Contract analysis

I. PURPOSE This memorandum formally documents the change of Matter No. 1002-00004 to dormant status effective December 1, 2022. It has been prepared for internal file closure and hold purposes in accordance with Calderwood & Harkness LLP's matter administration policies. The purpose of this memorandum is threefold. First, it provides a comprehensive summary of the transaction history from engagement through the prese

II. TRANSACTION SUMMARY A. Parties. Client / Investor. Pinnacle Venture Fund II LP, a Delaware limited partnership (EIN: 84-3921057), acting through its general partner, Pinnacle Capital Management LLC, a Delaware limited liability company (EIN: 84-2817634). Pinnacle Capital Management LLC serves as the sole general partner of the Fund and is authorized to make investment decisions and enter into binding agreements o

III. TIMELINE OF KEY EVENTS The following is a chronological summary of all significant events from the opening of the matter through the formal change to dormant status. This timeline has been compiled from engagement records, internal correspondence, document metadata, and contemporaneous file notes. April 19, 2022. Matter No. 1002-00004 was opened in Calderwood & Harkness's matter management system. Pinnacle Ventu

IV. UNRESOLVED COMMERCIAL TERMS AT TIME OF DORMANCY As of the date the matter was placed on dormant status, the following material commercial terms remained unresolved between the parties. These open issues were the proximate cause of the parties' inability to reach a definitive agreement. A. Valuation Gap The central and most significant unresolved issue is the sixty million dollar ($60,000,000) gap between the part

V. STATUS OF TRANSACTION DOCUMENTS No transaction documents were executed in connection with the proposed Series D investment. All documents prepared by Calderwood & Harkness remain in draft or markup form. The following tables summarize the status of all transaction documents as of the date of dormancy. A. Pre-Signing / Term Sheet Phase Documents The Exclusivity Agreement and its two amendments are the only document

VI. VERDANA KEY FINANCIAL DATA (DILIGENCE SUMMARY) The following is a summary of Verdana Software, Inc.'s key financial and operating metrics as reflected in the diligence materials reviewed by Calderwood & Harkness during the engagement. All financial data is as of the most recent available period (Q1 2022 / March 31, 2022) unless otherwise noted. This data is drawn from the legal due diligence summary memorandum de

VII. FEE SUMMARY A. Engagement Terms Calderwood & Harkness's engagement in this matter was governed by the engagement letter dated April 19, 2022, executed by Harrison Wexford on behalf of the firm and by Marcus Trejo on behalf of Pinnacle Capital Management LLC, as general partner of Pinnacle Venture Fund II LP. The engagement was structured on an hourly billing basis. The applicable billing rates for each member of

VIII. COMPLETE FILE INVENTORY The following is a complete inventory of all documents contained in the file for Matter No. 1002-00004. The inventory is organized by document category and includes all engagement materials, term sheet phase documents, diligence memoranda, transaction document drafts, internal analyses, correspondence, and administrative records. All documents are maintained in Calderwood & Harkness's do

IX. RECOMMENDATIONS FOR DORMANCY PERIOD A. File Preservation All documents comprising the file for Matter No. 1002-00004, as identified in the complete file inventory set forth in Section VIII above, are to be preserved in Calderwood & Harkness's document management system under the designated matter number. No documents are to be destroyed, deleted, or removed from the matter file during the dormancy period, consist

X. CONCLUSION Matter No. 1002-00004 is formally placed on dormant status effective December 1, 2022. The principal facts and conclusions of this memorandum are summarized as follows: Total legal fees incurred through December 1, 2022 are three hundred eighty-seven thousand five hundred dollars ($387,500), which is within the initial fee estimate of $350,000 to $450,000 provided at the commencement of the engagement.

1. Valuation: An unresolved sixty million dollar ($60,000,000) gap between Pinnacle's proposed pre-money valuation of $260,000,000 and Verdana's proposed pre-money valuation of $320,000,000.

2. Liquidation Preference: Disagreement over a 1.5x non-participating liquidation preference (Pinnacle's position) versus a 1.0x non-participating liquidation preference (Verdana's position).

3. Anti-Dilution: Disagreement over full-ratchet anti-dilution protection (Pinnacle's position) versus broad-based weighted average anti-dilution protection (Verdana's position).

4. Drag-Along Rights: Disagreement over a drag-along provision triggered by majority preferred approval (Pinnacle's position) versus a drag-along provision subject to a $500,000,000 enterprise value floor (the founders' position). This memorandum and the file inventory set forth in Section VIII constitute the complete record of work product generated during the engagement. The file contains a total of thirty-six (36)