1002-00003 · Pinnacle Venture Capital Management LLC · Transaction Documents/MFN Framework

mfn-election-procedures-letter-template.docx DOCUMENT Funds

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CONFIDENTIAL

PINNACLE VENTURE CAPITAL MANAGEMENT LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025

[Date]

Instructional Note: This letter is to be dated and delivered within 15 business days after the Final Close of Pinnacle Venture Fund II LP. All bracketed placeholders must be completed prior to delivery.

[Name of Limited Partner] [Address Line 1] [Address Line 2] [City, State, Zip Code]

Attention: [Authorized Representative]

Re: Most Favored Nation Election — Pinnacle Venture Fund II LP

Dear [Authorized Representative]:

1. Introduction

Pinnacle Venture Capital Management LLC, a Delaware limited liability company (the "General Partner" or "GP"), acting in its capacity as the general partner of Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Fund"), is delivering this letter (this "Letter") to you in connection with your most favored nation election rights under your side letter agreement with the General Partner.

Reference is made to (a) the Amended and Restated Agreement of Limited Partnership of Pinnacle Venture Fund II LP, dated as of [Insert First Close Date], as the same may have been further amended, restated, supplemented, or otherwise modified from time to time (the "LPA"), and (b) the side letter agreement entered into between the General Partner, on behalf of the Fund, and [Name of Limited Partner] (the "Limited Partner" or "you"), dated as of [Insert Date] (the "Side Letter").

You are receiving this Letter because you have made a capital commitment to the Fund in the amount of $[Insert Amount] (the "Commitment"), which equals or exceeds the minimum threshold of Twenty-Five Million Dollars ($25,000,000) required for most favored nation election eligibility, as set forth in Section [__] of the Side Letter. By virtue of your Commitment meeting or exceeding such threshold, you are an eligible limited partner entitled to exercise most favored nation election rights in accordance with the terms and procedures described in this Letter.

The purpose of this Letter is to (i) deliver to you the MFN Side Letter Compilation (as defined below), (ii) deliver to you the MFN Election Form (as defined below), and (iii) describe in detail the procedures by which you may exercise your most favored nation election rights with respect to side letter provisions granted to other limited partners of the Fund, subject to the limitations and exclusions set forth herein.

2. Defined Terms

Capitalized terms used but not otherwise defined in this Letter shall have the meanings ascribed to such terms in the LPA or the Side Letter, as applicable. In the event a term is defined in both the LPA and the Side Letter, the definition set forth in the Side Letter shall govern for purposes of this Letter, unless the context otherwise requires.

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

"Election Deadline" means 5:00 p.m. (Pacific Time) on the last day of the Election Period, which is the date that is thirty (30) calendar days after the date of this Letter, i.e., [Insert Date 30 Calendar Days from Date of Letter]. If such date falls on a Saturday, Sunday, or federal holiday, the Election Deadline shall be the next succeeding business day.

"Election Period" means the thirty (30) calendar day period commencing on the date of this Letter (which is the date of delivery of the MFN Side Letter Compilation to you) and ending on the Election Deadline.

"Excluded Provisions" means those categories of side letter provisions that are not available for most favored nation election, as described in detail in Section 5 of this Letter.

"MFN Election Form" means the election form enclosed with this Letter as Exhibit B, to be completed, executed, and returned by you in accordance with the procedures described in Section 6 of this Letter.

"MFN Side Letter Compilation" means the redacted compilation of side letter provisions enclosed with this Letter as Exhibit A, prepared by the General Partner in accordance with the terms of the LPA and the applicable side letter agreements.

"MFN Supplemental Side Letter" has the meaning set forth in Section 7 of this Letter.

3. Description of the MFN Side Letter Compilation

Enclosed as Exhibit A to this Letter is the MFN Side Letter Compilation.

The MFN Side Letter Compilation sets forth, in redacted form, the material terms and provisions of the side letter agreements entered into between the General Partner, on behalf of the Fund, and other limited partners of the Fund in connection with such limited partners' respective capital commitments to the Fund. The MFN Side Letter Compilation has been prepared by the General Partner for the sole purpose of enabling eligible limited partners to review and, if they so choose, elect to receive certain of such provisions in accordance with their most favored nation election rights.

The identities of the limited partners who received such side letter agreements have been redacted from the MFN Side Letter Compilation and are not disclosed therein. In no event shall the General Partner be required to disclose the identity of any limited partner to whom a particular side letter provision was originally granted.

