Contract analysis

1. Issuer Verdana Software, Inc., a Delaware C-corporation (the "Company"). Headquarters: 1175 NW Couch Street, Suite 800, Portland, OR 97209 Registered Agent: Cascade Systems, 1209 Orange Street, Wilmington, DE 19801 Delaware Secretary of State File Number: 6274913 Employer Identification Number (EIN): 93-1485726 Founded: 2016 Key Management: Business Description: The Company develops and markets an AI-powered suppl

2. Investor Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Investor" or "Pinnacle"). Address: 2400 Sand Hill Road, Suite 310, Menlo Park, CA 94025 General Partner: Pinnacle Capital Management LLC, a Delaware limited liability company Employer Identification Number (EIN): 84-3921057 Key Deal Professional: Marcus Trejo, Partner, Head of Growth Equity Fund Size: $850,000,000 (Fund II, 2020 vintage)

3. Type of Security Series D Preferred Stock of the Company (the "Series D Preferred Stock"), to be authorized by the filing of an Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware prior to or concurrently with the closing of the financing (the "Closing").

4. Investment Amount The aggregate investment amount shall be Sixty Million Dollars ($60,000,000) (the "Investment Amount"), to be provided by a single investor, Pinnacle Venture Fund II LP, in a single closing.

5. Pre-Money Valuation The pre-money valuation of the Company shall be Two Hundred Sixty Million Dollars ($260,000,000) on a fully diluted basis, resulting in a post-money valuation of Three Hundred Twenty Million Dollars ($320,000,000) (i.e., $260,000,000 + $60,000,000 = $320,000,000). For purposes of determining the pre-money valuation, the fully diluted shares outstanding of the Company immediately prior to the Cl

6. Price Per Share The purchase price per share of Series D Preferred Stock shall be $3.25 (the "Original Issue Price"), calculated as follows: $260,000,000 (pre-money valuation) ÷ 80,000,000 (fully diluted shares) = $3.25 per share

7. Shares Issued The number of shares of Series D Preferred Stock to be issued to Pinnacle at the Closing shall be approximately 18,461,538 shares, calculated as follows: $60,000,000 (aggregate investment) ÷ $3.25 (price per share) = 18,461,538 shares (rounded to the nearest whole share)

8. Post-Closing Ownership Following the Closing, Pinnacle's ownership of the Company shall be approximately 18.75% of the fully diluted capitalization, calculated as follows: 18,461,538 Series D shares ÷ 98,461,538 total fully diluted shares = approximately 18.75% The total post-closing fully diluted share count of 98,461,538 shares consists of the 80,000,000 pre-closing fully diluted shares plus the 18,461,538 newly

9. Pre-Investment Capitalization Table (Reference) The following table sets forth the Company's capitalization on a fully diluted basis immediately prior to the proposed investment. The Company represents that the information below is complete and accurate as of the date of this term sheet. The Company shall deliver to Pinnacle prior to Closing a fully updated capitalization table verified by Company counsel, reflect

10. Option Pool The Company's existing ESOP consists of 12,000,000 shares of common stock reserved for issuance to employees, directors, consultants, and advisors pursuant to the Company's equity incentive plan. Any increase to the option pool prior to or in connection with the Closing shall be treated as included in the pre-money capitalization for purposes of calculating the Series D price per share and Pinnacle's

11. Dividends Holders of Series D Preferred Stock shall be entitled to receive cumulative dividends at a rate of eight percent (8%) per annum on the Original Issue Price of $3.25 per share (equivalent to $0.26 per share per annum), accruing from the date of issuance of the Series D Preferred Stock. Dividends shall be non-compounding. Dividends shall be payable when, as, and if declared by the Board of Directors of th

12. Liquidation Preference In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, or upon the occurrence of any Deemed Liquidation Event (as defined in Section 13 below), the holders of Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution or payment to holders of common stock or any class or series of preferred stock

13. Deemed Liquidation Events Each of the following events shall be treated as a liquidation event for purposes of the Liquidation Preference (each, a "Deemed Liquidation Event"): (a) A merger, consolidation, or other business combination of the Company with or into another entity in which the stockholders of the Company immediately prior to such transaction do not retain a majority of the voting power of the survivi

14. Conversion Optional Conversion. Each share of Series D Preferred Stock shall be convertible at any time, at the option of the holder thereof, into shares of common stock of the Company at the then-applicable conversion rate. The initial conversion rate shall be one-to-one (1:1) (i.e., each share of Series D Preferred Stock shall initially be convertible into one share of common stock), subject to adjustment for a

15. Anti-Dilution Protection Full-Ratchet Anti-Dilution Adjustment. If at any time after the Closing, the Company issues or sells (or is deemed to have issued or sold) additional shares of common stock or securities convertible into or exercisable for shares of common stock (collectively, "Additional Shares") at an effective per-share price that is lower than the then-applicable Series D conversion price, the Series

16. Voting Rights Each holder of Series D Preferred Stock shall be entitled to the number of votes equal to the number of shares of common stock into which such holder's shares of Series D Preferred Stock are then convertible, and shall vote together with holders of common stock as a single class on all matters submitted to a vote of the stockholders of the Company. In addition to the foregoing, holders of Series D P

17. Protective Provisions (Series D Consent Rights) The Company shall not, without the prior written consent of the holders of a majority of the then-outstanding shares of Series D Preferred Stock (for so long as Pinnacle holds at least fifty percent (50%) of the shares of Series D Preferred Stock originally issued to Pinnacle at the Closing), take any of the following actions, whether directly or indirectly, includi

