1008-00003 · Client 1008 · Term Sheets

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CONFIDENTIAL

NON-BINDING TERM SHEET

Simple Agreement for Future Equity (SAFE) Investment

September 25, 2023

This term sheet (this "Term Sheet") summarizes the principal terms of a proposed investment in Lumos Analytics Inc., a Delaware C-corporation (the "Company"), by Canopy Growth Capital LLC, a Delaware limited liability company (the "Investor"). This Term Sheet is non-binding and is intended solely as a basis for further discussion. It does not constitute a commitment by either party to consummate the proposed investment, and no party shall have any obligation hereunder except as expressly set forth in Sections 13 and 14 below. Any legally binding obligation of the parties shall arise only upon the execution and delivery of definitive transaction documentation.

The principal terms of the proposed investment are as follows:

Section 1: Parties

1.1 Company (Issuer)

The Company is a data analytics software company that has been duly organized and is in good standing under the laws of the State of Delaware. The Company operates its principal place of business at the address set forth above.

1.2 Investor.

The Investor is a Delaware limited liability company engaged in the business of making venture-stage and growth-stage investments. The Investor's principal point of contact for purposes of this transaction and any related correspondence shall be Lena Petrova, Managing Member, at the address set forth above.

Section 2: Investment Terms

2.1 Type of Security

The security to be issued to the Investor shall be a Post-Money SAFE (Simple Agreement for Future Equity), based on the standard form published by Calderon Partners LLC, as modified to reflect the specific terms set forth herein and as may be further negotiated by the parties in connection with the preparation of definitive transaction documentation (the "SAFE").

The parties acknowledge and agree that the SAFE is not a debt instrument and does not accrue interest, and that the SAFE is not equity in the Company at the time of issuance. The SAFE represents a contractual right to receive equity in the Company upon the occurrence of certain triggering events, as described in Section 4 below. Prior to conversion, the Investor will not hold shares of the Company's capital stock and will not be entitled to vote on matters submitted to the Company's stockholders.

2.2 Purchase Amount

The aggregate purchase price to be paid by the Investor for the SAFE (the "Purchase Amount") shall be:

$1,100,000.00

(One Million One Hundred Thousand Dollars)

The Purchase Amount shall be payable in full in immediately available funds upon execution of the definitive SAFE agreement, or at such other time as may be mutually agreed upon by the parties.

2.3 Post-Money Valuation Cap

The SAFE shall include a post-money valuation cap (the "Valuation Cap") of:

$28,000,000.00

(Twenty-Eight Million Dollars)

For purposes of conversion, the post-money valuation cap shall be used to determine the price per share at which the SAFE converts, calculated by dividing the Valuation Cap by the Company Capitalization (as defined in the definitive SAFE agreement, which shall include all issued and outstanding shares, all shares reserved under employee equity incentive plans, all shares issuable upon conversion of outstanding SAFEs and other convertible instruments, and all shares underlying any outstanding warrants or other rights to acquire capital stock of the Company).

2.4 discount Rate

None. No discount to the price per share of a subsequent equity financing shall apply to the conversion of the SAFE. The SAFE shall convert solely by reference to the Valuation Cap as set forth in Section 2.3, or, in the case of an Equity Financing (as defined below), at the lower of the Valuation Cap price and the price per share of the Equity Financing.

2.5 Pro Forma Ownership at Conversion

Based on the full contemplated round of $6,800,000 in aggregate SAFE proceeds at a $28,000,000 post-money valuation cap, the Investor's pro forma ownership percentage upon conversion of the SAFE on a fully diluted, as-converted basis would be approximately:

$1,100,000 ÷ $28,000,000 = 3.93%

The foregoing is an approximation only and is provided for illustrative purposes. Actual ownership percentages upon conversion will depend on the Company Capitalization at the time of conversion, the aggregate amount of SAFEs and other convertible instruments outstanding, and the terms of the applicable triggering event. The parties acknowledge that additional dilution may result from employee option grants, future financings, and other issuances of equity or equity-linked instruments.

Section 3: SAFE Round Overview

3.1 Total Round Target

The Company is seeking to raise an aggregate of $6,800,000 in gross proceeds through the issuance of Post-Money SAFEs on economic terms identical to those described in this Term Sheet (the "SAFE Round"). The Company reserves the right to increase or decrease the total amount of the SAFE Round at its sole discretion, provided that all SAFEs issued in connection with the SAFE Round shall be on terms no more favorable to subsequent investors than those set forth herein, subject to the MFN provision described in Section 5.

3.2 Lead Investor

The lead investor in the SAFE Round is Vantage Peak Ventures Fund II, L.P., which has committed a total investment amount of $3,500,000. The SAFE in favor of Vantage Peak Ventures Fund II, L.P. was executed on September 12, 2023, on economic terms identical to those described in this Term Sheet (including the same $28,000,000 post-money valuation cap and no discount).

3.3 Other Investors

In addition to the lead investor and the Investor, the following investor has committed to participate in the SAFE Round:

• Ridgeline Angel Fund, L.P. — $1,200,000 commitment. The SAFE in favor of Ridgeline Angel Fund, L.P. was executed on September 22, 2023, on economic terms identical to those described in this Term Sheet.

