1042-00002 · Client 1042 · Closing

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CONFIDENTIAL

CALDERWOOD & HARKNESS LLP 600 Travis Street, Suite 4200 Houston, TX 77002

Matter No. 1042-00002

April 15, 2022

VIA E-MAIL AND HAND DELIVERY

Brightfield Cloud Services Inc. 4710 East Riverside Drive, Suite 210 Austin, TX 78741

Attention: Devin Mallory, Chief Executive Officer

Re: Closing of SAFE Financing Round — Brightfield Cloud Services Inc.

Dear Mr. Mallory:

Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm that the closing of the Simple Agreement for Future Equity ("SAFE") financing round by Brightfield Cloud Services Inc., a Delaware corporation ("BCS" or the "Company"), occurred on April 15, 2022 (the "Closing" or the "Closing Date"). C&H served as issuer's counsel to the Company throughout the transaction, from the commencement of our engagement through the Closing Date, pursuant to the engagement letter between C&H and the Company dated February 28, 2022 (the "Engagement Letter"). This letter (this "Closing Letter") sets forth a summary of the transaction, a description of the documents executed at or prior to closing, confirmation of the receipt of funds, a discussion of post-closing obligations, and a summary of the Company's capitalization as of the Closing Date for the Company's records.

Capitalized terms used but not otherwise defined in this Closing Letter shall have the meanings ascribed to them in the respective SAFE instruments or as otherwise set forth herein.

1. Summary of the Transaction

In connection with the Closing, the Company issued five (5) Post-Money SAFEs (Valuation Cap, No discount) to the following angel investors (each, a "Purchaser" and collectively, the "Purchasers") in the following Purchase Amounts:

The material economic terms of the SAFEs are summarized as follows:

Valuation Cap: $12,000,000 (post-money).

discount Rate: None. The SAFEs do not include a discount rate; conversion is based solely on the Valuation Cap.

Most Favored Nation ("MFN") Provision: Each SAFE includes a Most Favored Nation provision entitling each Purchaser to elect to amend the terms of such Purchaser's SAFE to incorporate any term or provision that is more favorable to a subsequent SAFE holder in the event the Company issues additional SAFEs or similar convertible instruments on more favorable terms prior to the occurrence of an Equity Financing, a Liquidity Event, or a Dissolution Event.

Equity Financing Trigger: The SAFEs will convert into shares of the Company's capital stock upon the occurrence of an "Equity Financing," defined as a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation, and which results in aggregate gross proceeds to the Company of at least $1,000,000 (excluding the conversion of the SAFEs and any other convertible instruments).

Securities Exemption: The offer and sale of the SAFEs were conducted in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D promulgated thereunder. All five Purchasers qualify as "accredited investors" within the meaning of Rule 501(a) of Regulation D. No general solicitation or general advertising (within the meaning of Rule 502(c) of Regulation D) was conducted in connection with the offer or sale of the SAFEs.

2. Executed Closing Documents

Set forth below is an itemized list of all documents executed at or prior to the Closing. Each document has been fully executed and, where applicable, delivered to the appropriate parties.

2.1 SAFE Instruments

Five (5) Post-Money SAFEs (Valuation Cap, No discount), each dated as of April 15, 2022, were executed by and between the Company and the respective Purchaser listed below:

(a) Post-Money SAFE between BCS and Lorraine Chastain — Purchase Amount: $500,000;

(b) Post-Money SAFE between BCS and Jade Peak Ventures LLC (Marshall Huang, sole member) — Purchase Amount: $400,000;

(c) Post-Money SAFE between BCS and Ariel Crest Capital LLC (Dr. Nneka Adeyemi-Foster, sole member) — Purchase Amount: $350,000;

(d) Post-Money SAFE between BCS and Samuel Kittridge — Purchase Amount: $300,000; and

(e) Post-Money SAFE between BCS and Volkov Bridge Holdings LLC (Renata Dobrynin, sole member) — Purchase Amount: $300,000.

Each SAFE is governed by the laws of the State of Delaware, without regard to conflict of laws principles. The individual Purchase Amounts correspond to the amounts set forth in Section 1 of this Closing Letter.

2.2 Pro Rata Rights Side Letters

Three (3) Pro Rata Rights Side Letters, each dated as of April 15, 2022, were executed by and between the Company and each of the following "Major Purchasers" — that is, Purchasers committing Purchase Amounts of $350,000 or more:

(a) Pro Rata Rights Side Letter between BCS and Lorraine Chastain (Purchase Amount: $500,000);

(b) Pro Rata Rights Side Letter between BCS and Jade Peak Ventures LLC / Marshall Huang (Purchase Amount: $400,000); and

(c) Pro Rata Rights Side Letter between BCS and Ariel Crest Capital LLC / Dr. Nneka Adeyemi-Foster (Purchase Amount: $350,000).

Each Pro Rata Rights Side Letter grants the respective Major Purchaser the right to participate on a pro rata basis (based on the ratio of such Major Purchaser's Purchase Amount to the aggregate Purchase Amounts of all SAFEs outstanding as of the Closing Date) in the next Equity Financing of the Company. Each Pro Rata Rights Side Letter is governed by the laws of the State of Delaware, without regard to conflict of laws principles.