Excluded Provisions, as defined and described in Section 5 of this Letter, have been excluded from the MFN Side Letter Compilation and are not available for election. Accordingly, the MFN Side Letter Compilation does not purport to be a complete or exhaustive summary of all side letter terms that have been agreed upon between the General Partner and the limited partners of the Fund; rather, it includes only those provisions that are eligible for most favored nation election.

Each provision included in the MFN Side Letter Compilation is identified by a unique section reference number (e.g., "SL-1," "SL-2," etc.) for the purpose of enabling you to identify and reference the specific provisions you wish to elect when completing the MFN Election Form. You should use these section reference numbers when completing your MFN Election Form to ensure the accuracy and clarity of your elections.

Important Notice: The General Partner makes no representation or warranty, express or implied, as to the applicability, suitability, enforceability, or legal, regulatory, or tax consequences of any provision listed in the MFN Side Letter Compilation with respect to your particular circumstances, organizational structure, regulatory status, or investment objectives. Each limited partner's legal, regulatory, and tax situation is unique, and a provision that is appropriate or beneficial for one limited partner may not be appropriate or beneficial for another. You are strongly advised to consult with your own legal counsel, tax advisors, and other professional advisors before making any election under this Letter. The General Partner and the Fund shall have no liability to you arising from or relating to your election or non-election of any provision set forth in the MFN Side Letter Compilation.

4. Excluded Provisions — Provisions Not Subject to Most Favored Nation Election

The following categories of side letter provisions are "Excluded Provisions" and are not included in the MFN Side Letter Compilation and are not available for most favored nation election. The General Partner has determined, consistent with the terms of the LPA and the applicable side letter agreements, that these categories of provisions are not subject to most favored nation election rights by reason of their nature, the specific circumstances of the limited partner to which they were originally granted, or the terms of the LPA.

4.1 Legal, Regulatory, or Tax-Status Provisions

Provisions that were granted to a limited partner in order to satisfy specific legal, regulatory, or tax requirements applicable to such limited partner by reason of its particular legal status, regulatory status, organizational structure, tax classification, or jurisdictional requirements are Excluded Provisions. Such provisions were negotiated and agreed to in order to address the particular compliance obligations or legal constraints of the limited partner that originally received them and, by their nature, are not generally applicable to or appropriate for other limited partners.

By way of illustration and not limitation, examples of such Excluded Provisions include:

(a) provisions addressing public records, open meetings, or freedom-of-information obligations of governmental investors, state pension plans, or other public entities subject to state or federal sunshine or transparency laws;

(b) representations, covenants, or waivers relating to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including provisions addressing the status of the Fund's assets as "plan assets" within the meaning of the regulations issued by the U.S. Department of Labor under ERISA, or provisions addressing fiduciary duty or prohibited transaction concerns under Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code");

(c) provisions necessitated by the tax-exempt status of a particular investor under Section 501(a), Section 501(c)(3), or other applicable provisions of the Code, including provisions relating to unrelated business taxable income ("UBTI"), unrelated debt-financed income ("UDFI"), or effectively connected income ("ECI");

(d) provisions required by reason of a limited partner's status as a non-United States person, a sovereign wealth fund, a foreign governmental entity, or an entity subject to the laws or regulations of a non-U.S. jurisdiction; and

(e) provisions relating to compliance with anti-money laundering laws, sanctions regulations administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), or the Foreign Corrupt Practices Act of 1977, as amended, that are tailored to the particular circumstances or jurisdictional requirements of a specific limited partner.

4.2 Advisory Committee Seats

Rights to serve on, designate a representative to, or otherwise participate in the Fund's advisory committee (or any similar body constituted under the LPA) are Excluded Provisions. Advisory committee membership involves governance responsibilities, fiduciary considerations, and capacity limitations that render such rights unsuitable for most favored nation election. The composition of the advisory committee is determined by the General Partner in its sole discretion, as provided in the LPA.

4.3 Portfolio Company Board Observer Rights

Rights to appoint, designate, or nominate board observers, board members, or other representatives with respect to the Fund's portfolio company investments, or rights to receive information regarding the Fund's portfolio companies beyond what is generally provided to limited partners under the LPA, to the extent such rights are linked to board observation or board participation privileges, are Excluded Provisions. Such rights involve operational considerations at the portfolio company level, confidentiality obligations, and potential conflicts of interest that make them inappropriate for most favored nation election.

4.4 GP-Determined LP-Specific Terms

Any term or provision that, in the General Partner's reasonable determination, is specific to the legal, regulatory, tax, or organizational status, investment profile, or particular circumstances of the limited partner that originally received such term, and that is not reasonably applicable to the electing limited partner, is an Excluded Provision. The General Partner shall make any such determination in good faith and on a reasonable basis.

