Investor Rights Agreement (US)

INVESTOR RIGHTS AGREEMENT

This Investor Rights Agreement (this "Agreement") is entered into as of [effective date] by and between [company legal name], a [state of incorporation] [entity type (corporation or llc)] (the "Company"), and each investor listed on the signature pages and on Exhibit A (each, an "Investor", and collectively, the "Investors").

1. PURPOSE; RELATIONSHIP TO OTHER DOCUMENTS

This Agreement sets out the rights granted to the Investors in connection with their investment in the Company. It applies alongside the Company's [charter or operating agreement], the [stock or unit purchase agreement title] dated [purchase agreement date], and any side letters. If there is a conflict, the [charter or operating agreement] controls, then this Agreement, then any other document, unless a later document expressly states it overrides this Agreement.

2. INFORMATION RIGHTS

2.1 Financial statements. Until a Qualified Exit (defined as an IPO, sale of the Company, or winding-up), the Company will provide to each Investor holding at least [minimum ownership threshold for information rights]% of Company [common or preferred securities] on an as-converted basis: (a) within 45 days after each fiscal quarter end, an unaudited balance sheet, income statement, and cash flow statement; and (b) within 120 days after each fiscal year end, annual financial statements, [reviewed or audited] if available.

2.2 Annual budget. The Company will provide an annual operating plan and budget within 45 days after the start of each fiscal year, with material updates when approved by the Board.

2.3 Inspection. On reasonable notice during normal business hours, the Company will permit an Investor (or its professional advisers bound by confidentiality) to inspect books and facilities, provided the inspection does not unreasonably disrupt operations or jeopardize attorney-client privilege.

2.4 Confidentiality. All information provided under this Section 2 is Company confidential information and may not be disclosed except to an Investor's affiliates, partners, and advisers who need to know and are bound by confidentiality, or as required by law.

3. PRO RATA RIGHT TO PARTICIPATE IN NEW ISSUANCES

3.1 New Issuances. If the Company proposes to issue any equity securities or securities convertible into equity ("New Securities"), it will first offer each Investor holding at least [minimum ownership threshold for pro rata right]% of Company equity (on an as-converted basis) the right to purchase up to its Pro Rata Share. "Pro Rata Share" means an Investor's ownership of Company equity (on an as-converted basis) immediately before the New Issuance.

3.2 Notice; exercise. The Company will send written notice describing price, number of New Securities, and key terms. The Investor has [pro rata election period in business days] business days to elect. Closing of the Investor's purchase will occur on the same terms and timing as the New Issuance.

3.3 Exceptions. This right does not apply to: (a) employee or contractor equity issued under a plan approved by the Board; (b) equity issued on conversion of existing securities; (c) equipment or real estate financing at fair market terms; (d) strategic partnerships or acquisitions for non-cash consideration approved by the Board; or (e) up to [small round exceptions cap] of new equity in any 12-month period in bona fide small fundraising rounds.

3.4 Transfer of rights. An Investor may assign its Pro Rata Right to an affiliate or to any fund vehicle it manages on written notice to the Company.

4. RIGHT OF FIRST REFUSAL AND CO-SALE ON FOUNDER TRANSFERS

4.1 Right of first refusal. Before any Founder or Key Holder listed on Exhibit A (each, a "Key Holder") transfers any Company equity, the Key Holder must first offer those securities to (a) the Company; then (b) the Investors pro rata, on the same price and terms. The Company and the Investors have 15 business days to accept and 15 business days to close after acceptance.

4.2 Co-sale. If the Key Holder will sell to a third party and the right of first refusal in Section 4.1 is not fully exercised, each Investor may participate in the sale up to its Pro Rata Share on the same price and terms. The Key Holder will cause the buyer to purchase the participating Investors' securities.

4.3 Permitted transfers. Sections 4.1 and 4.2 do not restrict: (a) transfers for estate planning or to trusts, affiliates, or entities wholly-owned by the Key Holder, provided the transferee agrees in writing to be bound by this Agreement; or (b) pledges to institutional lenders that agree to be bound on foreclosure.

5. BOARD OBSERVER RIGHT (OPTIONAL)

The Investors holding at least [observer threshold]% of Company equity (on an as-converted basis) may designate one non-voting observer (the "Observer"). The Company will give the Observer the same Board materials and meeting notices as directors, subject to exclusion for conflicts, attorney-client privilege, or highly confidential personnel matters. The Observer must sign a confidentiality agreement reasonably acceptable to the Company before receiving any Board materials.