2.3 Board Written Consent

An Action by Unanimous Written Consent of the Board of Directors of Brightfield Cloud Services Inc., dated as of April 4, 2022 (the "Board Consent"), was executed by all three (3) members of the Company's Board of Directors:

(a) Devin Mallory, Director;

(b) Priya Raghavan, Director; and

The Board Consent authorized the following actions, among others:

(i) the issuance of up to $2,000,000 in Post-Money SAFEs (Valuation Cap, No discount) to accredited investors;

(ii) the approval of the forms of SAFE instrument and Pro Rata Rights Side Letter, substantially in the forms presented to the Board;

(iii) the authorization of Devin Mallory, in his capacity as Chief Executive Officer, to negotiate, execute, and deliver all transaction documents and ancillary agreements in connection with the SAFE financing round on behalf of the Company;

(iv) the authorization for the Company to file a Form D with the U.S. Securities and Exchange Commission (the "SEC") in connection with the offering; and

(v) the authorization for the Company to make state securities notice filings (blue-sky filings) in the states of Texas, California, and New York, as applicable.

2.4 Secretary's Certificate

A Certificate of the Secretary of Brightfield Cloud Services Inc. (the "Secretary's Certificate") was executed by Tomás Guerrero-Vidal, in his capacity as Secretary of the Company, dated as of April 15, 2022. The Secretary's Certificate attaches true, correct, and complete copies of the following organizational documents:

(a) the Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on September 14, 2021 (Delaware Secretary of State File Number 6198274);

(b) the Bylaws of the Company, as adopted by the Board of Directors; and

The Secretary's Certificate further certifies and confirms the following:

(i) the Company is in good standing under the laws of the State of Delaware, as evidenced by a certificate of good standing obtained from the Delaware Secretary of State;

(ii) the Company is duly qualified to transact business in the State of Texas (Texas Secretary of State Filing Number 804217635); and

(iii) Devin Mallory is duly appointed and currently serving as Chief Executive Officer of the Company, with full authority to execute all transaction documents on behalf of the Company in connection with the SAFE financing round.

2.5 Founder intellectual Property Assignment Confirmations

Three (3) short-form intellectual Property Assignment Confirmations, each dated as of April 8, 2022, were executed by the Company's three founders:

(a) intellectual Property Assignment Confirmation executed by Devin Mallory;

(b) intellectual Property Assignment Confirmation executed by Priya Raghavan; and

Each intellectual Property Assignment Confirmation confirms that the Confidential Information and Invention Assignment Agreement ("CIIAA") executed by the respective founder in connection with such founder's Restricted Stock Purchase Agreement, each dated as of September 14, 2021 (the date of the Company's incorporation), remains in full force and effect and has not been amended, terminated, or otherwise modified. Each confirmation further certifies that all intellectual property developed by such founder in connection with the Company's business — including, without limitation, all rights in and to the BrightWatch platform (the Company's proprietary cloud-based IoT monitoring software) and the Company's proprietary IoT sensor hardware designs — has been duly and irrevocably assigned to the Company in accordance with the terms of the applicable CIIAA.

2.6 Accredited Investor Questionnaires

Five (5) completed Accredited Investor Questionnaires were received by the Company, one from each Purchaser (or, in the case of Purchasers investing through single-member limited liability companies, from such investing entity and its sole member, as applicable). Each questionnaire confirms the status of the respective Purchaser as an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act.

2.7 Disclosure Schedule / Company Representations

The Company delivered to the Purchasers a set of supplemental representations and disclosures (the "Disclosure Schedule"), which include representations and disclosures with respect to the following matters, among others:

(a) the Company's authorized and outstanding capitalization as of immediately prior to the Closing;

(b) ownership and assignment of intellectual property, including the BrightWatch platform and proprietary IoT sensor hardware designs;

(d) pending or threatened litigation, claims, or proceedings involving the Company; and

(e) other customary representations and disclosures regarding the Company's organization, authority, compliance with laws, tax matters, and absence of undisclosed liabilities.

3. Funding Confirmation

We confirm that all five (5) Purchase Amounts were received by the Company via wire transfer on or prior to the Closing Date, into the Company's operating account at the following depository institution:

Depository Bank: Pinehart National Bank Branch Address: 3200 South Lamar Boulevard, Austin, TX 78704 Account Designation: Operating Account Account Number Ending: x4718 ABA Routing Number: 111-907-244

Aggregate funds received by the Company: $1,850,000.

Wire transfer confirmations have been obtained and reviewed by C&H for each of the five (5) individual wire transfers corresponding to the Purchase Amounts set forth in Section 1. The Company should retain copies of the wire transfer confirmations in its corporate records.

4. Post-Closing Obligations

While the Closing has occurred and all transaction documents have been executed and delivered, the following post-closing actions remain outstanding and require timely attention by the Company (with the assistance of C&H as described below).