In the event that a limited partner submits an MFN Election Form electing a specific provision and the General Partner determines that such provision constitutes an Excluded Provision under this Section 4.4 with respect to the electing limited partner, the General Partner shall provide prompt written notice to the electing limited partner, together with a written explanation in reasonable detail of the basis for such determination. The electing limited partner shall have the opportunity to discuss such determination with the General Partner, but the General Partner's determination made in good faith shall be final and binding.

5. Election Procedures

5.1 Reviewing the MFN Side Letter Compilation

You should carefully review the MFN Side Letter Compilation enclosed as Exhibit A to this Letter. Each provision available for most favored nation election is listed therein with a unique section reference number (e.g., "SL-1," "SL-2," etc.) and a description of the substantive terms of such provision. You should review each available provision in the context of your own investment objectives, legal and regulatory obligations, organizational documents, and existing rights under the LPA and your Side Letter.

As noted above, you are encouraged to consult with your legal counsel and other professional advisors in connection with your review of the MFN Side Letter Compilation and any elections you may wish to make.

5.2 Completing the MFN Election Form

If you wish to exercise your most favored nation election rights, you must complete the MFN Election Form enclosed as Exhibit B to this Letter. In completing the MFN Election Form, you must:

(a) identify each provision you elect to receive by referencing the applicable section reference number from the MFN Side Letter Compilation (e.g., "SL-3," "SL-7," "SL-12");

(b) provide the information requested in the MFN Election Form, including, without limitation, the full legal name of the electing Limited Partner, the Limited Partner's capital commitment amount, the date of election, and any representations or certifications required by the MFN Election Form;

(c) execute the MFN Election Form by having it signed by a duly authorized representative of the Limited Partner who has the power and authority to bind the Limited Partner; and

(d) deliver the completed and executed MFN Election Form to the General Partner in accordance with the delivery instructions set forth in Section 5.3 below.

Incomplete, unsigned, or improperly completed MFN Election Forms may be rejected by the General Partner, and the General Partner shall have no obligation to accept or process any MFN Election Form that does not comply with the requirements set forth in this Letter. In the event the General Partner receives an MFN Election Form that is incomplete or requires clarification, the General Partner may, but shall not be obligated to, contact the submitting Limited Partner to request additional information or a corrected form; provided, however, that any such additional information or corrected form must be received by the General Partner no later than the Election Deadline.

5.3 Submission Deadline and Method

The completed and executed MFN Election Form must be received by the General Partner no later than 5:00 p.m. (Pacific Time) on the Election Deadline, which is [Insert Date 30 Calendar Days from Date of Letter]. For the avoidance of doubt, it is the date and time of receipt by the General Partner, and not the date and time of sending, that is determinative. It is the sole responsibility of the Limited Partner to ensure that the MFN Election Form is received by the General Partner by the Election Deadline.

The MFN Election Form must be delivered to the General Partner by one of the following methods:

(a) Hand Delivery or Recognized Overnight Courier Service. Delivery by hand or by a nationally recognized overnight courier service (e.g., Severin Partners LLC, Halcyon Partners LLC, Tarrant & Co.) to:

Pinnacle Venture Capital Management LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025

Attention: [Insert Authorized Person / Title]

(b) Email (PDF Format). Delivery by email in portable document format (PDF) to:

[Insert Email Address]

with a confirmation copy sent by nationally recognized overnight courier service to the address set forth in clause (a) above. The email delivery shall be deemed the effective delivery for purposes of determining timeliness; provided, however, that failure to send the confirmation copy by overnight courier within two (2) business days following the email delivery may, in the General Partner's sole discretion, result in the election being treated as invalid.

Elections received after the Election Deadline will not be accepted. If a valid MFN Election Form is not timely received by the General Partner on or before the Election Deadline, the Limited Partner's right to make most favored nation elections with respect to the Fund shall terminate automatically and be of no further force or effect, without any further notice or action by the General Partner. The General Partner shall have no obligation to extend the Election Deadline for any reason, including, without limitation, delays in mail or courier delivery, technical difficulties with email transmission, or the Limited Partner's failure to receive this Letter in a timely manner. Time is of the essence with respect to the Election Deadline.

5.4 Partial Elections

An eligible Limited Partner may elect to receive all, some, or none of the provisions set forth in the MFN Side Letter Compilation, in its sole and absolute discretion. The Limited Partner is not required to elect all available provisions in order to elect any particular provision, and the election or non-election of any one provision shall have no effect on the Limited Partner's ability to elect or decline any other provision.