Additional investors may participate in the SAFE Round on the same economic terms as set forth herein, subject to the MFN provision described in Section 5 and the Company's right to accept or reject any proposed investor at its sole discretion. As of the date of this Term Sheet, the commitments received and anticipated are summarized as follows:

3.4 Terms Uniformity

All SAFEs issued in connection with the SAFE Round shall be issued on identical economic terms, including the same post-money valuation cap of $28,000,000 and no discount rate. The Company represents that no SAFE or other convertible instrument has been or will be issued in connection with the SAFE Round on terms more favorable than those set forth in this Term Sheet, except as may be disclosed to the Investor and subject to the MFN provision set forth in Section 5.

Section 4: Conversion Events

The SAFE shall convert into equity of the Company, or otherwise be settled, upon the occurrence of any of the following triggering events:

4.1 Equity Financing

Upon the closing of a bona fide equity financing in which the Company issues and sells shares of its Preferred Stock (or other equity securities) to one or more investors, resulting in aggregate gross proceeds to the Company of at least $1,000,000 (excluding the conversion of SAFEs, convertible notes, and other convertible instruments) (an "Equity Financing"), the SAFE shall automatically convert into shares of the same class and series of Preferred Stock (or other equity securities) issued and sold in the Equity Financing.

The price per share at which the SAFE converts shall be equal to the lower of:

(a) the price per share determined by dividing the Post-Money Valuation Cap ($28,000,000) by the Company Capitalization (as defined in the definitive SAFE agreement); or

(b) the price per share of the equity securities sold in the Equity Financing.

Because no discount rate applies to this SAFE, the conversion price will effectively be the Valuation Cap price unless the price per share in the Equity Financing is lower than the Valuation Cap price, in which case the Investor will convert at the Equity Financing price per share.

The shares of Preferred Stock (or other equity securities) issued to the Investor upon conversion shall have the same rights, privileges, preferences, and restrictions as the shares issued to other investors in the Equity Financing, except that the Investor's shares shall be designated as "SAFE Preferred Stock" or such similar designation as is customary for Calderon Partners LLC post-money SAFE conversions.

4.2 Liquidity Event

In the event of a Liquidity Event, defined as (i) a Change of Control (including any merger, acquisition, consolidation, or sale of all or substantially all of the Company's assets in which the Company's stockholders immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity), (ii) a Direct Listing of the Company's securities on a national securities exchange, or (iii) an Initial Public Offering of the Company's securities, the SAFE shall, at the Investor's election, either:

(a) convert into shares of Common Stock of the Company at the Valuation Cap price immediately prior to the closing of the Liquidity Event; or

(b) entitle the Investor to receive a cash payment equal to the Purchase Amount.

The specific mechanics and election procedures in connection with a Liquidity Event shall be set forth in the definitive SAFE agreement.

4.3 Dissolution Event

In the event of a Dissolution Event, defined as (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), the Investor shall be entitled to receive a cash payment equal to the Purchase Amount ($1,100,000), prior to and in preference to any distribution to holders of the Company's Common Stock or other junior securities, but after satisfaction of any outstanding senior indebtedness and obligations.

The Company shall promptly notify the Investor of any impending Dissolution Event and shall use its commercially reasonable efforts to ensure that the Investor receives the full Purchase Amount, subject to the availability of funds and the Company's obligations to its creditors and senior security holders.

Section 5: Most Favored Nation (MFN) Provision

The definitive SAFE agreement shall include a standard Most Favored Nation ("MFN") provision in favor of the Investor. If, at any time after the execution of the definitive SAFE agreement and prior to the conversion or termination of the SAFE, the Company issues any subsequent SAFE, convertible note, or other convertible instrument (each, a "Subsequent Convertible Instrument") containing terms that are, in any material respect, more favorable to the holder thereof than the terms of the Investor's SAFE, the Investor shall have the right, upon written notice to the Company, to elect to amend its SAFE to incorporate such more favorable terms.

The MFN provision shall apply to, but shall not be limited to, the following terms of any Subsequent Convertible Instrument:

(a) the valuation cap (whether post-money or pre-money);

(b) the discount rate applicable to conversion;

(d) any liquidation preference or other economic terms; and

(e) any other material terms that provide the holder of the Subsequent Convertible Instrument with a more favorable economic position relative to the Investor.

The Company shall provide the Investor with prompt written notice (and in any event within five (5) business days) of the issuance of any Subsequent Convertible Instrument, together with a copy of such instrument and a summary of the material terms thereof.

Section 6: Information Rights

During the period commencing on the execution of the definitive SAFE agreement and continuing until the earlier of (i) the conversion of the SAFE in full or (ii) the termination of the SAFE in accordance with its terms, the Company shall provide the Investor with the following information:

(a) Annual Financial Statements. Within ninety (90) days following the end of each fiscal year of the Company, the Company shall deliver to the Investor unaudited financial statements for such fiscal year, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles (GAAP) applied on a consistent basis (or, at the Company's election, in accordance with such other reasonable accounting standards as the Company may adopt).