4.1 SEC Form D Filing

Pursuant to Rule 503 of Regulation D, the Company is required to file a notice of sale on Form D with the SEC within fifteen (15) calendar days of the first sale of securities in the offering. Because the first sale of securities occurred on the Closing Date (April 15, 2022), the Form D must be filed with the SEC no later than April 29, 2022 (the 15th day falling on a Friday; if the SEC's EDGAR system is unavailable on such date, the filing should be made on the next business day).

The Form D will be filed under Rule 506(b) of Regulation D and will reference the sale of five (5) Post-Money SAFEs in the aggregate amount of $1,850,000 to five (5) accredited investors. The following Company information will be referenced in the filing:

• Company EIN: 87-3294156

• Delaware File Number: 6198274

• Anticipated SEC File Number: 021-394782

C&H will prepare and file the Form D on behalf of the Company through the SEC's EDGAR filing system. We will circulate a draft of the Form D to the Company for review and approval prior to submission. If any information in the Form D is inaccurate or incomplete, we ask that the Company notify C&H promptly so that corrections can be made in advance of the filing deadline.

4.2 State Blue-Sky Notice Filings

In addition to the SEC Form D filing, state securities notice filings ("blue-sky filings") are required in the following jurisdictions, which correspond to the states of residence of the Purchasers:

(a) Texas — A notice filing under Section 139.16 of the Texas Securities Act is required with the Texas State Securities Board. This filing generally must be made within fifteen (15) days of the first sale of securities in Texas.

(b) California — A notice filing is required with the California Department of Financial Protection and Innovation. California requires a filing fee and a copy of the federal Form D.

(c) New York — A notice filing is required with the New York State Department of Law, Bureau of Investor Protection and Securities. New York requires a Form D filing along with a Form 99 and applicable filing fee.

C&H will prepare and file the state notice filings on behalf of the Company in each of the foregoing jurisdictions. Please note that the scope of C&H's engagement, as set forth in the Engagement Letter, covers blue-sky filings in Texas, California, and New York only. To the extent any Purchaser has a state of residence other than those listed above, or to the extent any SAFE is deemed to have been offered or sold in any additional jurisdiction, the Company should consult with counsel regarding any additional state filing obligations.

4.3 Reimbursement of Investors' Legal Fees

Pursuant to the terms agreed in the non-binding term sheet between the Company and the lead Purchasers, and as reflected in the SAFE instruments, the Company is obligated to reimburse the Purchasers for legal fees and expenses incurred by the Purchasers' counsel in connection with the negotiation and documentation of the SAFE financing round, subject to a cap of $15,000 in the aggregate. The Purchasers were represented by the following law firm:

Holloway, Fenn & Archer LLP 221 West 6th Street, Suite 1440 Austin, TX 78701

Principal Contact: Diana Whitford, Partner

We recommend that the Company contact Ms. Whitford (or her designee) to request a final invoice from Holloway, Fenn & Archer LLP and remit payment of the reimbursable legal fees promptly following receipt of such invoice. If the invoice exceeds the $15,000 cap, the Company's reimbursement obligation is limited to $15,000.

5. Capitalization Summary (Post-Closing)

For the Company's records, set forth below is a summary of the Company's capitalization as of the Closing Date, giving effect to the issuance of the SAFEs:

Authorized Capital Stock:

• Common Stock: 10,000,000 shares authorized

• Preferred Stock: None authorized

Outstanding Common Stock: 7,500,000 shares, held by the following stockholders:

Preferred Stock: No shares of preferred stock have been authorized or issued.

Equity Incentive Plan / Option Pool: No equity incentive plan has been adopted and no option pool has been established as of the Closing Date.

Outstanding Convertible Instruments: Five (5) Post-Money SAFEs with aggregate Purchase Amounts of $1,850,000, as described in Section 1 of this Closing Letter. The aggregate "SAFE Percent" represented by the outstanding SAFEs — that is, the percentage of the Company's fully diluted capitalization that the SAFE holders would receive upon conversion at the $12,000,000 post-money Valuation Cap — is approximately 15.4167% (calculated as $1,850,000 ÷ $12,000,000).

Implied Fully Diluted Share Count Upon SAFE Conversion: Based on the foregoing capitalization and assuming conversion of all outstanding SAFEs at the $12,000,000 post-money Valuation Cap, the implied fully diluted share count is approximately 8,866,995 shares, consisting of:

• Existing Common Stock: 7,500,000 shares

• Implied SAFE Conversion Shares: approximately 1,366,995 shares

Note: The foregoing capitalization summary is provided for informational purposes only and is based on the Company's capitalization as of the Closing Date. The actual number of shares issuable upon conversion of the SAFEs will depend upon the terms and pricing of the applicable Equity Financing (or other triggering event) and the Company's capitalization at the time of conversion. This summary should not be relied upon as a definitive statement of the Company's capitalization for any purpose. The Company should consult with its counsel and accountants in preparing any future capitalization table or equity compensation analysis.