Each provision elected by the Limited Partner shall be treated as an independent and severable election. If the General Partner determines that any particular elected provision constitutes an Excluded Provision or is otherwise unavailable to the electing Limited Partner, such determination shall not affect the validity or enforceability of the Limited Partner's election with respect to any other provision.

A Limited Partner that does not wish to exercise any most favored nation election rights is not required to submit an MFN Election Form. The failure to submit an MFN Election Form by the Election Deadline shall be treated as a decision not to exercise most favored nation election rights and shall not constitute a waiver of any other rights of the Limited Partner under the LPA or the Side Letter.

6. Effect of Election

Upon timely receipt of a valid and complete MFN Election Form from an electing Limited Partner, the General Partner shall, within [__] business days following the Election Deadline, prepare and deliver to the electing Limited Partner a supplemental side letter amendment (the "MFN Supplemental Side Letter") incorporating the provisions duly elected by such Limited Partner. The MFN Supplemental Side Letter shall set forth the elected provisions in full and shall require execution by both the General Partner and the electing Limited Partner.

The MFN Supplemental Side Letter shall be supplemental to, and shall modify the terms of, the LPA solely as between the General Partner and the electing Limited Partner, in the same manner and to the same extent as the original Side Letter. The MFN Supplemental Side Letter shall not amend or modify the LPA as between the General Partner and any other limited partner of the Fund, and shall not create any rights in favor of, or obligations with respect to, any other limited partner.

Elected provisions shall be effective as of the date of execution of the MFN Supplemental Side Letter by both the General Partner and the electing Limited Partner, unless otherwise expressly specified in the MFN Supplemental Side Letter or in the applicable elected provision. The election of a provision does not entitle the electing Limited Partner to receive any retroactive benefit, credit, reimbursement, or payment for any period prior to the effective date of the MFN Supplemental Side Letter, unless the elected provision, as set forth in the MFN Supplemental Side Letter, expressly provides otherwise.

The MFN Supplemental Side Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles thereof, consistent with the governing law provisions of the LPA and the Side Letter.

7. Confidentiality

The MFN Side Letter Compilation, the MFN Election Form, and the contents thereof constitute confidential information of the Fund and the General Partner. By accepting delivery of this Letter and the enclosed materials, the Limited Partner acknowledges and agrees to hold the MFN Side Letter Compilation, the MFN Election Form, and all terms, provisions, and information described therein or derived therefrom in strict confidence, subject to and in accordance with the confidentiality provisions set forth in the LPA and the Limited Partner's Side Letter.

Notwithstanding the foregoing, the Limited Partner may disclose the MFN Side Letter Compilation and the MFN Election Form to its legal counsel, tax advisors, financial advisors, auditors, and other professional advisors (collectively, "Permitted Recipients") who (a) have a bona fide need to know such information in connection with the Limited Partner's evaluation of its most favored nation election rights and (b) are bound by obligations of confidentiality no less restrictive than those set forth in the LPA and the Side Letter, whether by contract, professional duty, or applicable law.

The Limited Partner further acknowledges that the confidentiality obligations set forth herein are subject to any applicable exceptions for disclosures required by applicable law, regulation, or judicial or administrative process, in each case subject to the prior notice and cooperation provisions set forth in the Limited Partner's Side Letter. To the extent the Limited Partner is required by applicable law, regulation, or valid legal process to disclose any information contained in the MFN Side Letter Compilation, the Limited Partner shall, to the extent legally permissible, provide the General Partner with prompt written notice of such requirement prior to making any such disclosure, and shall cooperate with the General Partner, at the General Partner's expense, in seeking a protective order or other appropriate remedy to limit the scope of such disclosure.

8. No Modification of Other Terms

This Letter and any elections made hereunder do not, and shall not be deemed to, modify, amend, supplement, or waive any terms, provisions, rights, or obligations of the LPA or the Limited Partner's Side Letter, except as expressly set forth in any MFN Supplemental Side Letter duly executed and delivered in accordance with Section 6 above. Until such time as an MFN Supplemental Side Letter is executed and delivered, all terms of the LPA and the Side Letter shall remain in full force and effect, unmodified by this Letter or any MFN Election Form submitted hereunder.

In the event of any conflict or inconsistency between an elected provision incorporated in an MFN Supplemental Side Letter and the existing terms of the Limited Partner's Side Letter or the LPA, the MFN Supplemental Side Letter shall control solely with respect to the specific subject matter of the elected provision giving rise to such conflict or inconsistency. All other terms of the LPA and the Side Letter shall remain unaffected and shall continue to govern the relationship between the General Partner and the Limited Partner in all other respects.

