1008-00003 · Client 1008 · Term Sheets

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CONFIDENTIAL

NON-BINDING TERM SHEET

Proposed SAFE Financing

Lumos Analytics Inc.

August 25, 2023

This term sheet summarizes the principal terms of a proposed Simple Agreement for Future Equity ("SAFE") financing by Lumos Analytics Inc. (the "Company"). This term sheet is for discussion purposes only and does not constitute a binding obligation of any party except as expressly set forth in the sections titled "Confidentiality," "Exclusivity," and "Governing Law." No party shall be bound by the terms set forth herein (other than those expressly binding sections) unless and until a definitive SAFE instrument and related ancillary documents are executed and delivered by all parties thereto. Any obligation of the parties to negotiate in good faith toward a definitive agreement shall not be implied from this term sheet.

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

Attention: Omar Siddiqui, Associate

1. Parties

1.1 Issuer / Company

Lumos Analytics Inc., a corporation organized under the laws of the State of Delaware (the "Company").

Principal Office: 340 Folsom Street, Suite 1100, San Francisco, California 94105

Date of Incorporation: January 14, 2022

Chief Executive Officer: Priya Narasimhan, Co-Founder, CEO & President

Issuer's Counsel: Calderwood & Harkness LLP, 555 California Street, 30th Floor, San Francisco, California 94104

The Company is an early-stage technology company focused on the development and commercialization of machine-learning-driven analytics solutions for the enterprise data market, including its flagship product, the Lumos Prism platform.

1.2 Lead Investor

Vantage Peak Ventures Fund II, L.P., a limited partnership organized under the laws of the State of Delaware (the "Lead Investor" or "Vantage Peak"), acting through its general partner, Vantage Peak Capital Management LLC, a Delaware limited liability company.

Principal Office: 2900 Sand Hill Road, Suite 240, Menlo Park, California 94025

Deal Lead: Samantha Reyes, Principal

Investor's Counsel: Whitfield Harte & Associates LLP, 3000 El Camino Real, Suite 500, Palo Alto, California 94306

The Lead Investor is an institutionally managed venture capital fund focused on seed and early-stage investments in enterprise software and data infrastructure companies. Vantage Peak Capital Management LLC serves as the general partner of the Lead Investor and has full authority to execute binding agreements, including SAFE instruments, on behalf of the Lead Investor.

2. Overview of the Offering

2.1 Security. The securities to be issued in this financing shall be Post-Money SAFEs (Simple Agreements for Future Equity), based on the standard form published by Calderon Partners LLC (the "YC Standard Form"), with certain modifications as described herein (each, a "SAFE" and collectively, the "SAFEs"). The SAFEs are not debt instruments, do not bear interest, and do not have a maturity date. Each SAFE represents the right to receive equity in the Company upon the occurrence of certain triggering events, as more particularly described in Section 4 below.

2.2 Total Round Size

The target aggregate SAFE amount for this financing round (the "Round") is $6,800,000 (Six Million Eight Hundred Thousand Dollars). The Company anticipates raising the total Round from the Lead Investor and up to three (3) additional co-investors (each, a "Co-Investor" and collectively, the "Co-Investors"), with each Co-Investor executing a separate SAFE on substantially identical material terms. The Company reserves the right, in its sole discretion and subject to the Exclusivity provisions set forth in Section 14, to adjust the aggregate Round size and the number of participating Co-Investors; provided, however, that any material change to the aggregate Round size shall be communicated to the Lead Investor promptly in writing.

2.3 Lead Investor Commitment

The Lead Investor, Vantage Peak Ventures Fund II, L.P., shall commit to purchase a SAFE in the aggregate amount of $3,500,000 (Three Million Five Hundred Thousand Dollars), representing approximately 51.5% of the total Round. The full purchase amount shall be payable to the Company by wire transfer of immediately available funds at the closing of the Lead Investor's SAFE.

2.4 Post-Money Valuation Cap

The post-money valuation cap applicable to all SAFEs issued in this Round shall be $28,000,000 (Twenty-Eight Million Dollars) (the "Valuation Cap"). The Valuation Cap applies on a post-money basis, inclusive of the following:

(a) all SAFEs issued in this Round (including the Lead Investor SAFE and all Co-Investor SAFEs);

(b) all outstanding SAFEs from prior rounds of financing, including the pre-seed SAFEs described in Section 8.2 below;

(d) all shares reserved and available for future issuance under the Company's 2022 Equity Incentive Plan (whether or not granted); and

(e) any other outstanding options, warrants, or convertible securities of the Company,

in each case, calculated as of immediately prior to the conversion of the SAFEs (the "Company Capitalization"). The Valuation Cap serves as the ceiling on the effective valuation at which the SAFEs convert into equity upon the occurrence of an Equity Financing or other conversion event, as described in Section 4 below.

2.5 discount Rate

No discount shall apply to the conversion price of the SAFEs issued in this Round. The conversion price shall be determined solely by reference to the Valuation Cap and the price per share paid by new investors in the applicable Equity Financing, as set forth in Section 4.1.

3. Key Economic Terms

3.1 Pro Forma Ownership

Upon conversion of all SAFEs issued in this Round at the Valuation Cap, and assuming the full $6,800,000 Round is subscribed at the $28,000,000 post-money Valuation Cap, the pro forma ownership percentages of the new investors, on a fully diluted basis and prior to any dilution from the next Equity Financing, are estimated as follows:

The foregoing ownership percentages are presented on an as-converted, fully diluted basis for illustrative purposes only. Actual ownership percentages at the time of conversion will depend on the Company Capitalization at such time, including any additional equity grants, changes to the option pool, or other issuances occurring between the date of this term sheet and the date of conversion.

3.2 Use of Proceeds

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

(a) continued development and enhancement of the Lumos Prism platform, the Company's flagship machine-learning analytics product, including engineering, data science, and product management expenditures;

(b) expansion of the Company's sales and marketing functions, including the hiring of additional go-to-market personnel and investment in demand generation and customer acquisition initiatives; and

(c) general working capital needs, including operational expenses, administrative costs, and maintenance of adequate cash reserves to support the Company's growth trajectory through the next anticipated equity financing milestone.

The Company shall have broad discretion over the deployment of proceeds, and the foregoing description of intended uses shall not be construed as a binding commitment or restriction on the Company's use of funds.

4. Conversion Events

4.1 Equity Financing

The SAFE shall automatically convert into shares of the Company's preferred stock (the "Conversion Shares") upon the closing of a bona fide equity financing (an "Equity Financing") in which the Company issues and sells shares of its preferred stock to one or more investors, with aggregate gross proceeds to the Company of at least $1,000,000 (One Million Dollars), excluding for this purpose the conversion of SAFEs and any outstanding convertible notes. The Equity Financing shall be on customary institutional venture capital terms and shall be led by one or more institutional investors.

Upon conversion in connection with an Equity Financing, the SAFE holder shall receive the number of shares of the Company's preferred stock (or the series of preferred stock issued to new investors in the Equity Financing, as applicable) determined by dividing the SAFE holder's purchase amount by the applicable conversion price. The conversion price shall be the lesser of:

(a) the price per share paid by new investors in the Equity Financing; or

(b) the price per share equal to the Valuation Cap divided by the Company Capitalization (as defined in Section 2.4 above).

