (term sheet or letter of intent), and secondly, when calculating how much money gets distributed from the sale (Proceeds). If Acme Corporation opts for an Equity Financing (raising money by selling more shares), again, the value of these outstanding options will be factored into the price per share of the Preferred Stock.

“Safe” means an instrument containing a future right to shares of Capital Stock, similar in form and content to this instrument, purchased by investors for the purpose of funding the Company’s business operations. References to “this Safe” mean this specific instrument.

"Safe" refers to a document that gives investors, like CashCowVC, the chance to get company shares, like those of Acme Corporation, in the future. This document is used by investors to put money into the company's business operations. When the text says "this Safe," it's talking about this specific document.

“Safe Preferred Stock” means the shares of the series of Preferred Stock issued to the Investor in an Equity Financing, having the identical rights, privileges, preferences, seniority, liquidation multiple and restrictions as the shares of Standard Preferred Stock, except that any price-based preferences (such as the per share liquidation amount, initial conversion price and per share dividend amount) will be based on the Safe Price.

"Safe Preferred Stock" refers to a specific type of stock that Acme Corporation gives to CashCowVC when there's an Equity Financing. This stock is the same as Standard Preferred Stock in terms of rights, benefits, rank, and restrictions. However, certain financial aspects like the liquidation value, conversion start price, and dividend per share will be based on the Safe Price.

“Safe Price” means the price per share equal to the Post-Money Valuation Cap divided by the Company

The "Safe Price" is the value of each share which is worked out by dividing the total worth of the company (known as the Post-Money Valuation Cap) by the number of shares in the company.

Capitalization.

The document discusses how the company, Acme Corporation, and the investor, CashCowVC, share ownership. It details the process of determining the value of the company and how shares are divided between them.

“Standard Preferred Stock” means the shares of the series of Preferred Stock issued to the investors investing new money in the Company in connection with the initial closing of the Equity Financing.

"Standard Preferred Stock" refers to the special shares given to those who put new money into the Acme Corporation during the first part of the Equity Financing. These investors, such as CashCowVC, get these shares because they are providing new funds to the company.

“Unissued Option Pool” means all shares of Capital Stock that are reserved, available for future grant and not subject to any outstanding Options or Promised Options (but in the case of a Liquidity Event, only to the extent Proceeds are payable on such Promised Options) under any equity incentive or similar Company plan.

The "Unissued Option Pool" refers to all the shares that Acme Corporation has set aside, which can be granted in the future and are not currently tied to any existing or promised options under any of the company's incentive plans. However, in the event of a Liquidity Event, only those promised options that can generate proceeds are considered in this pool.

3. Company Representations

This section outlines the promises made by Acme Corporation to CashCowVC.

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation, and has the power and authority to own, lease and operate its properties and carry on its business as now conducted.

Acme Corporation was properly set up, and exists legally under the laws of its state. It has the necessary rights to own, rent and manage its properties, and conduct its business as it is currently doing.

(b) The execution, delivery and performance by the Company of this Safe is within the power of the Company and has been duly authorized by all necessary actions on the part of the Company (subject to section 3(d)). This Safe constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity. To its knowledge, the Company is not in violation of (i) its current certificate of incorporation or bylaws, (ii) any material statute, rule or regulation applicable to the Company or (iii) any material debt or contract to which the Company is a party or by which it is bound, where, in each case,

Acme Corporation has the authority to carry out the actions stated in this agreement and has gone through all the necessary steps to make it valid. This agreement is a legal responsibility of Acme Corporation and can be enforced against them, unless there are bankruptcy or insolvency issues. As far as Acme Corporation is aware, they are not breaking any rules in their own corporation, any important laws, or any significant debts or contracts that they're part of.

such violation or default, individually, or together with allsuch violations or defaults, could reasonably be expected to have a material adverse effect on the Company.

If Acme Corporation breaks rules or fails to meet requirements in a way that, alone or with other rule breaks or failures, could seriously harm the company, it would be considered a significant negative impact.

(c) The performance and consummation of the transactions contemplated by this Safe do not and will not: (i) violate any material judgment, statute, rule or regulation applicable to the Company; (ii) result in the acceleration of any material debt or contract to which the Company is a party or by which it is bound; or (iii) result in the creation or imposition of any lien on any property, asset or revenue of the Company or the suspension, forfeiture, or nonrenewal of any material

The actions that Acme Corporation is carrying out based on this agreement won't:
(i) break any significant laws, rules or regulations that apply to the company;
(ii) cause any significant debt or contract that the company is involved in to speed up;
(iii) lead to a claim being made on any of the company's property, assets or income, or cause any significant licenses or permissions that the company has to be taken away, lost, or not renewed.

permit, license or authorization applicable to the Company, its business or operations.

The company, Acme Corporation, has all the necessary approvals, licenses, or permissions required to run its business and operations.

(d) No consents or approvals are required in connection with the performance of this Safe, other than: (i) the Company’s corporate approvals; (ii) any qualifications or filings under applicable securities laws; and (iii) necessary corporate approvals for the authorization of Capital Stock issuable pursuant to Section 1.