9. Governing Law

This Letter and the rights and obligations of the parties arising hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof that would cause the application of the laws of any other jurisdiction.

10. Contact Information / Questions

If you have any questions regarding this Letter, the MFN Side Letter Compilation, the MFN Election Form, or the election procedures described herein, please do not hesitate to contact:

[Insert Name] [Insert Title] Pinnacle Venture Capital Management LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025 Telephone: [Insert Phone Number]

Email: [Insert Email Address]

Alternatively, you may direct inquiries to the Fund's outside legal counsel:

[Insert Name] [Insert Law Firm Name] [Insert Address] Telephone: [Insert Phone Number]

Email: [Insert Email Address]

We look forward to working with you through this process and appreciate your continued partnership as a valued limited partner of the Fund.

Sincerely,

PINNACLE VENTURE CAPITAL MANAGEMENT LLC

By: ________

Name: [Insert Name]

Title: [Insert Title]

In its capacity as General Partner of Pinnacle Venture Fund II LP

Enclosures:

Exhibit A — Most Favored Nation Side Letter Compilation [Not attached to this template — to be prepared and included at time of delivery]

Exhibit B — Most Favored Nation Election Form [Template form attached separately]

EXHIBIT A

Most Favored Nation Side Letter Compilation

[To be prepared by the General Partner and attached at the time of delivery of this letter. The MFN Side Letter Compilation will set forth, in redacted form, the side letter provisions available for election by MFN-eligible Limited Partners. Each available provision will be identified by a unique section reference number (e.g., "SL-1," "SL-2," etc.) for purposes of completing the MFN Election Form. The identities of the limited partners to whom such side letter provisions were originally granted will be redacted and will not be disclosed. Excluded Provisions (as defined and described in Section 4 of this Letter) will be omitted from the MFN Side Letter Compilation and will not be available for most favored nation election.]

Instructional Note to GP: Prior to delivery, the General Partner should compile all non-excluded side letter provisions, assign unique section reference numbers, redact limited partner identities, and organize provisions by subject matter category for ease of review by the electing Limited Partner. The compilation should be reviewed by Fund counsel prior to distribution.

EXHIBIT B

Most Favored Nation Election Form

[See separately attached MFN Election Form template.]

Instructional Note: The MFN Election Form is maintained as a standalone template document. Cross-reference file: mfn-election-form-template.docx. The MFN Election Form template should be enclosed with this Letter at the time of delivery to each MFN-eligible Limited Partner. The election form will require the Limited Partner to identify each elected provision by section reference number, provide its full legal name and capital commitment amount, make certain representations and certifications, and execute the form through a duly authorized representative.