(b) Additional Information. The Company shall provide such other financial and operational information as may be reasonably requested by the Investor from time to time, subject to the Company's reasonable determination that the production of such information would not impose an undue burden on the Company or require the disclosure of competitively sensitive or privileged information.

The information rights described in this Section 6 shall terminate automatically and without further action upon the conversion of the SAFE into equity of the Company, at which time the Investor's information rights (if any) shall be governed by the terms of the applicable investor rights agreement or similar agreement entered into in connection with the Equity Financing.

Section 7: Representations and Warranties

In connection with the execution of the definitive SAFE agreement, the Company shall make customary representations and warranties to the Investor, including but not limited to the following:

(a) Due Organization and Good Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business in each jurisdiction in which the nature of its business or the ownership of its assets requires such qualification.

(b) Authorization and Enforceability. The execution, delivery, and performance of the SAFE by the Company have been duly authorized by all necessary corporate action, and the SAFE, when executed and delivered, shall constitute a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors' rights generally and to general principles of equity.

(c) No Conflicts. The execution, delivery, and performance of the SAFE by the Company do not and will not (i) violate or conflict with the Company's certificate of incorporation, bylaws, or other organizational documents, (ii) violate or conflict with any material agreement, contract, or instrument to which the Company is a party or by which it is bound, or (iii) violate any applicable law, rule, regulation, order, or judgment.

(d) Capitalization. The capitalization of the Company is as set forth in Section 8 of this Term Sheet, and there are no outstanding options, warrants, rights, or other agreements or commitments obligating the Company to issue or sell any shares of its capital stock or other equity securities, except as disclosed in Section 8 or in the definitive SAFE agreement.

(e) Compliance with Applicable Law. The Company is in material compliance with all applicable federal, state, and local laws, rules, regulations, orders, and judgments, and the Company has obtained all material permits, licenses, and authorizations required in connection with the conduct of its business.

(f) intellectual Property Ownership. The Company owns or has the right to use all intellectual property necessary for the conduct of its business as currently conducted, free and clear of all liens, encumbrances, and claims of third parties, except as would not reasonably be expected to have a material adverse effect on the Company. To the Company's knowledge, the Company's business as currently conducted does not infringe upon or misappropriate the intellectual property rights of any third party.

The specific representations and warranties, and any qualifications, exceptions, or schedules thereto, shall be set forth in the definitive SAFE agreement.

Section 8: Company Capitalization Summary (Pre-Round)

The following table summarizes the Company's capitalization as of the date of this Term Sheet, prior to the issuance of any SAFEs in connection with the SAFE Round described herein:

Authorized Capital Stock:

Issued and Outstanding Common Stock:

2022 Equity Incentive Plan:

Outstanding Convertible Instruments (Pre-Seed):

The Company represents that, except as set forth above, there are no other outstanding shares, options, warrants, convertible instruments, or other rights to acquire equity of the Company. The Company acknowledges that the Pre-Seed SAFEs issued in August 2022 remain outstanding and unconverted as of the date of this Term Sheet, and that such instruments will convert in accordance with their respective terms upon the occurrence of the applicable triggering events.

Section 9: Use of Proceeds

The Company intends to use the proceeds from the SAFE Round for general corporate purposes, including but not limited to:

(a) Product Development. Continued investment in the development, enhancement, and scaling of the Company's data analytics platform, including engineering, design, and quality assurance;

(b) Sales and Marketing. Expansion of the Company's sales team, development of go-to-market strategies, and investment in customer acquisition and retention initiatives; and

The Company shall have sole discretion over the allocation of proceeds among the foregoing categories, and the foregoing description is provided for informational purposes only and shall not be construed as a binding commitment to allocate proceeds in any particular manner.

Section 10: Governing Law

The definitive SAFE agreement and any disputes arising out of or relating to the proposed investment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflict of laws principles that would require the application of the laws of any other jurisdiction. Each party hereby consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of Delaware for the resolution of any disputes arising out of or relating to the definitive SAFE agreement.

Section 11: Definitive Documentation

The investment contemplated by this Term Sheet shall be documented by the execution and delivery of a definitive Post-Money SAFE on terms consistent with this Term Sheet and based on the standard Calderon Partners LLC Post-Money SAFE form, with such modifications as are mutually agreed upon by the parties and their respective counsel. The definitive SAFE agreement shall supersede this Term Sheet in its entirety upon execution and delivery.

The Company's legal counsel in connection with this transaction is:

Calderwood & Harkness LLP 555 California Street, 30th Floor San Francisco, CA 94104

Attention: Omar Siddiqui, Associate

The parties shall work in good faith with their respective legal advisors to finalize and execute the definitive SAFE agreement within the timeframe set forth in Section 15 of this Term Sheet.

Section 12: Expenses

Each party shall be responsible for and shall bear its own legal, accounting, advisory, and other costs and expenses incurred in connection with the negotiation, preparation, execution, and delivery of this Term Sheet and the definitive SAFE agreement. Neither party shall have any obligation to reimburse or indemnify the other party for any such costs or expenses, regardless of whether the proposed investment is consummated.

