Contract analysis

Section 1.1 Definitions As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" means, with respect to any specified Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such specified Person. For purposes of this definition, "control" (including the correlative terms "controlling," "controlled by," and "under com

Section 1.2 Rules of Construction Unless the context of this Agreement otherwise requires: (a) words of any gender include each other gender; (b) words using the singular or plural number also include the plural or singular number, respectively; (c) the terms "hereof," "herein," "hereby," "hereto," and derivative or similar words refer to this entire Agreement; (d) the terms "Article," "Section," "Exhibit," and "Sche

ARTICLE 2 — REGISTRATION RIGHTS

Section 2.1 Demand Registration (a) Demand Right. Subject to the conditions of this Section 2.1, at any time after the earlier of (i) the date that is five (5) years from the date of this Agreement, or (ii) the date that is one hundred eighty (180) days following the effective date of the first registration statement filed by the Company covering an underwritten initial public offering of Common Stock (the "IPO"), th

Section 2.2 Piggyback Registration (a) Company Notice. If at any time after the date of this Agreement the Company proposes to register any of its equity securities under the Securities Act (whether for the Company's own account or for the account of any other Person), on a form that would permit the registration of Registrable Securities, the Company shall give prompt written notice (each, a "Piggyback Notice") to a

Section 2.3 Form S-3 Registration (a) S-3 Right. At such time as the Company becomes eligible to use Form S-3 (or any successor form) for the registration of its securities under the Securities Act, any Major Investor may request in writing that the Company file a registration statement on Form S-3 covering the registration and sale of Registrable Securities having an anticipated aggregate offering price (net of unde

Section 2.4 Registration Procedures In connection with any registration effected pursuant to this Article 2, the Company shall: (a) prepare and file with the SEC a registration statement with respect to the Registrable Securities to be registered and use commercially reasonable efforts to cause such registration statement to become effective as soon as practicable, and prepare and file with the SEC such amendments an

Section 2.5 Registration Expenses All expenses incident to the Company's performance of or compliance with this Article 2 (collectively, "Registration Expenses") shall be borne by the Company, regardless of whether the registration statement becomes effective. Registration Expenses shall include, without limitation: (a) all SEC, stock exchange, and Financial Industry Regulatory Authority registration and filing fees;

Section 2.6 Indemnification in Connection with Registration (a) Company Indemnification of Holders. To the extent permitted by law, the Company shall indemnify and hold harmless each selling Holder, and each of its officers, directors, partners, members, managers, employees, agents, and counsel, and each Person, if any, who controls such Holder within the meaning of Section 15 of the Securities Act or Section 20 of t

Section 2.7 Rule 144 Reporting With a view to making available to the Holders the benefits of certain rules and regulations of the SEC that may permit the sale of the Registrable Securities to the public without registration, the Company shall use commercially reasonable efforts, upon becoming a reporting company under the Exchange Act, to: (a) make and keep available adequate current public information with respect

Section 2.8 Lockup Agreement Each Holder agrees that, upon the request of the Company or the managing underwriter(s) in connection with the IPO, such Holder shall enter into a customary lockup agreement pursuant to which such Holder shall agree not to sell, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale o

Section 2.9 Transfer of Registration Rights The rights granted to any Holder under this Article 2 may be assigned and transferred by such Holder to (a) any Affiliate of such Holder, or (b) a transferee or assignee who acquires at least shares of Registrable Securities (as adjusted for stock splits, stock dividends, combinations, recapitalizations, and similar events); provided, however, that (i) the Company is given

Section 2.10 Termination of Registration Rights The registration rights granted under this Article 2 shall terminate and be of no further force and effect on the earliest to occur of the following: (a) the date that is five (5) years after the effective date of the Company's IPO; (b) with respect to any particular Holder, the date on which such Holder can sell all of its Registrable Securities in a single transaction

ARTICLE 3 — INFORMATION RIGHTS

Section 3.1 Quarterly Financial Statements The Company shall deliver to each Major Investor, within days after the end of each fiscal quarter (other than the fourth fiscal quarter), unaudited financial statements of the Company for such fiscal quarter, consisting of a balance sheet as of the end of such quarter and statements of income and cash flows for such quarter and for the year-to-date period then ended. Such f

Section 3.2 Annual Financial Statements The Company shall deliver to each Major Investor, within days after the end of each fiscal year, audited annual financial statements of the Company for such fiscal year, consisting of a balance sheet as of the end of such fiscal year and statements of income, cash flows, and stockholders' equity for such fiscal year. Such annual financial statements shall be prepared in accorda