In no event shall the conversion price be less than zero or result in the issuance of a fractional share. Fractional shares shall be rounded down to the nearest whole share, and the Company shall pay cash in lieu of any fractional share in an amount equal to such fraction multiplied by the applicable conversion price.

4.2 Liquidity Event

In the event of a change of control (including a merger, consolidation, or sale of all or substantially all of the Company's assets) or a direct listing (collectively, a "Liquidity Event") occurring prior to the conversion of the SAFE in an Equity Financing, the SAFE holder shall have the right to elect, at its sole option, one of the following:

(a) Cash Payment. Receive a cash payment equal to the SAFE holder's purchase amount, payable upon the consummation of the Liquidity Event and subject to the priority and payment waterfall provisions of the definitive SAFE instrument; or

(b) Conversion. Convert the SAFE into shares of the Company's Common Stock at a conversion price equal to the Valuation Cap divided by the Company Capitalization, and thereafter participate in the Liquidity Event as a holder of shares of Common Stock, receiving a pro rata portion of the consideration distributed to holders of Common Stock in connection with such Liquidity Event.

The SAFE holder must notify the Company of its election in writing no later than five (5) business days prior to the anticipated closing of the Liquidity Event. If the SAFE holder fails to make a timely election, the SAFE holder shall be deemed to have elected the cash payment option described in clause (a) above.

4.3 Dissolution Event

In the event of a voluntary or involuntary dissolution, winding up, or liquidation of the Company (a "Dissolution Event"), the SAFE holder shall be entitled to receive a cash payment equal to the SAFE holder's purchase amount, payable out of the remaining assets of the Company legally available for distribution. Such payment shall be made:

(a) after the satisfaction of all debts, obligations, and liabilities of the Company to its creditors (whether secured or unsecured), including any obligations under applicable tax law; but

(b) prior to any distribution of remaining assets to holders of the Company's capital stock (whether Common Stock or preferred stock).

If the assets of the Company available for distribution to SAFE holders upon a Dissolution Event are insufficient to permit payment in full of all SAFE purchase amounts, the available assets shall be distributed among the SAFE holders on a pro rata basis in proportion to their respective purchase amounts.

5. Most Favored Nation (MFN) Provision

If, at any time following the execution of the Lead Investor's SAFE and prior to the conversion of such SAFE in an Equity Financing, the Company issues any subsequent SAFE, convertible note, or other convertible security (each, a "Subsequent Convertible Security") to any investor on terms that are more favorable to such investor than those set forth in the Lead Investor's SAFE — including, without limitation, a lower valuation cap, the inclusion of a discount rate, more favorable conversion mechanics, or additional investor rights or protections not contained in the Lead Investor's SAFE — then the Lead Investor shall have the right, upon written notice to the Company, to amend the terms of its SAFE to incorporate such more favorable terms (the "MFN Right").

The MFN Right shall apply to:

(a) SAFEs or convertible instruments issued to Co-Investors during this Round, to the extent such instruments contain terms materially different from those of the Lead Investor's SAFE; and

(b) any subsequent SAFE or convertible instrument issued by the Company at any time prior to the closing of the next Equity Financing in which the Lead Investor's SAFE converts.

The Company shall promptly notify the Lead Investor of the issuance of any Subsequent Convertible Security and provide the Lead Investor with a copy of the executed instrument and a summary of the material terms thereof. The Lead Investor shall have fifteen (15) days following receipt of such notice to exercise the MFN Right by delivering written notice to the Company. Upon exercise, the Lead Investor's SAFE shall be deemed amended to incorporate the more favorable terms as of the date of issuance of the Subsequent Convertible Security, without the need for any further action or consent.

6. Pro Rata Rights Side Letter

Concurrently with the execution of the Lead Investor's SAFE, the Company and the Lead Investor shall enter into a side letter (the "Pro Rata Rights Side Letter") pursuant to which the Company shall grant the Lead Investor the right to participate on a pro rata basis in the Company's next equity financing following the conversion of the SAFE (the "Next Equity Financing"). The Lead Investor's pro rata share shall be calculated based on its as-converted ownership percentage of the Company's fully diluted capitalization immediately following the conversion of the SAFE in the applicable Equity Financing.

The pro rata right shall entitle the Lead Investor to purchase, at the same price and on the same terms as other investors in the Next Equity Financing, up to that number of shares necessary to maintain the Lead Investor's percentage ownership of the Company on a fully diluted basis. The pro rata rights granted under the Pro Rata Rights Side Letter shall be subject to customary exceptions, including, without limitation, the following:

(a) issuances of equity securities pursuant to strategic partnerships, joint ventures, licensing arrangements, or similar commercial transactions approved by the Company's Board of Directors;

(b) issuances of debt securities or instruments convertible into equity securities in connection with bona fide lending or credit transactions;

(c) issuances of equity securities or options to employees, directors, consultants, or advisors of the Company pursuant to equity compensation plans approved by the Company's Board of Directors;

(d) issuances of equity securities in connection with a merger, acquisition, or similar business combination approved by the Company's Board of Directors; and

(e) issuances of equity securities as dividends, distributions, or in connection with stock splits, stock dividends, or similar recapitalization events.

The form and substance of the Pro Rata Rights Side Letter shall be mutually agreed upon by the parties and their respective counsel prior to closing.

7. Information Rights

Commencing upon the execution of the Lead Investor's SAFE and continuing until the earlier of (a) the conversion of the SAFE into equity securities of the Company or (b) the consummation of a Liquidity Event, the Company shall provide the Lead Investor with the following information (collectively, the "Information Rights"):

(a) Annual Financial Statements. Within ninety (90) days following the end of each fiscal year of the Company, unaudited financial statements of the Company for such fiscal year, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), applied on a consistent basis, subject to normal year-end adjustments.

(b) Quarterly Financial Summaries. Within forty-five (45) days following the end of each fiscal quarter of the Company (other than the last quarter of each fiscal year), a summary of the Company's key financial metrics for such quarter, including revenue, ending cash position, and operating expenses, presented in a format reasonably determined by the Company's management.

(c) Material Adverse Event Notices. Prompt written notice of any material adverse event affecting the Company's business, financial condition, results of operations, or product development, including, without limitation, any pending or threatened litigation, regulatory proceedings, loss of key personnel, significant customer terminations, or cybersecurity incidents, in each case to the extent the Company reasonably determines such event to be material.

The Information Rights are personal to the Lead Investor and may not be assigned or transferred without the prior written consent of the Company, except to an affiliate of the Lead Investor. The Company's obligation to provide information under this Section 7 shall terminate upon the earlier to occur of (a) the conversion of the Lead Investor's SAFE into equity securities of the Company (at which time the Lead Investor's information rights shall be governed by the terms of the applicable equity financing documents) or (b) the consummation of a Liquidity Event.

8. Company Capitalization (Summary)

The following is a summary of the Company's capitalization as of the date of this term sheet, provided for informational purposes and subject to verification during due diligence. The Company represents that the information set forth below is accurate and complete in all material respects as of the date hereof.

