Narrative. Side letters are the quiet workhorses of early-stage rounds. They let a company give specific investors rights that are not in the primary investment document — typically pro rata rights, most-favored-nations (MFN) rights, information rights, and sometimes board observer rights — without amending the core instrument and without triggering those rights for every other investor. Big-law practice uses side letters sparingly: overuse creates administrative drag and risks inconsistent treatment claims. The four rights below are the most common and represent the “big-law baseline” for a strategic or lead investor in a SAFE/convertible note round. Pro rata is the most valuable to a lead; MFN protects against downstream investors negotiating better terms; information rights are ministerial but useful; observer rights are a lightweight alternative to a full board seat.

THIS INVESTOR SIDE LETTER (this “Side Letter”) is entered into as of [DATE] by and between [COMPANY NAME], Inc., a Delaware corporation (the “Company”), and [INVESTOR NAME] (the “Investor”), in connection with the Investor’s purchase of [a SAFE / a Convertible Promissory Note] in the principal or purchase amount of $[AMOUNT] on the date hereof (the “Investment”).

1. Pro Rata Rights

Commencing upon the conversion of the Investment into shares of preferred stock issued in the Company’s next priced equity financing (the “Next Equity Financing”) and continuing through the Company’s subsequent preferred stock financings until the Company’s initial public offering or Change of Control, the Company shall offer the Investor the right to purchase a pro rata portion of any new securities issued by the Company in such subsequent financings, based on the Investor’s fully-diluted ownership as of immediately prior to the applicable financing. The Investor shall have [twenty (20)] business days after receiving written notice to exercise its pro rata right. This right is personal to the Investor and may not be transferred without the Company’s consent (except to affiliates).

2. Most-Favored Nations

If at any time prior to the closing of the Next Equity Financing the Company issues to any other investor a SAFE or convertible security on terms more favorable in any material respect than the terms of the Investment (the “Subsequent Terms”), the Company shall promptly notify the Investor in writing and, at the Investor’s election, the Investment shall be amended to incorporate such more favorable terms. Terms to be considered include the valuation cap, discount rate, MFN clause, pro rata rights, and any other economic right.

3. Information Rights

The Company shall deliver to the Investor, for so long as the Investor holds the Investment or any securities issued upon its conversion: (a) within [120] days after the end of each fiscal year, unaudited annual financial statements of the Company; (b) within [45] days after the end of each fiscal quarter, unaudited quarterly financial statements; and (c) such other information reasonably requested by the Investor from time to time. The Investor shall hold all such information in confidence and shall use it solely in connection with its investment in the Company.

4. Board Observer Rights (Optional)

Upon the Investor’s written request, the Company shall permit one representative designated by the Investor (the “Observer”) to attend all meetings of the Company’s Board of Directors in a non-voting observer capacity, and shall provide the Observer with copies of all materials provided to directors at substantially the same time. The Company may exclude the Observer from portions of any meeting or materials if necessary to protect attorney-client privilege, to address a material conflict of interest, or if the Board determines in good faith that such exclusion is necessary to protect highly confidential information.

5. Termination

The rights set forth in Sections 1 through 4 shall terminate automatically upon the earliest of (a) the closing of the Company’s initial public offering, (b) a Change of Control, or (c) the Investor’s ceasing to hold any securities of the Company.

6. Miscellaneous

This Side Letter supplements but does not amend the Investment documents. This Side Letter is governed by the laws of the State of [Delaware / California]. Any amendment must be in writing signed by both parties. This Side Letter may be executed in counterparts, including by electronic signature.

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[COMPANY NAME], Inc. INVESTOR:

By: _________________________ By: _________________________ Name: Name: Title: Title:

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This form is provided for informational purposes only and does not constitute legal advice or create an attorney-client relationship. Every situation is different; consult qualified legal counsel before using or adapting this document. © Montague Law.