Section 13: Non-Binding Nature; Exclusions

This Term Sheet is non-binding and does not constitute a binding agreement, commitment, or obligation on the part of either party to consummate the proposed investment or to enter into any definitive documentation. No party shall have any liability to the other party by reason of this Term Sheet or the discussions contemplated hereby, except with respect to the binding obligations expressly set forth in Section 14 (Confidentiality) below.

The parties acknowledge that the terms set forth herein are subject to further negotiation and due diligence, and that a binding obligation to consummate the proposed investment shall arise only upon the execution and delivery of the definitive SAFE agreement by both parties. Either party may, in its sole and absolute discretion, terminate discussions and negotiations at any time prior to the execution of the definitive SAFE agreement, without liability or obligation to the other party.

Notwithstanding the non-binding nature of this Term Sheet, the provisions of Section 13 (this section) and Section 14 (Confidentiality) shall be binding and enforceable obligations of the parties.

Section 14: Confidentiality

The existence of this Term Sheet, the terms and conditions set forth herein, and the fact that discussions and negotiations are taking place between the parties regarding the proposed investment shall be treated as strictly confidential by both parties and shall not be disclosed to any third party without the prior written consent of the other party, except that each party may disclose the foregoing:

(a) to its respective legal, financial, accounting, and tax advisors who have a need to know such information in connection with the proposed investment and who are bound by obligations of confidentiality;

(b) to its respective officers, directors, members, partners, and employees who have a need to know such information in connection with the proposed investment and who are bound by obligations of confidentiality; and

(c) as required by applicable law, regulation, legal process, or governmental authority, provided that the disclosing party shall, to the extent legally permissible, provide the other party with prompt written notice of any such required disclosure.

The confidentiality obligations set forth in this Section 14 shall survive the termination or expiration of this Term Sheet and shall remain in effect for a period of two (2) years following the date of this Term Sheet, unless superseded by confidentiality provisions contained in the definitive SAFE agreement.

Section 15: Expiration

This Term Sheet shall automatically expire and be of no further force or effect if a definitive SAFE agreement is not executed and delivered by both parties within thirty (30) days of the date hereof (i.e., by October 25, 2023), unless such deadline is extended by mutual written agreement of the parties. Upon expiration of this Term Sheet, neither party shall have any further obligation or liability to the other party hereunder, except with respect to the confidentiality obligations set forth in Section 14, which shall survive in accordance with their terms.

Signature block

IN WITNESS WHEREOF, the undersigned have caused this Non-Binding Term Sheet to be executed as of the date first written above, solely to evidence their mutual understanding of the principal terms of the proposed investment and to acknowledge their agreement to be bound by the provisions of Sections 13 and 14 hereof.

LUMOS ANALYTICS INC.

By: ________

Name: Priya Narasimhan

Title: Co-Founder, CEO & President

Date: September 25, 2023

CANOPY GROWTH CAPITAL LLC

By: ________

Name: Lena Petrova

Title: Managing Member

Date: September 25, 2023

Countersigned and accepted by both parties as of September 25, 2023.

This Term Sheet is confidential and is intended solely for the use of the parties named herein and their respective advisors. Any unauthorized distribution, copying, or disclosure of this Term Sheet or its contents is strictly prohibited.

Full Legal Name:	Lumos Analytics Inc.
Entity Type:	C-corporation
State of Incorporation:	Delaware
Headquarters:	340 Folsom Street, Suite 1100, San Francisco, CA 94105
Principal Contact:	Priya Narasimhan, Co-Founder, CEO & President
Full Legal Name:	Canopy Growth Capital LLC
Entity Type:	Limited liability company
State of Organization:	Delaware
Principal Office:	1455 Market Street, Suite 600, San Francisco, CA 94103
Principal Contact:	Lena Petrova, Managing Member
Investor	Commitment Amount	Status
Vantage Peak Ventures Fund II, L.P.	$3,500,000	SAFE Executed (Sept. 12, 2023)
Ridgeline Angel Fund, L.P.	$1,200,000	SAFE Executed (Sept. 22, 2023)
Canopy Growth Capital LLC	$1,100,000	Subject to this Term Sheet
Additional Investors (TBD)	Up to $1,000,000	Pending
Total SAFE Round	$6,800,000
Class	Authorized Shares
Common Stock	10,000,000 shares
Stockholder	Shares Held	Percentage of Outstanding
Priya Narasimhan (Co-Founder, CEO & President)	4,200,000	48.84%
Elliot Marsh (Co-Founder, CTO)	3,800,000	44.19%
Danielle Okoye (VP of Engineering)	600,000	6.98%
Total Issued and Outstanding	8,600,000	100.00%

Total Reserved	1,200,000
Granted (outstanding options/restricted stock awards)	480,000
Available for Future Grants	720,000
Instrument	Aggregate Principal / Purchase Amount	Post-Money Valuation Cap	Date Issued
Pre-Seed SAFEs	$1,200,000	$8,000,000	August 2022