8.1 Pre-Round Capital Structure

Breakdown of outstanding Common Stock:

Equity Incentive Plan:

The Company has adopted the Lumos Analytics Inc. 2022 Equity Incentive Plan (the "Plan") under which a total of 1,200,000 shares of Common Stock have been reserved for issuance. As of the date of this term sheet:

• Shares subject to outstanding option grants under the Plan: 480,000 shares

• Shares available for future grants under the Plan: 720,000 shares

All option grants under the Plan are subject to standard four-year vesting schedules with a one-year cliff, unless otherwise approved by the Board of Directors.

8.2 Outstanding SAFEs (Prior Round)

The Company has previously issued SAFEs in connection with a pre-seed financing round completed in August 2022. The terms and amounts of such outstanding SAFEs are summarized below:

No other convertible instruments (including convertible notes, warrants, or other rights to acquire equity securities of the Company) are outstanding as of the date of this term sheet. The Company confirms that the pre-seed SAFEs described above were issued on the standard YC post-money SAFE form without material modification.

8.3 Board of Directors

The Company's Board of Directors is currently composed of the following three (3) members:

No changes to the composition of the Board of Directors are contemplated in connection with this Round. The Lead Investor is not seeking board representation as a condition of this financing; however, the parties acknowledge that board composition may be addressed in connection with a future Equity Financing.

9. Anticipated Co-Investors

The Company expects to close additional SAFEs with up to three (3) Co-Investors on the same material terms as the Lead Investor's SAFE, including a post-money valuation cap of $28,000,000, no discount, and the MFN provision described in Section 5. The combined additional amount to be raised from Co-Investors is approximately $3,300,000 (Three Million Three Hundred Thousand Dollars), bringing the total Round to the target aggregate SAFE amount of $6,800,000.

The Co-Investor SAFEs are expected to be executed and closed within forty-five (45) days following the execution of the Lead Investor's SAFE. The Company shall keep the Lead Investor reasonably informed of the status and progress of the Co-Investor closings and shall promptly notify the Lead Investor of the identity and commitment amounts of each Co-Investor upon the execution of each Co-Investor SAFE.

The Lead Investor acknowledges that the identities and specific commitment amounts of the Co-Investors have not been finalized as of the date of this term sheet and that the Company retains sole discretion over the selection and acceptance of Co-Investors; provided, however, that the material terms of the Co-Investor SAFEs shall not be more favorable than those of the Lead Investor's SAFE without triggering the MFN provision described in Section 5.

10. Conditions to Closing

The obligation of the Lead Investor to deliver the purchase amount and consummate the transactions contemplated by this term sheet is subject to the satisfaction or waiver (by the Lead Investor) of each of the following conditions precedent:

(a) Definitive SAFE Instrument. The execution and delivery by the Company and the Lead Investor of the definitive SAFE instrument, in form and substance satisfactory to each party and their respective counsel, reflecting the terms set forth in this term sheet and incorporating such additional provisions as are customary for instruments of this type.

(b) Pro Rata Rights Side Letter. The execution and delivery by the Company and the Lead Investor of the Pro Rata Rights Side Letter described in Section 6, in form and substance satisfactory to each party and their respective counsel.

(c) Secretary's Certificate. The delivery by the Company to the Lead Investor of a Secretary's Certificate, executed by the Secretary or an authorized officer of the Company, certifying: (i) that the Board of Directors has duly authorized the issuance of the SAFE and the execution and delivery of all related documents; (ii) the incumbency and specimen signatures of all officers authorized to execute documents on behalf of the Company in connection with the financing; and (iii) that the Company is in good standing in the State of Delaware and each other jurisdiction in which it is qualified to do business.

(d) Certificate of Good Standing. The delivery by the Company to the Lead Investor of a certificate of good standing (or equivalent document) issued by the Secretary of State of the State of Delaware, dated not more than ten (10) days prior to the closing date.

(e) Due Diligence. The satisfactory completion of the Lead Investor's legal and business due diligence review of the Company, including without limitation a review of the Company's corporate records, intellectual property portfolio, material contracts, financial records, regulatory compliance, and any pending or threatened litigation or claims. The scope and depth of such review shall be determined by the Lead Investor in its sole discretion, exercised in good faith.

(f) No Material Adverse Change. The absence of any material adverse change in the Company's business, financial condition, results of operations, assets, properties, or prospects between the date of this term sheet and the closing date. For this purpose, a "material adverse change" shall mean any event, circumstance, development, or condition that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the Company.

The foregoing conditions are for the benefit of the Lead Investor and may be waived by the Lead Investor in its sole discretion, in whole or in part, by written notice to the Company.

11. Representations and Warranties

The definitive SAFE instrument will contain customary representations and warranties of the Company for a transaction of this type and size, including, without limitation, representations and warranties as to the following matters:

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

(b) Authorization and Enforceability. The execution, delivery, and performance of the SAFE and all related agreements have been duly authorized by all necessary corporate action on the part of the Company, and the SAFE, when executed and delivered, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, and equitable principles.

(c) Capitalization. The capitalization of the Company is as described in Section 8 of this term sheet, and except as so described, there are no outstanding options, warrants, rights, or agreements to acquire any shares of the Company's capital stock or securities convertible into or exchangeable for shares of the Company's capital stock.

(d) No Conflicts. The execution, delivery, and performance of the SAFE will not (i) violate or conflict with the Company's certificate of incorporation or bylaws, (ii) violate or constitute a default under any material agreement to which the Company is a party, or (iii) violate any applicable law, rule, regulation, judgment, order, or decree binding upon the Company.

(e) intellectual Property. The Company owns or has valid licenses to all intellectual property necessary for the conduct of its business as currently conducted and as proposed to be conducted, including without limitation all technology, software, trade secrets, patents, patent applications, trademarks, and copyrights. The Company's intellectual property portfolio includes U.S. Provisional Patent Application No. 63/987,214, filed June 15, 2023, relating to the Company's core machine learning analytics technology. To the Company's knowledge, the conduct of the Company's business does not infringe, misappropriate, or otherwise violate the intellectual property rights of any third party.

(f) Compliance with Laws. The Company is in compliance in all material respects with all applicable federal, state, and local laws, rules, regulations, and orders, including without limitation those relating to data privacy, information security, employment, and taxation.

(g) Accuracy of Information. All information provided by the Company to the Lead Investor in connection with this financing, including the Company's business plan, financial projections, capitalization summary, and due diligence materials, is accurate and complete in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading.

The specific language and scope of the representations and warranties shall be set forth in the definitive SAFE instrument and shall be subject to negotiation between the parties and their respective counsel.

12. Governing Law; Dispute Resolution

The definitive SAFE instrument, the Pro Rata Rights Side Letter, and all ancillary agreements entered into in connection with this financing shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would cause the application of the laws of any other jurisdiction. This Section 12 is a binding provision of this term sheet.

Any dispute, controversy, or claim arising out of or relating to the definitive SAFE, the Pro Rata Rights Side Letter, or any ancillary agreement, including any dispute regarding the breach, termination, or validity thereof, shall be submitted to and resolved exclusively in the state or federal courts located in the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of such courts for purposes of any such dispute and waives any objection to the laying of venue in such courts, including any objection based on the doctrine of forum non conveniens.