CONFIDENTIAL
PINNACLE VENTURE CAPITAL MANAGEMENT LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025
[Date]
Instructional Note: This letter is to be dated and delivered within 15 business days after the Final Close of Pinnacle Venture Fund II LP. All bracketed placeholders must be completed prior to delivery.
[Name of Limited Partner] [Address Line 1] [Address Line 2] [City, State, Zip Code]
Attention: [Authorized Representative]
Re: Most Favored Nation Election — Pinnacle Venture Fund II LP
Dear [Authorized Representative]:
1. Introduction
Pinnacle Venture Capital Management LLC, a Delaware limited liability company (the "General Partner" or "GP"), acting in its capacity as the general partner of Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Fund"), is delivering this letter (this "Letter") to you in connection with your most favored nation election rights under your side letter agreement with the General Partner.
Reference is made to (a) the Amended and Restated Agreement of Limited Partnership of Pinnacle Venture Fund II LP, dated as of [Insert First Close Date], as the same may have been further amended, restated, supplemented, or otherwise modified from time to time (the "LPA"), and (b) the side letter agreement entered into between the General Partner, on behalf of the Fund, and [Name of Limited Partner] (the "Limited Partner" or "you"), dated as of [Insert Date] (the "Side Letter").
You are receiving this Letter because you have made a capital commitment to the Fund in the amount of $[Insert Amount] (the "Commitment"), which equals or exceeds the minimum threshold of Twenty-Five Million Dollars ($25,000,000) required for most favored nation election eligibility, as set forth in Section [__] of the Side Letter. By virtue of your Commitment meeting or exceeding such threshold, you are an eligible limited partner entitled to exercise most favored nation election rights in accordance with the terms and procedures described in this Letter.
The purpose of this Letter is to (i) deliver to you the MFN Side Letter Compilation (as defined below), (ii) deliver to you the MFN Election Form (as defined below), and (iii) describe in detail the procedures by which you may exercise your most favored nation election rights with respect to side letter provisions granted to other limited partners of the Fund, subject to the limitations and exclusions set forth herein.
2. Defined Terms
Capitalized terms used but not otherwise defined in this Letter shall have the meanings ascribed to such terms in the LPA or the Side Letter, as applicable. In the event a term is defined in both the LPA and the Side Letter, the definition set forth in the Side Letter shall govern for purposes of this Letter, unless the context otherwise requires.
For purposes of this Letter, the following terms shall have the meanings set forth below:
"Election Deadline" means 5:00 p.m. (Pacific Time) on the last day of the Election Period, which is the date that is thirty (30) calendar days after the date of this Letter, i.e., [Insert Date 30 Calendar Days from Date of Letter]. If such date falls on a Saturday, Sunday, or federal holiday, the Election Deadline shall be the next succeeding business day.
"Election Period" means the thirty (30) calendar day period commencing on the date of this Letter (which is the date of delivery of the MFN Side Letter Compilation to you) and ending on the Election Deadline.
"Excluded Provisions" means those categories of side letter provisions that are not available for most favored nation election, as described in detail in Section 5 of this Letter.
"MFN Election Form" means the election form enclosed with this Letter as Exhibit B, to be completed, executed, and returned by you in accordance with the procedures described in Section 6 of this Letter.
"MFN Side Letter Compilation" means the redacted compilation of side letter provisions enclosed with this Letter as Exhibit A, prepared by the General Partner in accordance with the terms of the LPA and the applicable side letter agreements.
"MFN Supplemental Side Letter" has the meaning set forth in Section 7 of this Letter.
3. Description of the MFN Side Letter Compilation
Enclosed as Exhibit A to this Letter is the MFN Side Letter Compilation.
The MFN Side Letter Compilation sets forth, in redacted form, the material terms and provisions of the side letter agreements entered into between the General Partner, on behalf of the Fund, and other limited partners of the Fund in connection with such limited partners' respective capital commitments to the Fund. The MFN Side Letter Compilation has been prepared by the General Partner for the sole purpose of enabling eligible limited partners to review and, if they so choose, elect to receive certain of such provisions in accordance with their most favored nation election rights.
The identities of the limited partners who received such side letter agreements have been redacted from the MFN Side Letter Compilation and are not disclosed therein. In no event shall the General Partner be required to disclose the identity of any limited partner to whom a particular side letter provision was originally granted.
Excluded Provisions, as defined and described in Section 5 of this Letter, have been excluded from the MFN Side Letter Compilation and are not available for election. Accordingly, the MFN Side Letter Compilation does not purport to be a complete or exhaustive summary of all side letter terms that have been agreed upon between the General Partner and the limited partners of the Fund; rather, it includes only those provisions that are eligible for most favored nation election.
Each provision included in the MFN Side Letter Compilation is identified by a unique section reference number (e.g., "SL-1," "SL-2," etc.) for the purpose of enabling you to identify and reference the specific provisions you wish to elect when completing the MFN Election Form. You should use these section reference numbers when completing your MFN Election Form to ensure the accuracy and clarity of your elections.
Important Notice: The General Partner makes no representation or warranty, express or implied, as to the applicability, suitability, enforceability, or legal, regulatory, or tax consequences of any provision listed in the MFN Side Letter Compilation with respect to your particular circumstances, organizational structure, regulatory status, or investment objectives. Each limited partner's legal, regulatory, and tax situation is unique, and a provision that is appropriate or beneficial for one limited partner may not be appropriate or beneficial for another. You are strongly advised to consult with your own legal counsel, tax advisors, and other professional advisors before making any election under this Letter. The General Partner and the Fund shall have no liability to you arising from or relating to your election or non-election of any provision set forth in the MFN Side Letter Compilation.
