Legal Pro Rata Side Letter

LEGAL PRO RATA SIDE LETTER

This Pro Rata Side Letter (the Agreement) is entered into as of Day: Month: Year: by and between Investor Name: (Investor) and Company Name: (Company).

RECITALS

WHEREAS, the Company is undertaking a proposed issuance of securities described as (Securities) in a financing to occur on or about Month: Day: Year: (Offering).

WHEREAS, the Investor is a current or prospective holder of certain securities of the Company and has requested, and the Company has agreed in certain circumstances, to grant the Investor a right to purchase additional securities on a pro rata basis to permit the Investor to maintain its proportionate ownership.

WHEREAS, the parties desire to set forth in this Agreement the terms and conditions under which the Company will provide pro rata participation rights to the Investor.

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. DEFINITIONS

For purposes of this Agreement, the following terms shall have the meanings set forth below:

(a) "Pro Rata Percentage" means the percentage set forth below representing the Investor's right to participate in future issuances, calculated as the ratio of the Investor's fully diluted ownership immediately prior to such issuance. Pro Rata Percentage:

(b) "Proposed Issuance" means any issuance by the Company of equity securities, convertible securities, options, or other securities that would dilute existing equity holders, other than Exempt Issuances (as defined below).

(c) "Exempt Issuances" shall mean (i) issuances to employees, consultants or directors pursuant to a Company equity incentive plan approved by the Board, (ii) securities issued in a bona fide strategic transaction approved by the Board, and (iii) any issuance expressly excluded in a writing signed by the Investor.

2. GRANT OF PRO RATA RIGHT

Subject to the terms and conditions of this Agreement, the Company hereby grants to the Investor the right, but not the obligation, to purchase up to the Investor's Pro Rata Percentage of any Proposed Issuance on the same economic and other material terms offered to other purchasers in such Proposed Issuance (the Pro Rata Right).

3. EXERCISE PROCEDURES

(a) The Company shall provide the Investor written notice of any Proposed Issuance (the Notice) not less than calendar days prior to the expected closing date, specifying the number, price and general terms of the securities proposed to be issued and the date by which the Investor must elect to exercise its Pro Rata Right (the Exercise Deadline).

(b) To exercise the Pro Rata Right in whole or in part, the Investor must deliver to the Company prior to the Exercise Deadline a written notice of exercise setting forth the amount to be purchased and payment in accordance with the procedures set forth in the Notice.

(c) Failure by the Investor to timely deliver a notice of exercise and payment shall be deemed a waiver of the Investor's rights with respect to such Proposed Issuance, but shall not operate as a waiver of the Investor's rights with respect to subsequent Proposed Issuances.

4. LIMITATIONS, TRANSFER AND ASSIGNMENT

(a) The Pro Rata Right is personal to the Investor and shall not be assignable except with the prior written consent of the Company, which consent shall not be unreasonably withheld, except that the Investor may assign all or a portion of its rights under this Agreement to any affiliate or to any entity that acquires all or substantially all of the Investor's assets without the Company's consent.

(b) The Investor's right shall terminate upon the first to occur of (i) the closing of a Qualified Public Offering (as defined below), (ii) the dissolution of the Company, or (iii) a written agreement between the parties that terminates the right. For the purposes of this Agreement, "Qualified Public Offering" means an offering resulting in aggregate gross proceeds to the Company of at least .

5. REPRESENTATIONS AND WARRANTIES

(a) The Company represents and warrants to the Investor that: (i) it has the requisite corporate power and authority to enter into and perform this Agreement; (ii) this Agreement has been duly authorized, executed and delivered by the Company and constitutes a valid and binding obligation enforceable against the Company in accordance with its terms; and (iii) the Board of Directors has taken all necessary corporate action to approve the grant of the Pro Rata Right.

(b) The Investor represents and warrants to the Company that: (i) it has the power and authority to enter into and perform this Agreement; (ii) it is acquiring any securities pursuant to an exercise of the Pro Rata Right for investment purposes and not with a view to distribution; and (iii) the execution and performance of this Agreement does not violate any other agreement by which the Investor is bound.

6. CONFIDENTIALITY

The parties acknowledge that the terms of this Agreement and any non-public information disclosed pursuant to the exercise of the Pro Rata Right are confidential. Neither party shall disclose such information except to its employees, advisors or potential purchasers on a need-to-know basis, provided that such recipients are bound by confidentiality obligations no less restrictive than those in this Agreement or as otherwise required by law.

7. REMEDIES

The parties agree that monetary damages would be an inadequate remedy for any breach of this Agreement and that, in addition to any other remedies available at law or equity, the non-breaching party shall be entitled to injunctive relief to enforce the provisions of this Agreement without the necessity of posting bond.

8. NOTICES

All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be delivered to the addresses set forth below or to such other address as a party may designate by notice to the other in accordance with this Section. Notices shall be deemed given when delivered personally, sent by nationally recognized overnight courier, or three business days after deposit in the mail, postage prepaid, certified or registered mail, return receipt requested.

9. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of without regard to principles of conflicts of laws.

10. ENTIRE AGREEMENT

This Agreement, together with any documents referenced herein, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings and negotiations, whether written or oral, between the parties regarding such subject matter.

11. SEVERABILITY

If any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect, such provision shall be severed and the remainder of this Agreement shall remain in full force and effect to the maximum extent permitted by law.

12. AMENDMENT; WAIVER

No amendment, modification or waiver of any provision of this Agreement shall be effective unless in writing and signed by the parties hereto. No failure or delay by any party in exercising any right shall operate as a waiver of that right.

13. COUNTERPARTS

This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Signatures transmitted by electronic means shall be deemed original signatures for all purposes.

14. MISCELLANEOUS

The obligations and rights of the parties under this Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns. The headings in this Agreement are for convenience only and shall not affect interpretation.

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