13. Confidentiality

This Section 13 is a binding provision of this term sheet.

Each party agrees to keep the terms and conditions of this term sheet, the existence of the proposed transaction, and all information exchanged in connection with the negotiation of this term sheet and the definitive SAFE (collectively, "Confidential Information") strictly confidential and not to disclose such Confidential Information to any third party without the prior written consent of the other party, except as follows:

(a) each party may disclose Confidential Information to its officers, directors, employees, advisors, legal counsel, accountants, and affiliates who have a bona fide need to know such information in connection with the evaluation and negotiation of the proposed transaction, provided that such recipients are bound by obligations of confidentiality no less restrictive than those set forth herein;

(b) each party may disclose Confidential Information to the extent required by applicable law, regulation, or legal process, provided that the disclosing party provides the other party with prompt written notice of such requirement (to the extent permitted by law) and reasonably cooperates with the other party's efforts to obtain a protective order or other appropriate remedy; and

(c) each party may disclose the existence (but not the specific terms) of the proposed transaction to its limited partners, fund investors, or similar stakeholders in the ordinary course of its investment reporting obligations.

The confidentiality obligations set forth in this Section 13 shall survive any termination of discussions between the parties and shall remain in effect for a period of two (2) years from the date of this term sheet, regardless of whether the proposed transaction is consummated.

14. Exclusivity

This Section 14 is a binding provision of this term sheet.

For a period of thirty (30) days from the date of this term sheet (the "Exclusivity Period"), the Company agrees that it shall not, and shall cause its officers, directors, employees, advisors, and agents not to, directly or indirectly:

(a) solicit, initiate, or knowingly encourage any inquiry, proposal, or offer from any third party relating to any equity financing, convertible debt financing, merger, acquisition, recapitalization, or similar transaction (each, an "Alternative Transaction");

(b) participate in, engage in, or continue any discussions or negotiations with any third party regarding any Alternative Transaction;

(d) enter into any letter of intent, term sheet, memorandum of understanding, agreement in principle, or definitive agreement with any third party with respect to any Alternative Transaction.

Notwithstanding the foregoing, the Exclusivity Period shall not restrict the Company from (i) responding to unsolicited inbound inquiries solely to inform the inquiring party of the Company's exclusivity obligations, or (ii) engaging in discussions with potential Co-Investors for this Round on the terms contemplated by this term sheet, provided that such discussions are conducted in coordination with and with the knowledge of the Lead Investor.

The Exclusivity Period may be extended by mutual written consent of the Company and the Lead Investor. If the definitive SAFE instrument has not been executed by the expiration of the Exclusivity Period, the exclusivity obligations set forth in this Section 14 shall automatically terminate, and the Company shall be free to pursue alternative financing arrangements without restriction.

15. Expenses

Each party shall bear its own legal fees, advisory fees, and out-of-pocket expenses incurred in connection with the negotiation, preparation, and execution of this term sheet, the definitive SAFE instrument, and all related agreements, regardless of whether the proposed transaction is consummated.

The Company's engagement of Calderwood & Harkness LLP as issuer's counsel in connection with this financing is subject to a fee cap of $95,000 (Ninety-Five Thousand Dollars) for legal fees (exclusive of disbursements and out-of-pocket costs), as established between the Company and Calderwood & Harkness LLP in a separate engagement letter. The Lead Investor shall not be responsible for any portion of the Company's legal fees or expenses.

16. Non-Binding Nature

Except for the provisions set forth in the sections titled "Confidentiality" (Section 13), "Exclusivity" (Section 14), and "Governing Law" (Section 12), this term sheet is non-binding in its entirety and does not create any legally enforceable obligation on the part of either party to consummate the proposed transaction, to negotiate in good faith toward a definitive agreement, or to take or refrain from taking any action with respect thereto.

Either party may terminate discussions relating to the proposed transaction at any time prior to the execution and delivery of a definitive SAFE instrument, for any reason or for no reason, without liability to the other party, except with respect to obligations arising under the binding provisions of this term sheet.

No binding obligation of any party with respect to the financing described herein shall arise until the execution and delivery of the definitive SAFE instrument and all related ancillary documents by all parties thereto. No oral or written communication between the parties prior to the execution of the definitive documents shall be construed as creating any binding obligation or commitment, except as expressly set forth in the binding provisions of this term sheet.

17. Expiration

This term sheet shall expire automatically and be of no further force or effect if it has not been accepted and countersigned by the Lead Investor on or before September 5, 2023, unless such date is extended by mutual written agreement of the parties. Upon expiration, neither party shall have any obligation to the other with respect to the proposed transaction, except that the binding provisions of this term sheet (Sections 12, 13, and 14) shall survive such expiration in accordance with their terms.

[SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the parties have executed this Non-Binding Term Sheet as of the date first written above.

FOR THE COMPANY:

LUMOS ANALYTICS INC.

By: ________

Name: Priya Narasimhan

Title: Co-Founder, CEO & President

Date: ________

ACKNOWLEDGED AND AGREED (Non-Binding, except as to Sections 12, 13, and 14)

FOR THE LEAD INVESTOR:

VANTAGE PEAK VENTURES FUND II, L.P.

By: Vantage Peak Capital Management LLC, its General Partner

By: ________

Name: Samantha Reyes

Title: Principal

Date: ________

[End of Term Sheet]

Prepared by Calderwood & Harkness LLP, Issuer's Counsel Matter No. 1008-00003 Drafter: Omar Siddiqui, Associate

Investor	SAFE Amount	Pro Forma Ownership (%)
Vantage Peak Ventures Fund II, L.P.	$3,500,000	12.50%
Co-Investors (aggregate)	$3,300,000	11.79%
Total New Investor Ownership	$6,800,000	24.29%
Category	Shares
Authorized shares of Common Stock	10,000,000
Issued and outstanding shares of Common Stock	8,600,000
Stockholder	Title / Role	Shares Held
Priya Narasimhan	Co-Founder, CEO & President	4,200,000
Elliot Marsh	Co-Founder, CTO	3,800,000
Danielle Okoye	CFO	600,000
Total Outstanding	8,600,000
Investor	SAFE Amount	Valuation Cap (Post-Money)
Ridgeline Angel Fund, L.P.	$500,000	$8,000,000
Individual angel investors (3 investors, aggregate)	$700,000	$8,000,000
Total Outstanding Pre-Seed SAFEs	$1,200,000
Director	Position
Priya Narasimhan	Chair of the Board
Elliot Marsh	Director
Kenji Watanabe	Independent Director