4. Excluded Provisions — Provisions Not Subject to Most Favored Nation Election
The following categories of side letter provisions are "Excluded Provisions" and are not included in the MFN Side Letter Compilation and are not available for most favored nation election. The General Partner has determined, consistent with the terms of the LPA and the applicable side letter agreements, that these categories of provisions are not subject to most favored nation election rights by reason of their nature, the specific circumstances of the limited partner to which they were originally granted, or the terms of the LPA.
4.1 Legal, Regulatory, or Tax-Status Provisions
Provisions that were granted to a limited partner in order to satisfy specific legal, regulatory, or tax requirements applicable to such limited partner by reason of its particular legal status, regulatory status, organizational structure, tax classification, or jurisdictional requirements are Excluded Provisions. Such provisions were negotiated and agreed to in order to address the particular compliance obligations or legal constraints of the limited partner that originally received them and, by their nature, are not generally applicable to or appropriate for other limited partners.
By way of illustration and not limitation, examples of such Excluded Provisions include:
(a) provisions addressing public records, open meetings, or freedom-of-information obligations of governmental investors, state pension plans, or other public entities subject to state or federal sunshine or transparency laws;
(b) representations, covenants, or waivers relating to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including provisions addressing the status of the Fund's assets as "plan assets" within the meaning of the regulations issued by the U.S. Department of Labor under ERISA, or provisions addressing fiduciary duty or prohibited transaction concerns under Title I of ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code");
(c) provisions necessitated by the tax-exempt status of a particular investor under Section 501(a), Section 501(c)(3), or other applicable provisions of the Code, including provisions relating to unrelated business taxable income ("UBTI"), unrelated debt-financed income ("UDFI"), or effectively connected income ("ECI");
(d) provisions required by reason of a limited partner's status as a non-United States person, a sovereign wealth fund, a foreign governmental entity, or an entity subject to the laws or regulations of a non-U.S. jurisdiction; and
(e) provisions relating to compliance with anti-money laundering laws, sanctions regulations administered by the U.S. Department of the Treasury's Office of Foreign Assets Control ("OFAC"), or the Foreign Corrupt Practices Act of 1977, as amended, that are tailored to the particular circumstances or jurisdictional requirements of a specific limited partner.
4.2 Advisory Committee Seats
Rights to serve on, designate a representative to, or otherwise participate in the Fund's advisory committee (or any similar body constituted under the LPA) are Excluded Provisions. Advisory committee membership involves governance responsibilities, fiduciary considerations, and capacity limitations that render such rights unsuitable for most favored nation election. The composition of the advisory committee is determined by the General Partner in its sole discretion, as provided in the LPA.
4.3 Portfolio Company Board Observer Rights
Rights to appoint, designate, or nominate board observers, board members, or other representatives with respect to the Fund's portfolio company investments, or rights to receive information regarding the Fund's portfolio companies beyond what is generally provided to limited partners under the LPA, to the extent such rights are linked to board observation or board participation privileges, are Excluded Provisions. Such rights involve operational considerations at the portfolio company level, confidentiality obligations, and potential conflicts of interest that make them inappropriate for most favored nation election.
4.4 GP-Determined LP-Specific Terms
Any term or provision that, in the General Partner's reasonable determination, is specific to the legal, regulatory, tax, or organizational status, investment profile, or particular circumstances of the limited partner that originally received such term, and that is not reasonably applicable to the electing limited partner, is an Excluded Provision. The General Partner shall make any such determination in good faith and on a reasonable basis.
In the event that a limited partner submits an MFN Election Form electing a specific provision and the General Partner determines that such provision constitutes an Excluded Provision under this Section 4.4 with respect to the electing limited partner, the General Partner shall provide prompt written notice to the electing limited partner, together with a written explanation in reasonable detail of the basis for such determination. The electing limited partner shall have the opportunity to discuss such determination with the General Partner, but the General Partner's determination made in good faith shall be final and binding.
5. Election Procedures
5.1 Reviewing the MFN Side Letter Compilation
You should carefully review the MFN Side Letter Compilation enclosed as Exhibit A to this Letter. Each provision available for most favored nation election is listed therein with a unique section reference number (e.g., "SL-1," "SL-2," etc.) and a description of the substantive terms of such provision. You should review each available provision in the context of your own investment objectives, legal and regulatory obligations, organizational documents, and existing rights under the LPA and your Side Letter.
As noted above, you are encouraged to consult with your legal counsel and other professional advisors in connection with your review of the MFN Side Letter Compilation and any elections you may wish to make.
5.2 Completing the MFN Election Form
If you wish to exercise your most favored nation election rights, you must complete the MFN Election Form enclosed as Exhibit B to this Letter. In completing the MFN Election Form, you must:
(a) identify each provision you elect to receive by referencing the applicable section reference number from the MFN Side Letter Compilation (e.g., "SL-3," "SL-7," "SL-12");