6. Enclosed Materials

Enclosed with this Closing Letter, please find a USB drive containing electronic copies (PDF counterparts) of all executed closing documents, including the following:

1. Five (5) executed Post-Money SAFEs (Valuation Cap, No discount) — PDF counterparts;

2. Three (3) executed Pro Rata Rights Side Letters — PDF counterparts;

3. Action by Unanimous Written Consent of the Board of Directors, dated April 4, 2022;

4. Certificate of the Secretary, dated April 15, 2022, together with all attachments thereto (Certificate of Incorporation, Bylaws, and Board Written Consent);

5. Three (3) Founder intellectual Property Assignment Confirmations, each dated April 8, 2022;

6. Five (5) completed Accredited Investor Questionnaires;

7. Disclosure Schedule / Company Representations;

8. Wire transfer confirmations for each of the five (5) Purchase Amount wire transfers; and

9. Capitalization table reflecting the Company's pre-SAFE and post-SAFE capitalization.

We strongly recommend that the Company maintain the original executed documents, together with the enclosed electronic copies, in its permanent corporate records at its principal office located at 4710 East Riverside Drive, Suite 210, Austin, TX 78741. Proper maintenance of corporate records is essential for due diligence purposes in connection with any future financing, acquisition, or other significant corporate transaction.

7. Limitation of Engagement

The Firm's engagement in connection with the SAFE financing round is now concluded, subject only to the completion of the post-closing filings described in Section 4 above (SEC Form D filing and state blue-sky notice filings in Texas, California, and New York). Upon completion of those filings, C&H's engagement under the Engagement Letter with respect to this transaction will be fully concluded.

We wish to reiterate that the scope of C&H's engagement, as defined in the Engagement Letter, does not extend to (a) securities blue-sky filings in any jurisdiction other than Texas, California, and New York, or (b) any subsequent equity financing round, debt financing, or other capital-raising transaction by the Company. Any such matters would require a separate engagement letter between the Company and the Firm.

We recommend that the Company consult with qualified legal counsel prior to undertaking any of the following actions:

• any future issuance of securities (including additional SAFEs, convertible notes, common stock, or preferred stock);

• the adoption of an equity incentive plan or the establishment of an option pool;

• any amendment, modification, or waiver of the terms of the outstanding SAFEs or Pro Rata Rights Side Letters; and

• any change in the Company's organizational structure, including any redomiciliation, merger, acquisition, or dissolution.

Additionally, we note that the Company should maintain compliance with its ongoing corporate and franchise tax obligations in both Delaware and Texas. As a Delaware corporation, the Company is subject to the Delaware annual franchise tax, which carries a minimum annual payment of $400 (due on or before March 1 of each year). As a foreign corporation qualified to do business in Texas, the Company is subject to the Texas franchise tax; however, based on the Company's current revenue levels, the Company's revenue is below the current no-tax-due threshold of $1,230,000, and accordingly no Texas franchise tax payment is currently due. The Company should monitor its revenue levels and consult with its tax advisors to ensure timely filing and payment as the Company's business grows.

It has been a pleasure representing Brightfield Cloud Services Inc. in connection with the SAFE financing round, and we are proud to have been part of this milestone for the Company. We believe the transaction was well-structured and cleanly executed, and we are confident that the Company is well-positioned for future growth and success.

Should you have any questions regarding the Closing, the enclosed materials, or the post-closing obligations described in this letter, please do not hesitate to contact the undersigned or any member of the C&H team at any time.

We look forward to the opportunity to work with BCS again in the future.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

George Trujillo, Partner

600 Travis Street, Suite 4200 Houston, TX 77002

cc: Priya Raghavan, CTO & Co-Founder, Brightfield Cloud Services Inc. Tomás Guerrero-Vidal, COO & Co-Founder, Brightfield Cloud Services Inc. Kevin Ostrowski, Calderwood & Harkness LLP Christy Bauer, Calderwood & Harkness LLP Garrett Simmons, Calderwood & Harkness LLP

Enclosure: USB drive containing executed closing documents (as described in Section 6)

No.	Purchaser	Investing Entity / Capacity	Purchase Amount
1	Lorraine Chastain	Individual	$500,000
2	Marshall Huang	Jade Peak Ventures LLC (Texas single-member LLC)	$400,000
3	Dr. Nneka Adeyemi-Foster	Ariel Crest Capital LLC (Delaware single-member LLC)	$350,000
4	Samuel Kittridge	Individual	$300,000
5	Renata Dobrynin	Volkov Bridge Holdings LLC (New York single-member LLC)	$300,000
Aggregate Purchase Amounts	$1,850,000
Stockholder	Shares of Common Stock	Percentage of Outstanding Common Stock
Devin Mallory	3,750,000	50.00%
Priya Raghavan	2,250,000	30.00%
Tomás Guerrero-Vidal	1,500,000	20.00%
Total Outstanding	7,500,000	100.00%

CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 600 Travis Street, Suite 4200 Houston, TX 77002
Matter No. 1042-00002
April 15, 2022
VIA E-MAIL AND HAND DELIVERY
Brightfield Cloud Services Inc. 4710 East Riverside Drive, Suite 210 Austin, TX 78741
Attention: Devin Mallory, Chief Executive Officer
Re: Closing of SAFE Financing Round — Brightfield Cloud Services Inc.
Dear Mr. Mallory:
Calderwood & Harkness LLP ("C&H" or the "Firm") is pleased to confirm that the closing of the Simple Agreement for Future Equity ("SAFE") financing round by Brightfield Cloud Services Inc., a Delaware corporation ("BCS" or the "Company"), occurred on April 15, 2022 (the "Closing" or the "Closing Date"). C&H served as issuer's counsel to the Company throughout the transaction, from the commencement of our engagement through the Closing Date, pursuant to the engagement letter between C&H and the Company dated February 28, 2022 (the "Engagement Letter"). This letter (this "Closing Letter") sets forth a summary of the transaction, a description of the documents executed at or prior to closing, confirmation of the receipt of funds, a discussion of post-closing obligations, and a summary of the Company's capitalization as of the Closing Date for the Company's records.
Capitalized terms used but not otherwise defined in this Closing Letter shall have the meanings ascribed to them in the respective SAFE instruments or as otherwise set forth herein.
1. Summary of the Transaction
In connection with the Closing, the Company issued five (5) Post-Money SAFEs (Valuation Cap, No discount) to the following angel investors (each, a "Purchaser" and collectively, the "Purchasers") in the following Purchase Amounts:
The material economic terms of the SAFEs are summarized as follows:
Valuation Cap: $12,000,000 (post-money).
discount Rate: None. The SAFEs do not include a discount rate; conversion is based solely on the Valuation Cap.
Most Favored Nation ("MFN") Provision: Each SAFE includes a Most Favored Nation provision entitling each Purchaser to elect to amend the terms of such Purchaser's SAFE to incorporate any term or provision that is more favorable to a subsequent SAFE holder in the event the Company issues additional SAFEs or similar convertible instruments on more favorable terms prior to the occurrence of an Equity Financing, a Liquidity Event, or a Dissolution Event.
Equity Financing Trigger: The SAFEs will convert into shares of the Company's capital stock upon the occurrence of an "Equity Financing," defined as a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells preferred stock at a fixed pre-money valuation, and which results in aggregate gross proceeds to the Company of at least $1,000,000 (excluding the conversion of the SAFEs and any other convertible instruments).
Securities Exemption: The offer and sale of the SAFEs were conducted in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities Act"), and Rule 506(b) of Regulation D promulgated thereunder. All five Purchasers qualify as "accredited investors" within the meaning of Rule 501(a) of Regulation D. No general solicitation or general advertising (within the meaning of Rule 502(c) of Regulation D) was conducted in connection with the offer or sale of the SAFEs.
2. Executed Closing Documents
Set forth below is an itemized list of all documents executed at or prior to the Closing. Each document has been fully executed and, where applicable, delivered to the appropriate parties.
2.1 SAFE Instruments
Five (5) Post-Money SAFEs (Valuation Cap, No discount), each dated as of April 15, 2022, were executed by and between the Company and the respective Purchaser listed below:
(a) Post-Money SAFE between BCS and Lorraine Chastain — Purchase Amount: $500,000;
(b) Post-Money SAFE between BCS and Jade Peak Ventures LLC (Marshall Huang, sole member) — Purchase Amount: $400,000;
(c) Post-Money SAFE between BCS and Ariel Crest Capital LLC (Dr. Nneka Adeyemi-Foster, sole member) — Purchase Amount: $350,000;
(d) Post-Money SAFE between BCS and Samuel Kittridge — Purchase Amount: $300,000; and
(e) Post-Money SAFE between BCS and Volkov Bridge Holdings LLC (Renata Dobrynin, sole member) — Purchase Amount: $300,000.
Each SAFE is governed by the laws of the State of Delaware, without regard to conflict of laws principles. The individual Purchase Amounts correspond to the amounts set forth in Section 1 of this Closing Letter.
2.2 Pro Rata Rights Side Letters
Three (3) Pro Rata Rights Side Letters, each dated as of April 15, 2022, were executed by and between the Company and each of the following "Major Purchasers" — that is, Purchasers committing Purchase Amounts of $350,000 or more:
(a) Pro Rata Rights Side Letter between BCS and Lorraine Chastain (Purchase Amount: $500,000);
(b) Pro Rata Rights Side Letter between BCS and Jade Peak Ventures LLC / Marshall Huang (Purchase Amount: $400,000); and
(c) Pro Rata Rights Side Letter between BCS and Ariel Crest Capital LLC / Dr. Nneka Adeyemi-Foster (Purchase Amount: $350,000).
Each Pro Rata Rights Side Letter grants the respective Major Purchaser the right to participate on a pro rata basis (based on the ratio of such Major Purchaser's Purchase Amount to the aggregate Purchase Amounts of all SAFEs outstanding as of the Closing Date) in the next Equity Financing of the Company. Each Pro Rata Rights Side Letter is governed by the laws of the State of Delaware, without regard to conflict of laws principles.
2.3 Board Written Consent
An Action by Unanimous Written Consent of the Board of Directors of Brightfield Cloud Services Inc., dated as of April 4, 2022 (the "Board Consent"), was executed by all three (3) members of the Company's Board of Directors:
(a) Devin Mallory, Director;
(b) Priya Raghavan, Director; and
(c) Tomás Guerrero-Vidal, Director.
The Board Consent authorized the following actions, among others:
(i) the issuance of up to $2,000,000 in Post-Money SAFEs (Valuation Cap, No discount) to accredited investors;
(ii) the approval of the forms of SAFE instrument and Pro Rata Rights Side Letter, substantially in the forms presented to the Board;
(iii) the authorization of Devin Mallory, in his capacity as Chief Executive Officer, to negotiate, execute, and deliver all transaction documents and ancillary agreements in connection with the SAFE financing round on behalf of the Company;
(iv) the authorization for the Company to file a Form D with the U.S. Securities and Exchange Commission (the "SEC") in connection with the offering; and
(v) the authorization for the Company to make state securities notice filings (blue-sky filings) in the states of Texas, California, and New York, as applicable.
2.4 Secretary's Certificate
A Certificate of the Secretary of Brightfield Cloud Services Inc. (the "Secretary's Certificate") was executed by Tomás Guerrero-Vidal, in his capacity as Secretary of the Company, dated as of April 15, 2022. The Secretary's Certificate attaches true, correct, and complete copies of the following organizational documents:
(a) the Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on September 14, 2021 (Delaware Secretary of State File Number 6198274);
(b) the Bylaws of the Company, as adopted by the Board of Directors; and
(c) the Board Written Consent dated April 4, 2022.
The Secretary's Certificate further certifies and confirms the following:
(i) the Company is in good standing under the laws of the State of Delaware, as evidenced by a certificate of good standing obtained from the Delaware Secretary of State;
(ii) the Company is duly qualified to transact business in the State of Texas (Texas Secretary of State Filing Number 804217635); and
(iii) Devin Mallory is duly appointed and currently serving as Chief Executive Officer of the Company, with full authority to execute all transaction documents on behalf of the Company in connection with the SAFE financing round.
2.5 Founder intellectual Property Assignment Confirmations
Three (3) short-form intellectual Property Assignment Confirmations, each dated as of April 8, 2022, were executed by the Company's three founders:
(a) intellectual Property Assignment Confirmation executed by Devin Mallory;
(b) intellectual Property Assignment Confirmation executed by Priya Raghavan; and
(c) intellectual Property Assignment Confirmation executed by Tomás Guerrero-Vidal.
Each intellectual Property Assignment Confirmation confirms that the Confidential Information and Invention Assignment Agreement ("CIIAA") executed by the respective founder in connection with such founder's Restricted Stock Purchase Agreement, each dated as of September 14, 2021 (the date of the Company's incorporation), remains in full force and effect and has not been amended, terminated, or otherwise modified. Each confirmation further certifies that all intellectual property developed by such founder in connection with the Company's business — including, without limitation, all rights in and to the BrightWatch platform (the Company's proprietary cloud-based IoT monitoring software) and the Company's proprietary IoT sensor hardware designs — has been duly and irrevocably assigned to the Company in accordance with the terms of the applicable CIIAA.
2.6 Accredited Investor Questionnaires
Five (5) completed Accredited Investor Questionnaires were received by the Company, one from each Purchaser (or, in the case of Purchasers investing through single-member limited liability companies, from such investing entity and its sole member, as applicable). Each questionnaire confirms the status of the respective Purchaser as an "accredited investor" within the meaning of Rule 501(a) of Regulation D under the Securities Act.
2.7 Disclosure Schedule / Company Representations
The Company delivered to the Purchasers a set of supplemental representations and disclosures (the "Disclosure Schedule"), which include representations and disclosures with respect to the following matters, among others:
(a) the Company's authorized and outstanding capitalization as of immediately prior to the Closing;
(b) ownership and assignment of intellectual property, including the BrightWatch platform and proprietary IoT sensor hardware designs;
(c) material contracts to which the Company is a party;
(d) pending or threatened litigation, claims, or proceedings involving the Company; and
(e) other customary representations and disclosures regarding the Company's organization, authority, compliance with laws, tax matters, and absence of undisclosed liabilities.
3. Funding Confirmation
We confirm that all five (5) Purchase Amounts were received by the Company via wire transfer on or prior to the Closing Date, into the Company's operating account at the following depository institution:
Depository Bank: Pinehart National Bank Branch Address: 3200 South Lamar Boulevard, Austin, TX 78704 Account Designation: Operating Account Account Number Ending: x4718 ABA Routing Number: 111-907-244
Aggregate funds received by the Company: $1,850,000.
Wire transfer confirmations have been obtained and reviewed by C&H for each of the five (5) individual wire transfers corresponding to the Purchase Amounts set forth in Section 1. The Company should retain copies of the wire transfer confirmations in its corporate records.
4. Post-Closing Obligations