CONFIDENTIAL
NON-BINDING TERM SHEET
Proposed SAFE Financing
Lumos Analytics Inc.
August 25, 2023
This term sheet summarizes the principal terms of a proposed Simple Agreement for Future Equity ("SAFE") financing by Lumos Analytics Inc. (the "Company"). This term sheet is for discussion purposes only and does not constitute a binding obligation of any party except as expressly set forth in the sections titled "Confidentiality," "Exclusivity," and "Governing Law." No party shall be bound by the terms set forth herein (other than those expressly binding sections) unless and until a definitive SAFE instrument and related ancillary documents are executed and delivered by all parties thereto. Any obligation of the parties to negotiate in good faith toward a definitive agreement shall not be implied from this term sheet.
Prepared by: Calderwood & Harkness LLP 555 California Street, 30th Floor San Francisco, CA 94104
Attention: Omar Siddiqui, Associate
1. Parties
1.1 Issuer / Company
Lumos Analytics Inc., a corporation organized under the laws of the State of Delaware (the "Company").
Principal Office: 340 Folsom Street, Suite 1100, San Francisco, California 94105
Date of Incorporation: January 14, 2022
Chief Executive Officer: Priya Narasimhan, Co-Founder, CEO & President
Issuer's Counsel: Calderwood & Harkness LLP, 555 California Street, 30th Floor, San Francisco, California 94104
The Company is an early-stage technology company focused on the development and commercialization of machine-learning-driven analytics solutions for the enterprise data market, including its flagship product, the Lumos Prism platform.
1.2 Lead Investor
Vantage Peak Ventures Fund II, L.P., a limited partnership organized under the laws of the State of Delaware (the "Lead Investor" or "Vantage Peak"), acting through its general partner, Vantage Peak Capital Management LLC, a Delaware limited liability company.
Principal Office: 2900 Sand Hill Road, Suite 240, Menlo Park, California 94025
Deal Lead: Samantha Reyes, Principal
Investor's Counsel: Whitfield Harte & Associates LLP, 3000 El Camino Real, Suite 500, Palo Alto, California 94306
The Lead Investor is an institutionally managed venture capital fund focused on seed and early-stage investments in enterprise software and data infrastructure companies. Vantage Peak Capital Management LLC serves as the general partner of the Lead Investor and has full authority to execute binding agreements, including SAFE instruments, on behalf of the Lead Investor.
2. Overview of the Offering
2.1 Security.  The securities to be issued in this financing shall be Post-Money SAFEs (Simple Agreements for Future Equity), based on the standard form published by Calderon Partners LLC (the "YC Standard Form"), with certain modifications as described herein (each, a "SAFE" and collectively, the "SAFEs"). The SAFEs are not debt instruments, do not bear interest, and do not have a maturity date. Each SAFE represents the right to receive equity in the Company upon the occurrence of certain triggering events, as more particularly described in Section 4 below.
2.2 Total Round Size
The target aggregate SAFE amount for this financing round (the "Round") is $6,800,000 (Six Million Eight Hundred Thousand Dollars). The Company anticipates raising the total Round from the Lead Investor and up to three (3) additional co-investors (each, a "Co-Investor" and collectively, the "Co-Investors"), with each Co-Investor executing a separate SAFE on substantially identical material terms. The Company reserves the right, in its sole discretion and subject to the Exclusivity provisions set forth in Section 14, to adjust the aggregate Round size and the number of participating Co-Investors; provided, however, that any material change to the aggregate Round size shall be communicated to the Lead Investor promptly in writing.
2.3 Lead Investor Commitment
The Lead Investor, Vantage Peak Ventures Fund II, L.P., shall commit to purchase a SAFE in the aggregate amount of $3,500,000 (Three Million Five Hundred Thousand Dollars), representing approximately 51.5% of the total Round. The full purchase amount shall be payable to the Company by wire transfer of immediately available funds at the closing of the Lead Investor's SAFE.
2.4 Post-Money Valuation Cap
The post-money valuation cap applicable to all SAFEs issued in this Round shall be $28,000,000 (Twenty-Eight Million Dollars) (the "Valuation Cap"). The Valuation Cap applies on a post-money basis, inclusive of the following:
(a) all SAFEs issued in this Round (including the Lead Investor SAFE and all Co-Investor SAFEs);
(b) all outstanding SAFEs from prior rounds of financing, including the pre-seed SAFEs described in Section 8.2 below;
(c) all issued and outstanding shares of the Company's Common Stock;
(d) all shares reserved and available for future issuance under the Company's 2022 Equity Incentive Plan (whether or not granted); and
(e) any other outstanding options, warrants, or convertible securities of the Company,
in each case, calculated as of immediately prior to the conversion of the SAFEs (the "Company Capitalization"). The Valuation Cap serves as the ceiling on the effective valuation at which the SAFEs convert into equity upon the occurrence of an Equity Financing or other conversion event, as described in Section 4 below.
2.5 discount Rate
No discount shall apply to the conversion price of the SAFEs issued in this Round. The conversion price shall be determined solely by reference to the Valuation Cap and the price per share paid by new investors in the applicable Equity Financing, as set forth in Section 4.1.
3. Key Economic Terms
3.1 Pro Forma Ownership
Upon conversion of all SAFEs issued in this Round at the Valuation Cap, and assuming the full $6,800,000 Round is subscribed at the $28,000,000 post-money Valuation Cap, the pro forma ownership percentages of the new investors, on a fully diluted basis and prior to any dilution from the next Equity Financing, are estimated as follows:
The foregoing ownership percentages are presented on an as-converted, fully diluted basis for illustrative purposes only. Actual ownership percentages at the time of conversion will depend on the Company Capitalization at such time, including any additional equity grants, changes to the option pool, or other issuances occurring between the date of this term sheet and the date of conversion.
3.2 Use of Proceeds
The Company intends to use the net proceeds from the Round for general corporate purposes, including but not limited to:
(a) continued development and enhancement of the Lumos Prism platform, the Company's flagship machine-learning analytics product, including engineering, data science, and product management expenditures;
(b) expansion of the Company's sales and marketing functions, including the hiring of additional go-to-market personnel and investment in demand generation and customer acquisition initiatives; and
(c) general working capital needs, including operational expenses, administrative costs, and maintenance of adequate cash reserves to support the Company's growth trajectory through the next anticipated equity financing milestone.
The Company shall have broad discretion over the deployment of proceeds, and the foregoing description of intended uses shall not be construed as a binding commitment or restriction on the Company's use of funds.
4. Conversion Events
4.1 Equity Financing
The SAFE shall automatically convert into shares of the Company's preferred stock (the "Conversion Shares") upon the closing of a bona fide equity financing (an "Equity Financing") in which the Company issues and sells shares of its preferred stock to one or more investors, with aggregate gross proceeds to the Company of at least $1,000,000 (One Million Dollars), excluding for this purpose the conversion of SAFEs and any outstanding convertible notes. The Equity Financing shall be on customary institutional venture capital terms and shall be led by one or more institutional investors.
Upon conversion in connection with an Equity Financing, the SAFE holder shall receive the number of shares of the Company's preferred stock (or the series of preferred stock issued to new investors in the Equity Financing, as applicable) determined by dividing the SAFE holder's purchase amount by the applicable conversion price. The conversion price shall be the lesser of:
(a) the price per share paid by new investors in the Equity Financing; or
(b) the price per share equal to the Valuation Cap divided by the Company Capitalization (as defined in Section 2.4 above).
In no event shall the conversion price be less than zero or result in the issuance of a fractional share. Fractional shares shall be rounded down to the nearest whole share, and the Company shall pay cash in lieu of any fractional share in an amount equal to such fraction multiplied by the applicable conversion price.