CONFIDENTIAL
NON-BINDING TERM SHEET
Simple Agreement for Future Equity (SAFE) Investment
September 25, 2023
This term sheet (this "Term Sheet") summarizes the principal terms of a proposed investment in Lumos Analytics Inc., a Delaware C-corporation (the "Company"), by Canopy Growth Capital LLC, a Delaware limited liability company (the "Investor"). This Term Sheet is non-binding and is intended solely as a basis for further discussion. It does not constitute a commitment by either party to consummate the proposed investment, and no party shall have any obligation hereunder except as expressly set forth in Sections 13 and 14 below. Any legally binding obligation of the parties shall arise only upon the execution and delivery of definitive transaction documentation.
The principal terms of the proposed investment are as follows:
Section 1: Parties
1.1 Company (Issuer)
The Company is a data analytics software company that has been duly organized and is in good standing under the laws of the State of Delaware. The Company operates its principal place of business at the address set forth above.
1.2 Investor.  
The Investor is a Delaware limited liability company engaged in the business of making venture-stage and growth-stage investments. The Investor's principal point of contact for purposes of this transaction and any related correspondence shall be Lena Petrova, Managing Member, at the address set forth above.
Section 2: Investment Terms
2.1 Type of Security
The security to be issued to the Investor shall be a Post-Money SAFE (Simple Agreement for Future Equity), based on the standard form published by Calderon Partners LLC, as modified to reflect the specific terms set forth herein and as may be further negotiated by the parties in connection with the preparation of definitive transaction documentation (the "SAFE").
The parties acknowledge and agree that the SAFE is not a debt instrument and does not accrue interest, and that the SAFE is not equity in the Company at the time of issuance. The SAFE represents a contractual right to receive equity in the Company upon the occurrence of certain triggering events, as described in Section 4 below. Prior to conversion, the Investor will not hold shares of the Company's capital stock and will not be entitled to vote on matters submitted to the Company's stockholders.
2.2 Purchase Amount
The aggregate purchase price to be paid by the Investor for the SAFE (the "Purchase Amount") shall be:
$1,100,000.00
(One Million One Hundred Thousand Dollars)
The Purchase Amount shall be payable in full in immediately available funds upon execution of the definitive SAFE agreement, or at such other time as may be mutually agreed upon by the parties.
2.3 Post-Money Valuation Cap
The SAFE shall include a post-money valuation cap (the "Valuation Cap") of:
$28,000,000.00
(Twenty-Eight Million Dollars)
For purposes of conversion, the post-money valuation cap shall be used to determine the price per share at which the SAFE converts, calculated by dividing the Valuation Cap by the Company Capitalization (as defined in the definitive SAFE agreement, which shall include all issued and outstanding shares, all shares reserved under employee equity incentive plans, all shares issuable upon conversion of outstanding SAFEs and other convertible instruments, and all shares underlying any outstanding warrants or other rights to acquire capital stock of the Company).
2.4 discount Rate
None. No discount to the price per share of a subsequent equity financing shall apply to the conversion of the SAFE. The SAFE shall convert solely by reference to the Valuation Cap as set forth in Section 2.3, or, in the case of an Equity Financing (as defined below), at the lower of the Valuation Cap price and the price per share of the Equity Financing.
2.5 Pro Forma Ownership at Conversion
Based on the full contemplated round of $6,800,000 in aggregate SAFE proceeds at a $28,000,000 post-money valuation cap, the Investor's pro forma ownership percentage upon conversion of the SAFE on a fully diluted, as-converted basis would be approximately:
$1,100,000 ÷ $28,000,000 = 3.93%
The foregoing is an approximation only and is provided for illustrative purposes. Actual ownership percentages upon conversion will depend on the Company Capitalization at the time of conversion, the aggregate amount of SAFEs and other convertible instruments outstanding, and the terms of the applicable triggering event. The parties acknowledge that additional dilution may result from employee option grants, future financings, and other issuances of equity or equity-linked instruments.
Section 3: SAFE Round Overview
3.1 Total Round Target
The Company is seeking to raise an aggregate of $6,800,000 in gross proceeds through the issuance of Post-Money SAFEs on economic terms identical to those described in this Term Sheet (the "SAFE Round"). The Company reserves the right to increase or decrease the total amount of the SAFE Round at its sole discretion, provided that all SAFEs issued in connection with the SAFE Round shall be on terms no more favorable to subsequent investors than those set forth herein, subject to the MFN provision described in Section 5.
3.2 Lead Investor
The lead investor in the SAFE Round is Vantage Peak Ventures Fund II, L.P., which has committed a total investment amount of $3,500,000. The SAFE in favor of Vantage Peak Ventures Fund II, L.P. was executed on September 12, 2023, on economic terms identical to those described in this Term Sheet (including the same $28,000,000 post-money valuation cap and no discount).
3.3 Other Investors
In addition to the lead investor and the Investor, the following investor has committed to participate in the SAFE Round:
•  Ridgeline Angel Fund, L.P. — $1,200,000 commitment. The SAFE in favor of Ridgeline Angel Fund, L.P. was executed on September 22, 2023, on economic terms identical to those described in this Term Sheet.
Additional investors may participate in the SAFE Round on the same economic terms as set forth herein, subject to the MFN provision described in Section 5 and the Company's right to accept or reject any proposed investor at its sole discretion. As of the date of this Term Sheet, the commitments received and anticipated are summarized as follows:
3.4 Terms Uniformity
All SAFEs issued in connection with the SAFE Round shall be issued on identical economic terms, including the same post-money valuation cap of $28,000,000 and no discount rate. The Company represents that no SAFE or other convertible instrument has been or will be issued in connection with the SAFE Round on terms more favorable than those set forth in this Term Sheet, except as may be disclosed to the Investor and subject to the MFN provision set forth in Section 5.
Section 4: Conversion Events
The SAFE shall convert into equity of the Company, or otherwise be settled, upon the occurrence of any of the following triggering events:
4.1 Equity Financing
Upon the closing of a bona fide equity financing in which the Company issues and sells shares of its Preferred Stock (or other equity securities) to one or more investors, resulting in aggregate gross proceeds to the Company of at least $1,000,000 (excluding the conversion of SAFEs, convertible notes, and other convertible instruments) (an "Equity Financing"), the SAFE shall automatically convert into shares of the same class and series of Preferred Stock (or other equity securities) issued and sold in the Equity Financing.
The price per share at which the SAFE converts shall be equal to the lower of:
(a) the price per share determined by dividing the Post-Money Valuation Cap ($28,000,000) by the Company Capitalization (as defined in the definitive SAFE agreement); or
(b) the price per share of the equity securities sold in the Equity Financing.
Because no discount rate applies to this SAFE, the conversion price will effectively be the Valuation Cap price unless the price per share in the Equity Financing is lower than the Valuation Cap price, in which case the Investor will convert at the Equity Financing price per share.
The shares of Preferred Stock (or other equity securities) issued to the Investor upon conversion shall have the same rights, privileges, preferences, and restrictions as the shares issued to other investors in the Equity Financing, except that the Investor's shares shall be designated as "SAFE Preferred Stock" or such similar designation as is customary for Calderon Partners LLC post-money SAFE conversions.
4.2 Liquidity Event
In the event of a Liquidity Event, defined as (i) a Change of Control (including any merger, acquisition, consolidation, or sale of all or substantially all of the Company's assets in which the Company's stockholders immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity), (ii) a Direct Listing of the Company's securities on a national securities exchange, or (iii) an Initial Public Offering of the Company's securities, the SAFE shall, at the Investor's election, either:
(a) convert into shares of Common Stock of the Company at the Valuation Cap price immediately prior to the closing of the Liquidity Event; or
(b) entitle the Investor to receive a cash payment equal to the Purchase Amount.
The specific mechanics and election procedures in connection with a Liquidity Event shall be set forth in the definitive SAFE agreement.
4.3 Dissolution Event
In the event of a Dissolution Event, defined as (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), the Investor shall be entitled to receive a cash payment equal to the Purchase Amount ($1,100,000), prior to and in preference to any distribution to holders of the Company's Common Stock or other junior securities, but after satisfaction of any outstanding senior indebtedness and obligations.
The Company shall promptly notify the Investor of any impending Dissolution Event and shall use its commercially reasonable efforts to ensure that the Investor receives the full Purchase Amount, subject to the availability of funds and the Company's obligations to its creditors and senior security holders.
Section 5: Most Favored Nation (MFN) Provision
The definitive SAFE agreement shall include a standard Most Favored Nation ("MFN") provision in favor of the Investor. If, at any time after the execution of the definitive SAFE agreement and prior to the conversion or termination of the SAFE, the Company issues any subsequent SAFE, convertible note, or other convertible instrument (each, a "Subsequent Convertible Instrument") containing terms that are, in any material respect, more favorable to the holder thereof than the terms of the Investor's SAFE, the Investor shall have the right, upon written notice to the Company, to elect to amend its SAFE to incorporate such more favorable terms.
The MFN provision shall apply to, but shall not be limited to, the following terms of any Subsequent Convertible Instrument:
(a) the valuation cap (whether post-money or pre-money);
(b) the discount rate applicable to conversion;
(c) the conversion mechanics, including the definition of Company Capitalization and the treatment of option pools;
(d) any liquidation preference or other economic terms; and
(e) any other material terms that provide the holder of the Subsequent Convertible Instrument with a more favorable economic position relative to the Investor.
The Company shall provide the Investor with prompt written notice (and in any event within five (5) business days) of the issuance of any Subsequent Convertible Instrument, together with a copy of such instrument and a summary of the material terms thereof.
Section 6: Information Rights
During the period commencing on the execution of the definitive SAFE agreement and continuing until the earlier of (i) the conversion of the SAFE in full or (ii) the termination of the SAFE in accordance with its terms, the Company shall provide the Investor with the following information:
(a) Annual Financial Statements. Within ninety (90) days following the end of each fiscal year of the Company, the Company shall deliver to the Investor unaudited financial statements for such fiscal year, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles (GAAP) applied on a consistent basis (or, at the Company's election, in accordance with such other reasonable accounting standards as the Company may adopt).