6. PROTECTIVE MATTERS REQUIRING INVESTOR CONSENT

While the Investors collectively hold at least [aggregate threshold for protective matters]% of Company equity (on an as-converted basis), the Company will not, without approval of Investors holding a majority of the then-outstanding [investor securities class]:

(a) create any new class or series senior to or pari passu with the [investor securities class] as to dividends or liquidation;

(b) increase the authorized number of [investor securities class] beyond the amount needed to accommodate Section 3 pro rata participation;

(c) pay dividends or make distributions on equity (other than tax distributions by an LLC) or redeem equity, except as required by the Charter or Operating Agreement;

(d) liquidate, dissolve, or merge the Company, or sell all or substantially all of its assets; or

(e) increase the option pool by more than [option pool increase cap]% of fully-diluted post-money equity.

7. COMPANY REPRESENTATIONS AND COVENANTS

7.1 Organization; authority. The Company is duly organized, validly existing, and has the corporate or limited liability authority to enter into and perform this Agreement.

7.2 Capitalization. The capitalization table provided to the Investors as of [cap table date] is accurate in all material respects.

7.3 Employee and contractor IP assignment. The Company has obtained or will obtain written invention assignment agreements from each employee and contractor with access to Company intellectual property, with the state-specific compliance described in the applicable Option below.

Option A (California): The invention assignment agreements comply with California Labor Code Section 2870, which preserves employee rights to inventions developed entirely on the employee's own time without using Company equipment, supplies, facilities, or trade secret information, except for inventions that relate to the Company's business or anticipated research and development. The Company has provided each California employee with the written notice required by California Labor Code Section 2872.

Option B (Other employee-invention statute states): The invention assignment agreements comply with the applicable state employee-invention statute (which generally carves out inventions developed on the employee's own time, without Company resources, and unrelated to Company business). The Company has provided any required state-law written notice.

Option C (All other states): The Company has obtained or will obtain standard written invention assignment agreements from employees and contractors covering Company-related inventions, with confirmation of no conflicting obligations.

7.4 Worker classification. The Company classifies its workers as employees or independent contractors in compliance with applicable federal and state law, in accordance with the applicable Option below.

Option A (California): The Company applies the ABC test under California Labor Code Section 2775 (and AB 5 / AB 2257 exemptions where applicable) and treats workers as employees where required by that statute.

Option B (Massachusetts / New Jersey): The Company applies the strict ABC test under M.G.L. c. 149 Section 148B (Massachusetts) or N.J.S.A. 43:21-19(i)(6) (New Jersey), as applicable, when classifying contractors.

Option C (Other states): The Company follows applicable federal common-law and IRS factor tests and applicable state classification tests, and will reclassify any worker if legally required.

7.5 Privacy and data security. The Company complies with the privacy and data-security obligations described in the applicable Option below.

Option A (CCPA / CPRA-subject): The Company maintains a privacy program compliant with the California Consumer Privacy Act and California Privacy Rights Act (Cal. Civ. Code Section 1798.100 et seq.), honors consumer rights requests, and has compliant service-provider terms in place with each vendor that processes California personal information.

Option B (Not subject to CCPA / CPRA): The Company complies with applicable federal and state privacy and data-security laws, including any sector-specific rules (HIPAA, GLBA, COPPA, FERPA) that apply to its business.

8. NON-SOLICITATION; NON-COMPETITION (OPTIONAL)

Option A (California — no non-compete): No employee or contractor non-compete is imposed by the Company. Under California Business and Professions Code Section 16600, non-competes against lawful work are void in California. Section 16600.5 (added by SB 699, eff. January 1, 2024) makes void contracts unenforceable regardless of where signed; Section 16600.1 (added by AB 1076, eff. January 1, 2024) makes inclusion of a void non-compete unlawful. The Company may use reasonable employee and customer non-solicitation covenants and confidentiality / trade secret protections, which remain enforceable.

Option B (Massachusetts — Section 24L compliant): Any non-compete imposed on a Massachusetts-based employee will satisfy each of the following requirements of M.G.L. c. 149 Section 24L: (a) the employee has the right to consult with counsel prior to signing, expressly stated in the non-compete; (b) the non-compete is provided at the formal offer of engagement OR at least 10 business days before it takes effect, whichever is earlier; (c) the Company will provide either (i) garden leave pay of at least 50% of the employee's highest annualized base salary in the prior 2 years, paid pro-rata during the restricted period, OR (ii) other mutually agreed consideration specified in the non-compete; and (d) the restriction is no broader than necessary to protect the Company's legitimate interests in trade secrets, confidential information, and goodwill, and lasts no longer than [massachusetts non-compete period (max 12 months)].