While the Closing has occurred and all transaction documents have been executed and delivered, the following post-closing actions remain outstanding and require timely attention by the Company (with the assistance of C&H as described below).
4.1 SEC Form D Filing
Pursuant to Rule 503 of Regulation D, the Company is required to file a notice of sale on Form D with the SEC within fifteen (15) calendar days of the first sale of securities in the offering. Because the first sale of securities occurred on the Closing Date (April 15, 2022), the Form D must be filed with the SEC no later than April 29, 2022 (the 15th day falling on a Friday; if the SEC's EDGAR system is unavailable on such date, the filing should be made on the next business day).
The Form D will be filed under Rule 506(b) of Regulation D and will reference the sale of five (5) Post-Money SAFEs in the aggregate amount of $1,850,000 to five (5) accredited investors. The following Company information will be referenced in the filing:
•  Company EIN: 87-3294156
•  Delaware File Number: 6198274
•  Anticipated SEC File Number: 021-394782
C&H will prepare and file the Form D on behalf of the Company through the SEC's EDGAR filing system. We will circulate a draft of the Form D to the Company for review and approval prior to submission. If any information in the Form D is inaccurate or incomplete, we ask that the Company notify C&H promptly so that corrections can be made in advance of the filing deadline.
4.2 State Blue-Sky Notice Filings
In addition to the SEC Form D filing, state securities notice filings ("blue-sky filings") are required in the following jurisdictions, which correspond to the states of residence of the Purchasers:
(a) Texas — A notice filing under Section 139.16 of the Texas Securities Act is required with the Texas State Securities Board. This filing generally must be made within fifteen (15) days of the first sale of securities in Texas.
(b) California — A notice filing is required with the California Department of Financial Protection and Innovation. California requires a filing fee and a copy of the federal Form D.
(c) New York — A notice filing is required with the New York State Department of Law, Bureau of Investor Protection and Securities. New York requires a Form D filing along with a Form 99 and applicable filing fee.
C&H will prepare and file the state notice filings on behalf of the Company in each of the foregoing jurisdictions. Please note that the scope of C&H's engagement, as set forth in the Engagement Letter, covers blue-sky filings in Texas, California, and New York only. To the extent any Purchaser has a state of residence other than those listed above, or to the extent any SAFE is deemed to have been offered or sold in any additional jurisdiction, the Company should consult with counsel regarding any additional state filing obligations.
4.3 Reimbursement of Investors' Legal Fees
Pursuant to the terms agreed in the non-binding term sheet between the Company and the lead Purchasers, and as reflected in the SAFE instruments, the Company is obligated to reimburse the Purchasers for legal fees and expenses incurred by the Purchasers' counsel in connection with the negotiation and documentation of the SAFE financing round, subject to a cap of $15,000 in the aggregate. The Purchasers were represented by the following law firm:
Holloway, Fenn & Archer LLP 221 West 6th Street, Suite 1440 Austin, TX 78701
Principal Contact: Diana Whitford, Partner
We recommend that the Company contact Ms. Whitford (or her designee) to request a final invoice from Holloway, Fenn & Archer LLP and remit payment of the reimbursable legal fees promptly following receipt of such invoice. If the invoice exceeds the $15,000 cap, the Company's reimbursement obligation is limited to $15,000.
5. Capitalization Summary (Post-Closing)
For the Company's records, set forth below is a summary of the Company's capitalization as of the Closing Date, giving effect to the issuance of the SAFEs:
Authorized Capital Stock:
•  Common Stock: 10,000,000 shares authorized
•  Preferred Stock: None authorized
Outstanding Common Stock: 7,500,000 shares, held by the following stockholders:
Preferred Stock: No shares of preferred stock have been authorized or issued.
Equity Incentive Plan / Option Pool: No equity incentive plan has been adopted and no option pool has been established as of the Closing Date.
Outstanding Convertible Instruments: Five (5) Post-Money SAFEs with aggregate Purchase Amounts of $1,850,000, as described in Section 1 of this Closing Letter. The aggregate "SAFE Percent" represented by the outstanding SAFEs — that is, the percentage of the Company's fully diluted capitalization that the SAFE holders would receive upon conversion at the $12,000,000 post-money Valuation Cap — is approximately 15.4167% (calculated as $1,850,000 ÷ $12,000,000).
Implied Fully Diluted Share Count Upon SAFE Conversion: Based on the foregoing capitalization and assuming conversion of all outstanding SAFEs at the $12,000,000 post-money Valuation Cap, the implied fully diluted share count is approximately 8,866,995 shares, consisting of:
•  Existing Common Stock: 7,500,000 shares
•  Implied SAFE Conversion Shares: approximately 1,366,995 shares
Note: The foregoing capitalization summary is provided for informational purposes only and is based on the Company's capitalization as of the Closing Date. The actual number of shares issuable upon conversion of the SAFEs will depend upon the terms and pricing of the applicable Equity Financing (or other triggering event) and the Company's capitalization at the time of conversion. This summary should not be relied upon as a definitive statement of the Company's capitalization for any purpose. The Company should consult with its counsel and accountants in preparing any future capitalization table or equity compensation analysis.