4.2 Liquidity Event
In the event of a change of control (including a merger, consolidation, or sale of all or substantially all of the Company's assets) or a direct listing (collectively, a "Liquidity Event") occurring prior to the conversion of the SAFE in an Equity Financing, the SAFE holder shall have the right to elect, at its sole option, one of the following:
(a) Cash Payment. Receive a cash payment equal to the SAFE holder's purchase amount, payable upon the consummation of the Liquidity Event and subject to the priority and payment waterfall provisions of the definitive SAFE instrument; or
(b) Conversion. Convert the SAFE into shares of the Company's Common Stock at a conversion price equal to the Valuation Cap divided by the Company Capitalization, and thereafter participate in the Liquidity Event as a holder of shares of Common Stock, receiving a pro rata portion of the consideration distributed to holders of Common Stock in connection with such Liquidity Event.
The SAFE holder must notify the Company of its election in writing no later than five (5) business days prior to the anticipated closing of the Liquidity Event. If the SAFE holder fails to make a timely election, the SAFE holder shall be deemed to have elected the cash payment option described in clause (a) above.
4.3 Dissolution Event
In the event of a voluntary or involuntary dissolution, winding up, or liquidation of the Company (a "Dissolution Event"), the SAFE holder shall be entitled to receive a cash payment equal to the SAFE holder's purchase amount, payable out of the remaining assets of the Company legally available for distribution. Such payment shall be made:
(a) after the satisfaction of all debts, obligations, and liabilities of the Company to its creditors (whether secured or unsecured), including any obligations under applicable tax law; but
(b) prior to any distribution of remaining assets to holders of the Company's capital stock (whether Common Stock or preferred stock).
If the assets of the Company available for distribution to SAFE holders upon a Dissolution Event are insufficient to permit payment in full of all SAFE purchase amounts, the available assets shall be distributed among the SAFE holders on a pro rata basis in proportion to their respective purchase amounts.
5. Most Favored Nation (MFN) Provision
If, at any time following the execution of the Lead Investor's SAFE and prior to the conversion of such SAFE in an Equity Financing, the Company issues any subsequent SAFE, convertible note, or other convertible security (each, a "Subsequent Convertible Security") to any investor on terms that are more favorable to such investor than those set forth in the Lead Investor's SAFE — including, without limitation, a lower valuation cap, the inclusion of a discount rate, more favorable conversion mechanics, or additional investor rights or protections not contained in the Lead Investor's SAFE — then the Lead Investor shall have the right, upon written notice to the Company, to amend the terms of its SAFE to incorporate such more favorable terms (the "MFN Right").
The MFN Right shall apply to:
(a) SAFEs or convertible instruments issued to Co-Investors during this Round, to the extent such instruments contain terms materially different from those of the Lead Investor's SAFE; and
(b) any subsequent SAFE or convertible instrument issued by the Company at any time prior to the closing of the next Equity Financing in which the Lead Investor's SAFE converts.
The Company shall promptly notify the Lead Investor of the issuance of any Subsequent Convertible Security and provide the Lead Investor with a copy of the executed instrument and a summary of the material terms thereof. The Lead Investor shall have fifteen (15) days following receipt of such notice to exercise the MFN Right by delivering written notice to the Company. Upon exercise, the Lead Investor's SAFE shall be deemed amended to incorporate the more favorable terms as of the date of issuance of the Subsequent Convertible Security, without the need for any further action or consent.
6. Pro Rata Rights Side Letter
Concurrently with the execution of the Lead Investor's SAFE, the Company and the Lead Investor shall enter into a side letter (the "Pro Rata Rights Side Letter") pursuant to which the Company shall grant the Lead Investor the right to participate on a pro rata basis in the Company's next equity financing following the conversion of the SAFE (the "Next Equity Financing"). The Lead Investor's pro rata share shall be calculated based on its as-converted ownership percentage of the Company's fully diluted capitalization immediately following the conversion of the SAFE in the applicable Equity Financing.
The pro rata right shall entitle the Lead Investor to purchase, at the same price and on the same terms as other investors in the Next Equity Financing, up to that number of shares necessary to maintain the Lead Investor's percentage ownership of the Company on a fully diluted basis. The pro rata rights granted under the Pro Rata Rights Side Letter shall be subject to customary exceptions, including, without limitation, the following:
(a) issuances of equity securities pursuant to strategic partnerships, joint ventures, licensing arrangements, or similar commercial transactions approved by the Company's Board of Directors;
(b) issuances of debt securities or instruments convertible into equity securities in connection with bona fide lending or credit transactions;
(c) issuances of equity securities or options to employees, directors, consultants, or advisors of the Company pursuant to equity compensation plans approved by the Company's Board of Directors;
(d) issuances of equity securities in connection with a merger, acquisition, or similar business combination approved by the Company's Board of Directors; and
(e) issuances of equity securities as dividends, distributions, or in connection with stock splits, stock dividends, or similar recapitalization events.
The form and substance of the Pro Rata Rights Side Letter shall be mutually agreed upon by the parties and their respective counsel prior to closing.
7. Information Rights
Commencing upon the execution of the Lead Investor's SAFE and continuing until the earlier of (a) the conversion of the SAFE into equity securities of the Company or (b) the consummation of a Liquidity Event, the Company shall provide the Lead Investor with the following information (collectively, the "Information Rights"):
(a) Annual Financial Statements. Within ninety (90) days following the end of each fiscal year of the Company, unaudited financial statements of the Company for such fiscal year, including a balance sheet, income statement, and statement of cash flows, prepared in accordance with generally accepted accounting principles in the United States ("GAAP"), applied on a consistent basis, subject to normal year-end adjustments.
(b) Quarterly Financial Summaries. Within forty-five (45) days following the end of each fiscal quarter of the Company (other than the last quarter of each fiscal year), a summary of the Company's key financial metrics for such quarter, including revenue, ending cash position, and operating expenses, presented in a format reasonably determined by the Company's management.
(c) Material Adverse Event Notices. Prompt written notice of any material adverse event affecting the Company's business, financial condition, results of operations, or product development, including, without limitation, any pending or threatened litigation, regulatory proceedings, loss of key personnel, significant customer terminations, or cybersecurity incidents, in each case to the extent the Company reasonably determines such event to be material.
The Information Rights are personal to the Lead Investor and may not be assigned or transferred without the prior written consent of the Company, except to an affiliate of the Lead Investor. The Company's obligation to provide information under this Section 7 shall terminate upon the earlier to occur of (a) the conversion of the Lead Investor's SAFE into equity securities of the Company (at which time the Lead Investor's information rights shall be governed by the terms of the applicable equity financing documents) or (b) the consummation of a Liquidity Event.
8. Company Capitalization (Summary)
The following is a summary of the Company's capitalization as of the date of this term sheet, provided for informational purposes and subject to verification during due diligence. The Company represents that the information set forth below is accurate and complete in all material respects as of the date hereof.
8.1 Pre-Round Capital Structure