Option C (Texas — Section 15.50 reasonableness): Any non-compete imposed on a Texas-based employee will be: (a) ancillary to or part of an otherwise enforceable agreement; (b) supported by consideration beyond mere continued at-will employment (typically confidential information, specialized training, or equity); and (c) reasonable in time, geographic area, and scope of activity, in compliance with Texas Business and Commerce Code Section 15.50.

Option D (Other states — reasonable scope): Any non-compete imposed in other states will be limited to no more than 12 months post-employment, narrowly tailored to protect confidential information and customer goodwill, and subject to applicable state-law limits.

Option E (No non-compete): The Company does not impose non-competes. Confidentiality and trade-secret protections, plus reasonable employee and customer non-solicitation covenants, apply.

9. TRANSFER RESTRICTIONS; LEGENDS

The securities held by the Investors are restricted and may not be resold without compliance with applicable federal and state securities laws (including the Securities Act of 1933 and applicable state "blue sky" laws). The Company may place customary legends on certificates or book-entry records reflecting these restrictions.

10. INDEMNIFICATION; LIMITATION OF LIABILITY

10.1 Company indemnity. The Company will indemnify each Investor and its affiliates, and their respective directors, officers, partners, members, and agents, against losses arising from material breaches of the Company's representations, warranties, or covenants in this Agreement, except to the extent arising from the indemnified party's gross negligence, fraud, or willful misconduct.

10.2 Carve-outs and cap. Neither party excludes liability for fraud, willful misconduct, or personal injury caused by its negligence. Other than those carve-outs, neither party will be liable for incidental, special, or consequential damages, except to the extent such damages are the reasonably foreseeable result of a breach of confidentiality or IP infringement. Each party's aggregate liability under this Agreement (excluding unpaid purchase price) will not exceed the greater of (a) [liability cap amount], or (b) the amount actually invested by the relevant Investor.

11. NOTICES

All notices must be in writing and delivered by email with confirmation of transmission, by nationally recognized overnight courier, or by certified mail, to the addresses set out on the signature pages or on Exhibit B. Notices are effective on receipt or, for email, when sent if no bounce-back is received and a copy is sent by courier within one business day.

12. ASSIGNMENT; BINDING EFFECT

An Investor may assign this Agreement and its rights to (a) an affiliate or fund vehicle, or (b) any transferee of its Company securities who agrees in writing to be bound. The Company may not assign this Agreement without the consent of Investors holding a majority of the [investor securities class], except to a successor in a permitted reorganization that assumes this Agreement. This Agreement is binding on, and inures to the benefit of, the parties and their respective successors and permitted assigns.

13. AMENDMENTS AND WAIVERS

This Agreement may be amended only with the written consent of the Company and Investors holding a majority of the [investor securities class] then outstanding. Any amendment that disproportionately and adversely affects a subset of Investors requires the separate consent of a majority of that subset. A waiver must be in writing and signed by the waiving party.

14. TERM; TERMINATION

This Agreement remains in effect until the earliest of: (a) a Qualified Exit; (b) the Investor ceasing to hold any Company securities (as to that Investor only); or (c) termination by mutual written agreement of the Company and Investors holding a majority of the [investor securities class].

15. GOVERNING LAW; FORUM

Option A (New York): This Agreement is governed by New York law without regard to conflicts rules. The parties submit to the exclusive jurisdiction of the state and federal courts located in New York County, New York.

Option B (Delaware): This Agreement is governed by Delaware law without regard to conflicts rules. The parties submit to the exclusive jurisdiction of the Delaware Court of Chancery (and any Delaware state court or the U.S. District Court for the District of Delaware as applicable).

Option C (California): This Agreement is governed by California law without regard to conflicts rules. The parties submit to the exclusive jurisdiction of the state and federal courts located in [california county for forum], California.

Option D (Other state): This Agreement is governed by the laws of [governing law state] without regard to conflicts rules. The parties submit to the exclusive jurisdiction of the state and federal courts located in [county and state for forum].

16. DISPUTE RESOLUTION (OPTIONAL)

Option A (Court): Disputes will be resolved exclusively in the courts identified in Section 15.