In order to fulfill the terms of this Safe, Acme Corporation doesn't need any permissions or approvals except for the following: (i) approvals within the company itself, (ii) any qualifications or filings under laws related to securities, and (iii) necessary approvals within the company for the authorization of Capital Stock that can be issued according to Section 1.

(e) To its knowledge, the Company owns or possesses (or can obtain on commercially reasonable terms) sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information,

Acme Corporation claims to have enough legal access to all necessary patents, trademarks, names, copyrights, trade secrets, licenses, and information. If it doesn't own these, it can get them under reasonable conditions.

processes and other intellectual property rights necessary for its business as now conducted and as currently proposed to be conducted, without any conflict with, or infringement of the rights of, others.

Acme Corporation owns all the necessary intellectual property (like patents or trademarks) for running its business as it is currently and as it plans to in the future. This ownership doesn't cause any conflict or infringe on the rights of others.

4. Investor Representations

The investor, CashCowVC, promises certain things. These are called 'investor representations'.

(a) The Investor has full legal capacity, power and authority to execute and deliver this Safe and to perform its obligations hereunder. This Safe constitutes a valid and binding obligation of the Investor, enforceable in accordance with

The investor, CashCowVC, has all the necessary rights and abilities to agree to and carry out the responsibilities outlined in this agreement. This agreement is considered a legitimate commitment from CashCowVC, and can be enforced as per its terms.

its terms, except as limited by bankruptcy, insolvency or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and general principles of equity.

The agreement's conditions apply fully unless they are restricted by laws related to bankruptcy, insolvency, or other general laws that impact the ability to enforce the rights of creditors. Also, general fairness principles can affect the agreement.

(b) The Investor is an accredited investor as such term is defined in Rule 501 of Regulation D under the Securities Act, and acknowledges and agrees that if not an accredited investor at the time of an Equity Financing, the Company may void this Safe and return the Purchase Amount. The Investor has been advised that this Safe and the underlying securities have not been registered under the Securities Act, or any state securities laws and, therefore, cannot

The investor, CashCowVC, is acknowledged as an accredited investor, meaning they meet certain requirements set by financial regulations. CashCowVC understands that if they lose this status when an Equity Financing occurs, Acme Corporation can nullify this agreement and return the money. They have been informed that this agreement and the securities it relates to are not officially registered under financial laws.

be resold unlessthey areregistered under theSecurities Actand applicable state securities laws or unlessan exemption from such registration requirements is available. The Investor is purchasing this Safe and the securities to be acquired by the Investor hereunder for its own account for investment, not as a nominee or agent, and not with a view to, or for resale in connection with, the distribution thereof, and the Investor has no present intention of selling, granting any participation in, or otherwise distributing the same. The Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of such investment, is able to incur a complete loss of such investment without impairing the Investor’s financial condition and is able to bear the economic risk of such investment for

The shares bought by CashCowVC from Acme Corporation cannot be sold again unless they follow certain rules set by the Securities Act and state laws. These rules can be bypassed if there is a special exception. CashCowVC is buying these shares for itself, not for someone else, and doesn't plan to sell them or share them with others. CashCowVC understands the financial and business aspects of this purchase and is ready to deal with any potential loss without it affecting their financial situation. They are also prepared to handle any financial risks that come with this investment.

an indefinite period of time.

The phrase 'an indefinite period of time' means that there is no specific end date set.

5. Miscellaneous

This section deals with various other matters.

(a) Any provision of this Safe may be amended, waived or modified by written consent of the Company and either (i) the Investor or (ii) the majority-in-interest of all then-outstanding Safes with the same “Post-Money Valuation Cap” and “Discount Rate” as this Safe (and Safes lacking one or both of such terms will be considered to be the same with

Any part of this agreement can be changed, but only if Acme Corporation and CashCowVC agree in writing. Alternatively, if a majority of other investors with the same deal terms agree to the changes, they can also be made. Deals that don't specify the value cap or discount rate are considered the same for this purpose.

respect to such term(s)), provided that with respect to clause (ii): (A) the Purchase Amount may not be amended, waived or modified in this manner, (B) the consent of the Investor and each holder of such Safes must be solicited (even if not obtained), and (C) such amendment, waiver or modification treats all such holders in the same manner. “Majority-in • interest” refers to the holders of the applicable group of Safes whose Safes have a total Purchase Amount greater than 50% of the total Purchase Amount of all of such applicable group of Safes.

The company, Acme Corporation, has the ability to change certain terms, but there are restrictions. They cannot change the Purchase Amount. They must ask for permission from the investor, CashCowVC, and anyone else who holds Safes, even if they don't get it. And any changes made must be fair and identical for all Safe holders. The term "Majority-in interest" means those who hold Safes that amount to more than half of the total Purchase Amount of all Safes in that group.

(b) Any notice required or permitted by this Safe will be deemed sufficient when delivered personally or by

If Acme Corporation or CashCowVC need to send any important messages related to this agreement, it is considered acceptable and enough if done personally or through registered mail.

overnight courier or sent by email to the relevant address listed on the signature page, or 48 hours after being deposited in the U.S. mailas certified orregistered mailwith postage prepaid, addressed to the party to be notified atsuch party’s address listed on the signature page, as subsequently modified by written notice.