Breakdown of outstanding Common Stock:
Equity Incentive Plan:
The Company has adopted the Lumos Analytics Inc. 2022 Equity Incentive Plan (the "Plan") under which a total of 1,200,000 shares of Common Stock have been reserved for issuance. As of the date of this term sheet:
•  Shares subject to outstanding option grants under the Plan: 480,000 shares
•  Shares available for future grants under the Plan: 720,000 shares
All option grants under the Plan are subject to standard four-year vesting schedules with a one-year cliff, unless otherwise approved by the Board of Directors.
8.2 Outstanding SAFEs (Prior Round)
The Company has previously issued SAFEs in connection with a pre-seed financing round completed in August 2022. The terms and amounts of such outstanding SAFEs are summarized below:
No other convertible instruments (including convertible notes, warrants, or other rights to acquire equity securities of the Company) are outstanding as of the date of this term sheet. The Company confirms that the pre-seed SAFEs described above were issued on the standard YC post-money SAFE form without material modification.
8.3 Board of Directors
The Company's Board of Directors is currently composed of the following three (3) members:
No changes to the composition of the Board of Directors are contemplated in connection with this Round. The Lead Investor is not seeking board representation as a condition of this financing; however, the parties acknowledge that board composition may be addressed in connection with a future Equity Financing.
9. Anticipated Co-Investors
The Company expects to close additional SAFEs with up to three (3) Co-Investors on the same material terms as the Lead Investor's SAFE, including a post-money valuation cap of $28,000,000, no discount, and the MFN provision described in Section 5. The combined additional amount to be raised from Co-Investors is approximately $3,300,000 (Three Million Three Hundred Thousand Dollars), bringing the total Round to the target aggregate SAFE amount of $6,800,000.
The Co-Investor SAFEs are expected to be executed and closed within forty-five (45) days following the execution of the Lead Investor's SAFE. The Company shall keep the Lead Investor reasonably informed of the status and progress of the Co-Investor closings and shall promptly notify the Lead Investor of the identity and commitment amounts of each Co-Investor upon the execution of each Co-Investor SAFE.
The Lead Investor acknowledges that the identities and specific commitment amounts of the Co-Investors have not been finalized as of the date of this term sheet and that the Company retains sole discretion over the selection and acceptance of Co-Investors; provided, however, that the material terms of the Co-Investor SAFEs shall not be more favorable than those of the Lead Investor's SAFE without triggering the MFN provision described in Section 5.
10. Conditions to Closing
The obligation of the Lead Investor to deliver the purchase amount and consummate the transactions contemplated by this term sheet is subject to the satisfaction or waiver (by the Lead Investor) of each of the following conditions precedent:
(a) Definitive SAFE Instrument. The execution and delivery by the Company and the Lead Investor of the definitive SAFE instrument, in form and substance satisfactory to each party and their respective counsel, reflecting the terms set forth in this term sheet and incorporating such additional provisions as are customary for instruments of this type.
(b) Pro Rata Rights Side Letter. The execution and delivery by the Company and the Lead Investor of the Pro Rata Rights Side Letter described in Section 6, in form and substance satisfactory to each party and their respective counsel.
(c) Secretary's Certificate. The delivery by the Company to the Lead Investor of a Secretary's Certificate, executed by the Secretary or an authorized officer of the Company, certifying: (i) that the Board of Directors has duly authorized the issuance of the SAFE and the execution and delivery of all related documents; (ii) the incumbency and specimen signatures of all officers authorized to execute documents on behalf of the Company in connection with the financing; and (iii) that the Company is in good standing in the State of Delaware and each other jurisdiction in which it is qualified to do business.
(d) Certificate of Good Standing. The delivery by the Company to the Lead Investor of a certificate of good standing (or equivalent document) issued by the Secretary of State of the State of Delaware, dated not more than ten (10) days prior to the closing date.
(e) Due Diligence. The satisfactory completion of the Lead Investor's legal and business due diligence review of the Company, including without limitation a review of the Company's corporate records, intellectual property portfolio, material contracts, financial records, regulatory compliance, and any pending or threatened litigation or claims. The scope and depth of such review shall be determined by the Lead Investor in its sole discretion, exercised in good faith.
(f) No Material Adverse Change. The absence of any material adverse change in the Company's business, financial condition, results of operations, assets, properties, or prospects between the date of this term sheet and the closing date. For this purpose, a "material adverse change" shall mean any event, circumstance, development, or condition that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on the Company.
The foregoing conditions are for the benefit of the Lead Investor and may be waived by the Lead Investor in its sole discretion, in whole or in part, by written notice to the Company.
11. Representations and Warranties
The definitive SAFE instrument will contain customary representations and warranties of the Company for a transaction of this type and size, including, without limitation, representations and warranties as to the following matters:
(a) Organization and Good Standing. The Company is duly organized, validly existing, and in good standing under the laws of the State of Delaware and is duly qualified to transact business in each jurisdiction where the nature of its business or the ownership of its properties requires such qualification.
(b) Authorization and Enforceability. The execution, delivery, and performance of the SAFE and all related agreements have been duly authorized by all necessary corporate action on the part of the Company, and the SAFE, when executed and delivered, will constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, and equitable principles.
(c) Capitalization. The capitalization of the Company is as described in Section 8 of this term sheet, and except as so described, there are no outstanding options, warrants, rights, or agreements to acquire any shares of the Company's capital stock or securities convertible into or exchangeable for shares of the Company's capital stock.
(d) No Conflicts. The execution, delivery, and performance of the SAFE will not (i) violate or conflict with the Company's certificate of incorporation or bylaws, (ii) violate or constitute a default under any material agreement to which the Company is a party, or (iii) violate any applicable law, rule, regulation, judgment, order, or decree binding upon the Company.
(e) intellectual Property. The Company owns or has valid licenses to all intellectual property necessary for the conduct of its business as currently conducted and as proposed to be conducted, including without limitation all technology, software, trade secrets, patents, patent applications, trademarks, and copyrights. The Company's intellectual property portfolio includes U.S. Provisional Patent Application No. 63/987,214, filed June 15, 2023, relating to the Company's core machine learning analytics technology. To the Company's knowledge, the conduct of the Company's business does not infringe, misappropriate, or otherwise violate the intellectual property rights of any third party.
(f) Compliance with Laws. The Company is in compliance in all material respects with all applicable federal, state, and local laws, rules, regulations, and orders, including without limitation those relating to data privacy, information security, employment, and taxation.
(g) Accuracy of Information. All information provided by the Company to the Lead Investor in connection with this financing, including the Company's business plan, financial projections, capitalization summary, and due diligence materials, is accurate and complete in all material respects and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading.
The specific language and scope of the representations and warranties shall be set forth in the definitive SAFE instrument and shall be subject to negotiation between the parties and their respective counsel.