Option B (Arbitration): Any dispute arising out of this Agreement will be resolved by binding arbitration administered by [arbitration provider (aaa or jams)] under its [arbitration rules (streamlined or commercial)], seated in [arbitration seat city and state], before a single arbitrator. Judgment may be entered in any court of competent jurisdiction. Either party may seek equitable relief from a court to protect confidentiality or IP pending arbitration. This arbitration provision is governed by the Federal Arbitration Act, 9 U.S.C. Section 2.

17. GENERAL PROVISIONS

17.1 Entire agreement. This Agreement, together with the Charter or Operating Agreement and the documents referenced in Section 1, is the entire agreement on its subject and supersedes prior discussions.

17.2 Counterparts; electronic signatures. This Agreement may be executed in counterparts (including by PDF or electronic signature complying with the federal E-SIGN Act and applicable state UETA), each of which is deemed an original.

17.3 Severability. If any provision is held invalid or unenforceable, the remaining provisions remain in effect, and the invalid provision will be reformed to the minimum extent necessary to be enforceable.

17.4 No third-party beneficiaries. Except for indemnified persons under Section 10, this Agreement is solely for the benefit of the parties and their permitted successors and assigns.

SIGNATURE PAGES

IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.

COMPANY:

[company legal name]

By:

By: ___________________________________

Printed Name: [signatory name of the company]

Title: [signatory title of the company]

Date: [signature date of the company]

Notice Address: [notice address of the company]

Notice Email: [notice email of the company]

INVESTOR:

[investor legal name]

By:

By: ___________________________________

Printed Name: [signatory name of the investor]

Title: [signatory title of the investor]

Date: [signature date of the investor]

Notice Address: [notice address of the investor]

Notice Email: [notice email of the investor]

EXHIBIT A — INVESTORS AND KEY HOLDERS

Investors

[list of investor names, addresses, and securities held]

Founders / Key Holders (subject to Section 4)

[list of founder and key holder names and securities held]

EXHIBIT B — KEY COMMERCIAL TERMS

Effective Date: [effective date]

Company Legal Name: [company legal name]

State of Incorporation: [state of incorporation]

Entity Type: [entity type (corporation or llc)]

Charter / Operating Agreement: [charter or operating agreement]

Stock or Unit Purchase Agreement: [stock or unit purchase agreement title] dated [purchase agreement date]

Investor Securities Class: [investor securities class]

Cap Table Date: [cap table date]

Minimum Ownership Threshold (Information Rights, Section 2): [minimum ownership threshold for information rights]

Common or Preferred (Information Rights): [common or preferred securities]

Reviewed or Audited (Section 2.1(b)): [reviewed or audited]

Minimum Ownership Threshold (Pro Rata Right, Section 3): [minimum ownership threshold for pro rata right]

Pro Rata Election Period: [pro rata election period in business days]

Small Round Exceptions Cap (Section 3.3(e)): [small round exceptions cap]

Observer Threshold (Section 5): [observer threshold]

Aggregate Threshold for Protective Matters (Section 6): [aggregate threshold for protective matters]

Option Pool Increase Cap (Section 6(e)): [option pool increase cap]

IP Assignment Option (Section 7.3): Option A (California) / Option B (other employee-invention statute) / Option C (other states)

Worker Classification Option (Section 7.4): Option A (CA) / Option B (MA or NJ) / Option C (other states)

Privacy Option (Section 7.5): Option A (CCPA / CPRA-subject) / Option B (other)

Non-Compete Option (Section 8): Option A (CA) / B (MA) / C (TX) / D (other state) / E (none)

Massachusetts Non-Compete Period (max 12 months) (Section 8 Option B): [massachusetts non-compete period (max 12 months)]

Liability Cap Amount (Section 10.2): [liability cap amount]

Governing Law Option (Section 15): Option A (NY) / B (DE) / C (CA) / D (other state)

California County for Forum (Section 15 Option C): [california county for forum]

Governing Law State (Section 15 Option D): [governing law state]

County and State for Forum (Section 15 Option D): [county and state for forum]

Dispute Resolution Option (Section 16): Option A (Court) / Option B (Arbitration)

Arbitration Provider (Section 16 Option B): [arbitration provider (aaa or jams)]

Arbitration Rules (Section 16 Option B): [arbitration rules (streamlined or commercial)]

Arbitration Seat (Section 16 Option B): [arbitration seat city and state]