If Acme Corporation or CashCowVC need to send any important messages to each other, they can do so by overnight courier or email to the addresses listed on the signature page of their agreement. Or, they can send it through the U.S. mail as certified or registered mail with postage already paid. It will be considered delivered 48 hours after it is mailed. The address to send these messages is also on the signature page of their agreement, but if either Acme Corporation or CashCowVC change their address, they must let the other party know in writing.

(c) The Investor is not entitled, as a holder of this Safe, to vote or be deemed a holder of Capital Stock for any purpose other than tax purposes, nor will anything in this Safe be construed to confer on the Investor, as such, any rights of a Company stockholder or rights to vote for the election of directors or on any matter submitted to Company stockholders,

CashCowVC, as the holder of this Safe, doesn't have the right to vote or be considered a holder of Acme Corporation's Capital Stock for any other purpose except for tax reasons. Nothing in this Safe gives CashCowVC the rights of a stockholder in Acme Corporation, or the right to vote for director elections or on any matter brought to the company's stockholders.

or to give or withhold consent to any corporate action or to receive notice of meetings, until shares have been issued on the terms described in Section 1. However, if the Company pays a dividend on outstanding shares of Common Stock (that is

Acme Corporation cannot make any corporate decisions or receive meeting notices until shares have been issued as per Section 1. If Acme Corporation decides to pay a dividend on existing common stock, CashCowVC's rights can change.

not payable in shares of Common Stock) while this Safe is outstanding, the Company will pay the Dividend Amount to the Investor at the same time.

If Acme Corporation decides to pay out any dividends (not in the form of Common Stock) while this agreement is still in effect, CashCowVC will receive a similar dividend payment at the same time.

(d) Neither this Safe nor the rights in this Safe are transferable or assignable, by operation of law or otherwise, by either party without the prior written consent of the other; provided, however, that this Safe and/or its rights may be assigned without the Company’s consent by the Investor (i) to the Investor’s estate, heirs, executors, administrators,

Neither Acme Corporation nor CashCowVC can transfer or assign their rights in this Safe agreement to anyone else without the other's written approval. However, CashCowVC is allowed to transfer its rights without needing Acme Corporation's approval to its estate, heirs, or those managing its affairs after death.

guardians and/or successors in the eventof Investor’s death or disability, or (ii) to any other entity who directly or indirectly, controls, is controlled by or is under common control with the Investor, including, without limitation, any general partner, managing member, officer or director of the Investor, or any venture capital fund now or hereafter existing which is controlled by one or more general partners or managing members of, or shares the same management company with, the Investor.

If the investor passes away or becomes disabled, their guardians or successors can step in. Also, any organization that has control over, is controlled by, or is under the same control as the investor can step in. This includes key figures like general partners, managing members, officers, or directors of the investor, as well as any venture capital fund that shares the same management or is controlled by the partners or managing members of the investor.

(e) In the event any one or more of the provisions of this Safe is for any reason held to be invalid, illegal or

If any part of this agreement between Acme Corporation and CashCowVC is deemed unlawful or cannot be enforced for any reason, it doesn't affect the rest of the agreement. The remaining parts still hold.

unenforceable, in whole or in partor in any respect, or in the eventthatany one or more of the provisions of this Safeoperate or would prospectively operate to invalidate this Safe, then and in any such event, such provision(s) only will be deemed null and void and will not affect any other provision of this Safe and the remaining provisions of this Safe will remain operative and in full force and effect and will not be affected, prejudiced, or disturbed thereby.

If any part or whole of this agreement between Acme Corporation and CashCowVC is found to be unenforceable or could potentially make the agreement invalid, only that specific part will be considered null and void. The rest of the agreement will still be operative, fully effective and won't be influenced or disrupted by this.

(f) All rights and obligations hereunder will be governed by the laws of the State of [Governing Law Jurisdiction], without regard to the conflicts of law provisions of such jurisdiction.

Any rights and duties Acme Corporation and CashCowVC have under this agreement will follow the laws of the specified state. This will happen even if those laws are different from the laws where Acme Corporation or CashCowVC are located or operate.

(g) The parties acknowledge and agree that for United States federal and state income tax purposes this Safe is, and at all times has been, intended to be characterized as stock, and more particularly as common stock for purposes of Sections 304, 305, 306, 354, 368, 1036 and 1202 of the Internal Revenue Code of 1986, as amended. Accordingly, the parties agree to treatthis Safe consistentwith the foregoing intent for allUnited States federaland state income tax purposes (including, without limitation, on their respective tax returns or other informational statements).

Acme Corporation and CashCowVC both understand and agree that this Safe (a kind of investment) is considered as common stock for the purpose of several sections of the Internal Revenue Code of 1986. Therefore, both parties will handle this Safe as if it were common stock for all federal and state income tax purposes. This includes how they report it on their tax returns or any other tax-related documents.