(b) Additional Information. The Company shall provide such other financial and operational information as may be reasonably requested by the Investor from time to time, subject to the Company's reasonable determination that the production of such information would not impose an undue burden on the Company or require the disclosure of competitively sensitive or privileged information.
The information rights described in this Section 6 shall terminate automatically and without further action upon the conversion of the SAFE into equity of the Company, at which time the Investor's information rights (if any) shall be governed by the terms of the applicable investor rights agreement or similar agreement entered into in connection with the Equity Financing.
Section 7: Representations and Warranties
In connection with the execution of the definitive SAFE agreement, the Company shall make customary representations and warranties to the Investor, including but not limited to the following:
(a) Due Organization and Good Standing. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware, and is qualified to do business in each jurisdiction in which the nature of its business or the ownership of its assets requires such qualification.
(b) Authorization and Enforceability. The execution, delivery, and performance of the SAFE by the Company have been duly authorized by all necessary corporate action, and the SAFE, when executed and delivered, shall constitute a legal, valid, and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, and similar laws affecting creditors' rights generally and to general principles of equity.
(c) No Conflicts. The execution, delivery, and performance of the SAFE by the Company do not and will not (i) violate or conflict with the Company's certificate of incorporation, bylaws, or other organizational documents, (ii) violate or conflict with any material agreement, contract, or instrument to which the Company is a party or by which it is bound, or (iii) violate any applicable law, rule, regulation, order, or judgment.
(d) Capitalization. The capitalization of the Company is as set forth in Section 8 of this Term Sheet, and there are no outstanding options, warrants, rights, or other agreements or commitments obligating the Company to issue or sell any shares of its capital stock or other equity securities, except as disclosed in Section 8 or in the definitive SAFE agreement.
(e) Compliance with Applicable Law. The Company is in material compliance with all applicable federal, state, and local laws, rules, regulations, orders, and judgments, and the Company has obtained all material permits, licenses, and authorizations required in connection with the conduct of its business.
(f) intellectual Property Ownership. The Company owns or has the right to use all intellectual property necessary for the conduct of its business as currently conducted, free and clear of all liens, encumbrances, and claims of third parties, except as would not reasonably be expected to have a material adverse effect on the Company. To the Company's knowledge, the Company's business as currently conducted does not infringe upon or misappropriate the intellectual property rights of any third party.
The specific representations and warranties, and any qualifications, exceptions, or schedules thereto, shall be set forth in the definitive SAFE agreement.
Section 8: Company Capitalization Summary (Pre-Round)
The following table summarizes the Company's capitalization as of the date of this Term Sheet, prior to the issuance of any SAFEs in connection with the SAFE Round described herein:
Authorized Capital Stock:
Issued and Outstanding Common Stock:
2022 Equity Incentive Plan:
Outstanding Convertible Instruments (Pre-Seed):
The Company represents that, except as set forth above, there are no other outstanding shares, options, warrants, convertible instruments, or other rights to acquire equity of the Company. The Company acknowledges that the Pre-Seed SAFEs issued in August 2022 remain outstanding and unconverted as of the date of this Term Sheet, and that such instruments will convert in accordance with their respective terms upon the occurrence of the applicable triggering events.
Section 9: Use of Proceeds
The Company intends to use the proceeds from the SAFE Round for general corporate purposes, including but not limited to:
(a) Product Development. Continued investment in the development, enhancement, and scaling of the Company's data analytics platform, including engineering, design, and quality assurance;
(b) Sales and Marketing. Expansion of the Company's sales team, development of go-to-market strategies, and investment in customer acquisition and retention initiatives; and
(c) Working Capital. General working capital and operational expenses in the ordinary course of business.
The Company shall have sole discretion over the allocation of proceeds among the foregoing categories, and the foregoing description is provided for informational purposes only and shall not be construed as a binding commitment to allocate proceeds in any particular manner.
Section 10: Governing Law
The definitive SAFE agreement and any disputes arising out of or relating to the proposed investment shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to any conflict of laws principles that would require the application of the laws of any other jurisdiction. Each party hereby consents to the exclusive jurisdiction and venue of the state and federal courts located in the State of Delaware for the resolution of any disputes arising out of or relating to the definitive SAFE agreement.
Section 11: Definitive Documentation
The investment contemplated by this Term Sheet shall be documented by the execution and delivery of a definitive Post-Money SAFE on terms consistent with this Term Sheet and based on the standard Calderon Partners LLC Post-Money SAFE form, with such modifications as are mutually agreed upon by the parties and their respective counsel. The definitive SAFE agreement shall supersede this Term Sheet in its entirety upon execution and delivery.
The Company's legal counsel in connection with this transaction is:
Calderwood & Harkness LLP 555 California Street, 30th Floor San Francisco, CA 94104
Attention: Omar Siddiqui, Associate