18. Board of Directors Following the Closing, the Board of Directors of the Company shall consist of seven (7) members, composed as follows: (a) Two (2) directors designated by the Founders (initially Raj Anand and Lena Kovac); (b) One (1) director designated by Ridgeline Ventures Fund III LP, as the holder of the Series A Preferred Stock (currently Priya Dasgupta); (c) One (1) director designated by Northgate Growth

19. Information Rights For so long as Pinnacle holds at least fifty percent (50%) of the shares of Series D Preferred Stock originally purchased by Pinnacle at the Closing, the Company shall deliver to Pinnacle the following information: (a) Quarterly Financial Statements. Unaudited financial statements of the Company (including a balance sheet, income statement, and statement of cash flows), prepared in accordance w

20. Registration Rights The definitive transaction documents shall provide for the following registration rights in favor of Pinnacle and, as applicable, other holders of registrable securities: Demand Registration. Pinnacle shall have the right, on up to two (2) occasions after the earlier of (i) the closing of the Company's initial public offering or (ii) five (5) years from the Closing date, to demand that the Com

21. Right of First Refusal (Pro Rata Rights) Pinnacle shall have a pro rata right of first refusal to participate in any future issuance of equity securities by the Company (each, a "New Issuance"), on the same terms and at the same price as such New Issuance, in an amount sufficient to maintain Pinnacle's percentage ownership of the Company's fully diluted capitalization immediately prior to such New Issuance. The p

22. Right of First Refusal and Co-Sale (Founder Transfers) Right of First Refusal. In the event that any founder (including Raj Anand and Lena Kovac) proposes to transfer any shares of common stock of the Company to a third party, the Company shall have a right of first refusal to purchase such shares at the price and on the terms offered by the proposed transferee. To the extent the Company does not exercise its rig

23. Drag-Along Rights If the holders of a majority of the then-outstanding shares of preferred stock of the Company (Series A, Series B, Series C, and Series D, voting together as a single class on an as-converted-to-common-stock basis) approve a Sale of the Company (as defined in the definitive documents) or an initial public offering, then all stockholders of the Company (including the founders and all other holder

24. Redemption Rights At any time on or after the fifth (5th) anniversary of the Closing date, the holders of a majority of the then-outstanding shares of Series D Preferred Stock may elect to require the Company to redeem all (but not less than all) of the outstanding shares of Series D Preferred Stock at a redemption price per share equal to the Original Issue Price ($3.25 per share) plus all accrued but unpaid div

25. Pay-to-Play Mandatory Pay-to-Play. In the event the Company consummates any subsequent financing round involving the issuance of preferred stock (a "Qualified Financing"), each holder of preferred stock (including holders of Series A, Series B, Series C, and Series D Preferred Stock) shall be required to purchase its pro rata share of the securities offered in such Qualified Financing, determined based on such ho

26. Management Rights Letter Concurrently with the Closing, the Company shall deliver to Pinnacle a management rights letter in a form reasonably acceptable to Pinnacle, granting Pinnacle (and its authorized representatives) the following rights: (a) Consultation and advice rights with respect to the Company's business operations, financial planning, and strategic direction; (b) Reasonable access to the Company's fac

27. Indemnification The Company shall, concurrently with or promptly following the Closing, enter into an indemnification agreement with Pinnacle's Board designee (and any subsequent designee), in a form reasonably acceptable to Pinnacle, providing for indemnification and advancement of expenses to the fullest extent permitted under the laws of the State of Delaware, including without limitation indemnification again

28. Conditions to Closing The obligation of Pinnacle to consummate the investment contemplated by this term sheet shall be subject to the satisfaction or waiver of each of the following conditions: (a) Due Diligence. Completion of legal, financial, technical, and business due diligence by Pinnacle and its advisors, with results satisfactory to Pinnacle in its sole discretion; (b) Definitive Documents. Negotiation, ex

29. Exclusivity Upon execution of a separate definitive exclusivity agreement (to be negotiated and executed by the parties), the Company shall agree to negotiate exclusively with Pinnacle for a period of sixty (60) days from the date of such exclusivity agreement (the "Exclusivity Period"), during which the Company shall not, directly or indirectly: (a) Solicit, initiate, encourage, or facilitate any inquiry, propos

30. Confidentiality This term sheet and all related discussions, negotiations, correspondence, and information exchanged between the parties (including, without limitation, all financial, technical, and business information of the Company disclosed to Pinnacle) shall be treated as strictly confidential and shall not be disclosed to any third party without the prior written consent of the other party, except that each

31. Fees and Expenses Each party shall bear its own legal, accounting, and advisory fees and expenses incurred in connection with the proposed transaction and the negotiation and preparation of this term sheet and the definitive transaction documents. Pinnacle's Legal Counsel: Calderwood & Harkness LLP 101 Montgomery Street, Suite 3500 San Francisco, CA 94104 Attention: Harrison Wexford, Responsible Partner Company's

32. Non-Binding Nature Except for the provisions of Section 29 (Exclusivity) (solely to the extent a separate exclusivity agreement is executed), Section 30 (Confidentiality), Section 31 (Fees and Expenses), and Section 33 (Governing Law), this term sheet is non-binding and does not constitute a commitment, obligation, or agreement to invest or lend by Pinnacle, or to issue or sell securities by the Company. No party

33. Governing Law This term sheet and the rights and obligations of the parties hereunder, and the definitive transaction documents to be entered into in connection with the proposed investment, shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to principles of conflict of laws that would result in the application of the laws of any other jurisdiction.

34. Expiration This term sheet shall expire automatically if not accepted by Verdana Software, Inc. on or before May 6, 2022 (fourteen (14) calendar days from the date hereof). If this term sheet is not accepted by such date, it shall be null and void and neither party shall have any further obligation to the other with respect to the subject matter hereof, except that the confidentiality obligations set forth in Sec