6. Enclosed Materials
Enclosed with this Closing Letter, please find a USB drive containing electronic copies (PDF counterparts) of all executed closing documents, including the following:
1.  Five (5) executed Post-Money SAFEs (Valuation Cap, No discount) — PDF counterparts;
2.  Three (3) executed Pro Rata Rights Side Letters — PDF counterparts;
3.  Action by Unanimous Written Consent of the Board of Directors, dated April 4, 2022;
4.  Certificate of the Secretary, dated April 15, 2022, together with all attachments thereto (Certificate of Incorporation, Bylaws, and Board Written Consent);
5.  Three (3) Founder intellectual Property Assignment Confirmations, each dated April 8, 2022;
6.  Five (5) completed Accredited Investor Questionnaires;
7.  Disclosure Schedule / Company Representations;
8.  Wire transfer confirmations for each of the five (5) Purchase Amount wire transfers; and
9.  Capitalization table reflecting the Company's pre-SAFE and post-SAFE capitalization.
We strongly recommend that the Company maintain the original executed documents, together with the enclosed electronic copies, in its permanent corporate records at its principal office located at 4710 East Riverside Drive, Suite 210, Austin, TX 78741. Proper maintenance of corporate records is essential for due diligence purposes in connection with any future financing, acquisition, or other significant corporate transaction.
7. Limitation of Engagement
The Firm's engagement in connection with the SAFE financing round is now concluded, subject only to the completion of the post-closing filings described in Section 4 above (SEC Form D filing and state blue-sky notice filings in Texas, California, and New York). Upon completion of those filings, C&H's engagement under the Engagement Letter with respect to this transaction will be fully concluded.
We wish to reiterate that the scope of C&H's engagement, as defined in the Engagement Letter, does not extend to (a) securities blue-sky filings in any jurisdiction other than Texas, California, and New York, or (b) any subsequent equity financing round, debt financing, or other capital-raising transaction by the Company. Any such matters would require a separate engagement letter between the Company and the Firm.
We recommend that the Company consult with qualified legal counsel prior to undertaking any of the following actions:
•  any future issuance of securities (including additional SAFEs, convertible notes, common stock, or preferred stock);
•  the adoption of an equity incentive plan or the establishment of an option pool;
•  any amendment, modification, or waiver of the terms of the outstanding SAFEs or Pro Rata Rights Side Letters; and
•  any change in the Company's organizational structure, including any redomiciliation, merger, acquisition, or dissolution.
Additionally, we note that the Company should maintain compliance with its ongoing corporate and franchise tax obligations in both Delaware and Texas. As a Delaware corporation, the Company is subject to the Delaware annual franchise tax, which carries a minimum annual payment of $400 (due on or before March 1 of each year). As a foreign corporation qualified to do business in Texas, the Company is subject to the Texas franchise tax; however, based on the Company's current revenue levels, the Company's revenue is below the current no-tax-due threshold of $1,230,000, and accordingly no Texas franchise tax payment is currently due. The Company should monitor its revenue levels and consult with its tax advisors to ensure timely filing and payment as the Company's business grows.
It has been a pleasure representing Brightfield Cloud Services Inc. in connection with the SAFE financing round, and we are proud to have been part of this milestone for the Company. We believe the transaction was well-structured and cleanly executed, and we are confident that the Company is well-positioned for future growth and success.
Should you have any questions regarding the Closing, the enclosed materials, or the post-closing obligations described in this letter, please do not hesitate to contact the undersigned or any member of the C&H team at any time.
We look forward to the opportunity to work with BCS again in the future.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
George Trujillo, Partner
600 Travis Street, Suite 4200 Houston, TX 77002
cc: Priya Raghavan, CTO & Co-Founder, Brightfield Cloud Services Inc. Tomás Guerrero-Vidal, COO & Co-Founder, Brightfield Cloud Services Inc. Kevin Ostrowski, Calderwood & Harkness LLP Christy Bauer, Calderwood & Harkness LLP Garrett Simmons, Calderwood & Harkness LLP
Enclosure: USB drive containing executed closing documents (as described in Section 6)
No. | Purchaser | Investing Entity / Capacity | Purchase Amount
1 | Lorraine Chastain | Individual | $500,000
2 | Marshall Huang | Jade Peak Ventures LLC (Texas single-member LLC) | $400,000
3 | Dr. Nneka Adeyemi-Foster | Ariel Crest Capital LLC (Delaware single-member LLC) | $350,000
4 | Samuel Kittridge | Individual | $300,000
5 | Renata Dobrynin | Volkov Bridge Holdings LLC (New York single-member LLC) | $300,000
Aggregate Purchase Amounts | $1,850,000
Stockholder | Shares of Common Stock | Percentage of Outstanding Common Stock
Devin Mallory | 3,750,000 | 50.00%
Priya Raghavan | 2,250,000 | 30.00%
Tomás Guerrero-Vidal | 1,500,000 | 20.00%
Total Outstanding | 7,500,000 | 100.00%

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