The parties shall work in good faith with their respective legal advisors to finalize and execute the definitive SAFE agreement within the timeframe set forth in Section 15 of this Term Sheet.
Section 12: Expenses
Each party shall be responsible for and shall bear its own legal, accounting, advisory, and other costs and expenses incurred in connection with the negotiation, preparation, execution, and delivery of this Term Sheet and the definitive SAFE agreement. Neither party shall have any obligation to reimburse or indemnify the other party for any such costs or expenses, regardless of whether the proposed investment is consummated.
Section 13: Non-Binding Nature; Exclusions
This Term Sheet is non-binding and does not constitute a binding agreement, commitment, or obligation on the part of either party to consummate the proposed investment or to enter into any definitive documentation. No party shall have any liability to the other party by reason of this Term Sheet or the discussions contemplated hereby, except with respect to the binding obligations expressly set forth in Section 14 (Confidentiality) below.
The parties acknowledge that the terms set forth herein are subject to further negotiation and due diligence, and that a binding obligation to consummate the proposed investment shall arise only upon the execution and delivery of the definitive SAFE agreement by both parties. Either party may, in its sole and absolute discretion, terminate discussions and negotiations at any time prior to the execution of the definitive SAFE agreement, without liability or obligation to the other party.
Notwithstanding the non-binding nature of this Term Sheet, the provisions of Section 13 (this section) and Section 14 (Confidentiality) shall be binding and enforceable obligations of the parties.
Section 14: Confidentiality
The existence of this Term Sheet, the terms and conditions set forth herein, and the fact that discussions and negotiations are taking place between the parties regarding the proposed investment shall be treated as strictly confidential by both parties and shall not be disclosed to any third party without the prior written consent of the other party, except that each party may disclose the foregoing:
(a) to its respective legal, financial, accounting, and tax advisors who have a need to know such information in connection with the proposed investment and who are bound by obligations of confidentiality;
(b) to its respective officers, directors, members, partners, and employees who have a need to know such information in connection with the proposed investment and who are bound by obligations of confidentiality; and
(c) as required by applicable law, regulation, legal process, or governmental authority, provided that the disclosing party shall, to the extent legally permissible, provide the other party with prompt written notice of any such required disclosure.
The confidentiality obligations set forth in this Section 14 shall survive the termination or expiration of this Term Sheet and shall remain in effect for a period of two (2) years following the date of this Term Sheet, unless superseded by confidentiality provisions contained in the definitive SAFE agreement.
Section 15: Expiration
This Term Sheet shall automatically expire and be of no further force or effect if a definitive SAFE agreement is not executed and delivered by both parties within thirty (30) days of the date hereof (i.e., by October 25, 2023), unless such deadline is extended by mutual written agreement of the parties. Upon expiration of this Term Sheet, neither party shall have any further obligation or liability to the other party hereunder, except with respect to the confidentiality obligations set forth in Section 14, which shall survive in accordance with their terms.
Signature block
IN WITNESS WHEREOF, the undersigned have caused this Non-Binding Term Sheet to be executed as of the date first written above, solely to evidence their mutual understanding of the principal terms of the proposed investment and to acknowledge their agreement to be bound by the provisions of Sections 13 and 14 hereof.
LUMOS ANALYTICS INC.
By: ________
Name: Priya Narasimhan
Title: Co-Founder, CEO & President
Date: September 25, 2023
CANOPY GROWTH CAPITAL LLC
By: ________
Name: Lena Petrova
Title: Managing Member
Date: September 25, 2023
Countersigned and accepted by both parties as of September 25, 2023.
This Term Sheet is confidential and is intended solely for the use of the parties named herein and their respective advisors. Any unauthorized distribution, copying, or disclosure of this Term Sheet or its contents is strictly prohibited.
Full Legal Name: | Lumos Analytics Inc.
Entity Type: | C-corporation
State of Incorporation: | Delaware
Headquarters: | 340 Folsom Street, Suite 1100, San Francisco, CA 94105
Principal Contact: | Priya Narasimhan, Co-Founder, CEO & President
Full Legal Name: | Canopy Growth Capital LLC
Entity Type: | Limited liability company
State of Organization: | Delaware
Principal Office: | 1455 Market Street, Suite 600, San Francisco, CA 94103
Principal Contact: | Lena Petrova, Managing Member
Investor | Commitment Amount | Status
Vantage Peak Ventures Fund II, L.P. | $3,500,000 | SAFE Executed (Sept. 12, 2023)
Ridgeline Angel Fund, L.P. | $1,200,000 | SAFE Executed (Sept. 22, 2023)
Canopy Growth Capital LLC | $1,100,000 | Subject to this Term Sheet
Additional Investors (TBD) | Up to $1,000,000 | Pending
Total SAFE Round | $6,800,000
Class | Authorized Shares
Common Stock | 10,000,000 shares
Stockholder | Shares Held | Percentage of Outstanding
Priya Narasimhan (Co-Founder, CEO & President) | 4,200,000 | 48.84%
Elliot Marsh (Co-Founder, CTO) | 3,800,000 | 44.19%
Danielle Okoye (VP of Engineering) | 600,000 | 6.98%
Total Issued and Outstanding | 8,600,000 | 100.00%
Shares
Total Reserved | 1,200,000
Granted (outstanding options/restricted stock awards) | 480,000
Available for Future Grants | 720,000
Instrument | Aggregate Principal / Purchase Amount | Post-Money Valuation Cap | Date Issued
Pre-Seed SAFEs | $1,200,000 | $8,000,000 | August 2022

CONFIDENTIAL

NON-BINDING TERM SHEET

LUMOS ANALYTICS INC.

CANOPY GROWTH CAPITAL LLC

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