12. Governing Law; Dispute Resolution
The definitive SAFE instrument, the Pro Rata Rights Side Letter, and all ancillary agreements entered into in connection with this financing shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflicts of law that would cause the application of the laws of any other jurisdiction. This Section 12 is a binding provision of this term sheet.
Any dispute, controversy, or claim arising out of or relating to the definitive SAFE, the Pro Rata Rights Side Letter, or any ancillary agreement, including any dispute regarding the breach, termination, or validity thereof, shall be submitted to and resolved exclusively in the state or federal courts located in the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of such courts for purposes of any such dispute and waives any objection to the laying of venue in such courts, including any objection based on the doctrine of forum non conveniens.
13. Confidentiality
This Section 13 is a binding provision of this term sheet.
Each party agrees to keep the terms and conditions of this term sheet, the existence of the proposed transaction, and all information exchanged in connection with the negotiation of this term sheet and the definitive SAFE (collectively, "Confidential Information") strictly confidential and not to disclose such Confidential Information to any third party without the prior written consent of the other party, except as follows:
(a) each party may disclose Confidential Information to its officers, directors, employees, advisors, legal counsel, accountants, and affiliates who have a bona fide need to know such information in connection with the evaluation and negotiation of the proposed transaction, provided that such recipients are bound by obligations of confidentiality no less restrictive than those set forth herein;
(b) each party may disclose Confidential Information to the extent required by applicable law, regulation, or legal process, provided that the disclosing party provides the other party with prompt written notice of such requirement (to the extent permitted by law) and reasonably cooperates with the other party's efforts to obtain a protective order or other appropriate remedy; and
(c) each party may disclose the existence (but not the specific terms) of the proposed transaction to its limited partners, fund investors, or similar stakeholders in the ordinary course of its investment reporting obligations.
The confidentiality obligations set forth in this Section 13 shall survive any termination of discussions between the parties and shall remain in effect for a period of two (2) years from the date of this term sheet, regardless of whether the proposed transaction is consummated.
14. Exclusivity
This Section 14 is a binding provision of this term sheet.
For a period of thirty (30) days from the date of this term sheet (the "Exclusivity Period"), the Company agrees that it shall not, and shall cause its officers, directors, employees, advisors, and agents not to, directly or indirectly:
(a) solicit, initiate, or knowingly encourage any inquiry, proposal, or offer from any third party relating to any equity financing, convertible debt financing, merger, acquisition, recapitalization, or similar transaction (each, an "Alternative Transaction");
(b) participate in, engage in, or continue any discussions or negotiations with any third party regarding any Alternative Transaction;
(c) provide any non-public information to any third party in connection with any Alternative Transaction; or
(d) enter into any letter of intent, term sheet, memorandum of understanding, agreement in principle, or definitive agreement with any third party with respect to any Alternative Transaction.
Notwithstanding the foregoing, the Exclusivity Period shall not restrict the Company from (i) responding to unsolicited inbound inquiries solely to inform the inquiring party of the Company's exclusivity obligations, or (ii) engaging in discussions with potential Co-Investors for this Round on the terms contemplated by this term sheet, provided that such discussions are conducted in coordination with and with the knowledge of the Lead Investor.
The Exclusivity Period may be extended by mutual written consent of the Company and the Lead Investor. If the definitive SAFE instrument has not been executed by the expiration of the Exclusivity Period, the exclusivity obligations set forth in this Section 14 shall automatically terminate, and the Company shall be free to pursue alternative financing arrangements without restriction.
15. Expenses
Each party shall bear its own legal fees, advisory fees, and out-of-pocket expenses incurred in connection with the negotiation, preparation, and execution of this term sheet, the definitive SAFE instrument, and all related agreements, regardless of whether the proposed transaction is consummated.
The Company's engagement of Calderwood & Harkness LLP as issuer's counsel in connection with this financing is subject to a fee cap of $95,000 (Ninety-Five Thousand Dollars) for legal fees (exclusive of disbursements and out-of-pocket costs), as established between the Company and Calderwood & Harkness LLP in a separate engagement letter. The Lead Investor shall not be responsible for any portion of the Company's legal fees or expenses.
16. Non-Binding Nature
Except for the provisions set forth in the sections titled "Confidentiality" (Section 13), "Exclusivity" (Section 14), and "Governing Law" (Section 12), this term sheet is non-binding in its entirety and does not create any legally enforceable obligation on the part of either party to consummate the proposed transaction, to negotiate in good faith toward a definitive agreement, or to take or refrain from taking any action with respect thereto.
Either party may terminate discussions relating to the proposed transaction at any time prior to the execution and delivery of a definitive SAFE instrument, for any reason or for no reason, without liability to the other party, except with respect to obligations arising under the binding provisions of this term sheet.
No binding obligation of any party with respect to the financing described herein shall arise until the execution and delivery of the definitive SAFE instrument and all related ancillary documents by all parties thereto. No oral or written communication between the parties prior to the execution of the definitive documents shall be construed as creating any binding obligation or commitment, except as expressly set forth in the binding provisions of this term sheet.
17. Expiration
This term sheet shall expire automatically and be of no further force or effect if it has not been accepted and countersigned by the Lead Investor on or before September 5, 2023, unless such date is extended by mutual written agreement of the parties. Upon expiration, neither party shall have any obligation to the other with respect to the proposed transaction, except that the binding provisions of this term sheet (Sections 12, 13, and 14) shall survive such expiration in accordance with their terms.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Non-Binding Term Sheet as of the date first written above.
FOR THE COMPANY:
LUMOS ANALYTICS INC.
By: ________
Name: Priya Narasimhan
Title: Co-Founder, CEO & President
Date: ________
ACKNOWLEDGED AND AGREED (Non-Binding, except as to Sections 12, 13, and 14)
FOR THE LEAD INVESTOR:
VANTAGE PEAK VENTURES FUND II, L.P.
By: Vantage Peak Capital Management LLC, its General Partner
By: ________
Name: Samantha Reyes
Title: Principal
Date: ________
[End of Term Sheet]
Prepared by Calderwood & Harkness LLP, Issuer's Counsel Matter No. 1008-00003 Drafter: Omar Siddiqui, Associate
Investor | SAFE Amount | Pro Forma Ownership (%)
Vantage Peak Ventures Fund II, L.P. | $3,500,000 | 12.50%
Co-Investors (aggregate) | $3,300,000 | 11.79%
Total New Investor Ownership | $6,800,000 | 24.29%
Category | Shares
Authorized shares of Common Stock | 10,000,000
Issued and outstanding shares of Common Stock | 8,600,000
Stockholder | Title / Role | Shares Held
Priya Narasimhan | Co-Founder, CEO & President | 4,200,000
Elliot Marsh | Co-Founder, CTO | 3,800,000
Danielle Okoye | CFO | 600,000
Total Outstanding | 8,600,000
Investor | SAFE Amount | Valuation Cap (Post-Money)
Ridgeline Angel Fund, L.P. | $500,000 | $8,000,000
Individual angel investors (3 investors, aggregate) | $700,000 | $8,000,000
Total Outstanding Pre-Seed SAFEs | $1,200,000
Director | Position
Priya Narasimhan | Chair of the Board
Elliot Marsh | Director
Kenji Watanabe | Independent Director

CONFIDENTIAL

NON-BINDING TERM SHEET

FOR THE COMPANY:

LUMOS ANALYTICS INC.

FOR THE LEAD INVESTOR:

VANTAGE PEAK VENTURES FUND II, L.P.

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