Section 3.3 Monthly Management Reports The Company shall deliver to each Major Investor, within days after the end of each calendar month, a monthly management report, which shall include: (a) a summary income statement for such month and year-to-date; (b) a cash flow report for such month and year-to-date, together with the Company's cash and cash equivalents balance as of the end of such month; (c) key operating me

Section 3.4 Annual Budget At least thirty (30) days prior to the beginning of each fiscal year, the Company shall deliver to each Major Investor an annual operating budget for such upcoming fiscal year, as approved by the Board of Directors (or such committee thereof to which such authority has been delegated). The annual operating budget shall include projected revenue, operating expenses (by major category), capita

Section 3.5 Inspection Rights Each Major Investor (or its duly authorized representative, which may include accountants, auditors, or financial advisors) shall have the right to visit and inspect the Company's properties, examine its books of account and records, and discuss the Company's affairs, finances, and accounts with its officers and independent certified public accountants, at such reasonable times during no

Section 3.6 Confidentiality All information provided to the Investors or Major Investors pursuant to this Article 3 (collectively, "Confidential Information") shall be treated as confidential information of the Company and shall not be disclosed to any third party without the prior written consent of the Company; provided, however, that such Confidential Information may be disclosed: (a) to the Investor's partners, m

Section 3.7 Termination of Information Rights The obligations of the Company under this Article 3 shall terminate upon the earliest to occur of: (a) the effective date of the Company's IPO; (b) the consummation of a Deemed Liquidation Event (as defined in the Certificate of Incorporation); or (c) with respect to any particular Major Investor, the date on which such Major Investor ceases to hold at least shares of Pre

ARTICLE 4 — PROTECTIVE PROVISIONS AND CONSENT RIGHTS

Section 4.1 Actions Requiring Approval of Requisite Holders The Company shall not, directly or indirectly, without first obtaining the prior written consent or affirmative vote of the Requisite Holders (i.e., the holders of at least a majority of the then-outstanding shares of Preferred Stock, voting together as a single class on an as-converted to Common Stock basis), take any of the following actions: (a) amend, al

Section 4.2 Additional Series D Consent Rights In addition to the consent rights set forth in Section 4.1 and any other consent rights provided under the Certificate of Incorporation, the Company shall not, directly or indirectly, without first obtaining the prior written consent of the Series D Investor (for so long as the Series D Investor holds at least fifty percent (50%) of the shares of Series D Preferred Stock

Section 4.3 Existing Credit Facility Acknowledgment The Parties acknowledge and agree that, as of the date of this Agreement, the Company is party to a revolving credit facility with Pacific Summit Bank, N.A. (350 California Street, San Francisco, CA 94104), providing for aggregate commitments of $10,000,000, of which $6,200,000 was drawn as of March 31, 2022 (the "Existing Credit Facility"). The Existing Credit Faci

Section 5.1 Cumulative Dividends on Series D Preferred Stock (a) Accrual. The holders of Series D Preferred Stock shall be entitled to receive cumulative dividends at the rate of eight percent (8%) per annum of the Series D Original Issue Price ($4.00 per share), accruing from the date of issuance of such shares, The annual cumulative dividend accrual on the aggregate Series D investment shall be $4,800,000 per year

Section 5.2 Existing Series Dividends For the avoidance of doubt, the Series A Preferred Stock, Series B Preferred Stock, and Series C Preferred Stock shall continue to have the dividend rights set forth in the Certificate of Incorporation as in effect immediately prior to the Series D closing. Nothing in this Agreement shall be construed to alter, amend, or diminish such dividend rights, except to the extent that th

ARTICLE 6 — LIQUIDATION PREFERENCE

Section 6.1 Series D Liquidation Preference (a) Preference Amount. In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, or any Deemed Liquidation Event, each holder of outstanding shares of Series D Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of Com

Section 6.2 Payment Priority In the event of any liquidation, dissolution, winding up of the Company, or Deemed Liquidation Event, after payment of all debts and liabilities of the Company, distributions of the remaining assets of the Company legally available for distribution to stockholders shall be made in the following order of priority: Second, to the holders of Series B Preferred Stock, until each holder has re

Section 6.3 Insufficient Assets If, upon any liquidation, dissolution, winding up of the Company, or Deemed Liquidation Event, the assets of the Company available for distribution to stockholders are insufficient to pay all liquidation preferences in full in accordance with Section 6.2, then distributions shall be made to the holders of each series of Preferred Stock in order of seniority as set forth in Section 6.2