(b) provide the information requested in the MFN Election Form, including, without limitation, the full legal name of the electing Limited Partner, the Limited Partner's capital commitment amount, the date of election, and any representations or certifications required by the MFN Election Form;
(c) execute the MFN Election Form by having it signed by a duly authorized representative of the Limited Partner who has the power and authority to bind the Limited Partner; and
(d) deliver the completed and executed MFN Election Form to the General Partner in accordance with the delivery instructions set forth in Section 5.3 below.
Incomplete, unsigned, or improperly completed MFN Election Forms may be rejected by the General Partner, and the General Partner shall have no obligation to accept or process any MFN Election Form that does not comply with the requirements set forth in this Letter. In the event the General Partner receives an MFN Election Form that is incomplete or requires clarification, the General Partner may, but shall not be obligated to, contact the submitting Limited Partner to request additional information or a corrected form; provided, however, that any such additional information or corrected form must be received by the General Partner no later than the Election Deadline.
5.3 Submission Deadline and Method
The completed and executed MFN Election Form must be received by the General Partner no later than 5:00 p.m. (Pacific Time) on the Election Deadline, which is [Insert Date 30 Calendar Days from Date of Letter]. For the avoidance of doubt, it is the date and time of receipt by the General Partner, and not the date and time of sending, that is determinative. It is the sole responsibility of the Limited Partner to ensure that the MFN Election Form is received by the General Partner by the Election Deadline.
The MFN Election Form must be delivered to the General Partner by one of the following methods:
(a) Hand Delivery or Recognized Overnight Courier Service. Delivery by hand or by a nationally recognized overnight courier service (e.g., Severin Partners LLC, Halcyon Partners LLC, Tarrant & Co.) to:
Pinnacle Venture Capital Management LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025
Attention: [Insert Authorized Person / Title]
(b) Email (PDF Format). Delivery by email in portable document format (PDF) to:
[Insert Email Address]
with a confirmation copy sent by nationally recognized overnight courier service to the address set forth in clause (a) above. The email delivery shall be deemed the effective delivery for purposes of determining timeliness; provided, however, that failure to send the confirmation copy by overnight courier within two (2) business days following the email delivery may, in the General Partner's sole discretion, result in the election being treated as invalid.
Elections received after the Election Deadline will not be accepted. If a valid MFN Election Form is not timely received by the General Partner on or before the Election Deadline, the Limited Partner's right to make most favored nation elections with respect to the Fund shall terminate automatically and be of no further force or effect, without any further notice or action by the General Partner. The General Partner shall have no obligation to extend the Election Deadline for any reason, including, without limitation, delays in mail or courier delivery, technical difficulties with email transmission, or the Limited Partner's failure to receive this Letter in a timely manner. Time is of the essence with respect to the Election Deadline.
5.4 Partial Elections
An eligible Limited Partner may elect to receive all, some, or none of the provisions set forth in the MFN Side Letter Compilation, in its sole and absolute discretion. The Limited Partner is not required to elect all available provisions in order to elect any particular provision, and the election or non-election of any one provision shall have no effect on the Limited Partner's ability to elect or decline any other provision.
Each provision elected by the Limited Partner shall be treated as an independent and severable election. If the General Partner determines that any particular elected provision constitutes an Excluded Provision or is otherwise unavailable to the electing Limited Partner, such determination shall not affect the validity or enforceability of the Limited Partner's election with respect to any other provision.
A Limited Partner that does not wish to exercise any most favored nation election rights is not required to submit an MFN Election Form. The failure to submit an MFN Election Form by the Election Deadline shall be treated as a decision not to exercise most favored nation election rights and shall not constitute a waiver of any other rights of the Limited Partner under the LPA or the Side Letter.
6. Effect of Election
Upon timely receipt of a valid and complete MFN Election Form from an electing Limited Partner, the General Partner shall, within [__] business days following the Election Deadline, prepare and deliver to the electing Limited Partner a supplemental side letter amendment (the "MFN Supplemental Side Letter") incorporating the provisions duly elected by such Limited Partner. The MFN Supplemental Side Letter shall set forth the elected provisions in full and shall require execution by both the General Partner and the electing Limited Partner.
The MFN Supplemental Side Letter shall be supplemental to, and shall modify the terms of, the LPA solely as between the General Partner and the electing Limited Partner, in the same manner and to the same extent as the original Side Letter. The MFN Supplemental Side Letter shall not amend or modify the LPA as between the General Partner and any other limited partner of the Fund, and shall not create any rights in favor of, or obligations with respect to, any other limited partner.
Elected provisions shall be effective as of the date of execution of the MFN Supplemental Side Letter by both the General Partner and the electing Limited Partner, unless otherwise expressly specified in the MFN Supplemental Side Letter or in the applicable elected provision. The election of a provision does not entitle the electing Limited Partner to receive any retroactive benefit, credit, reimbursement, or payment for any period prior to the effective date of the MFN Supplemental Side Letter, unless the elected provision, as set forth in the MFN Supplemental Side Letter, expressly provides otherwise.
The MFN Supplemental Side Letter shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflicts of law principles thereof, consistent with the governing law provisions of the LPA and the Side Letter.
7. Confidentiality
The MFN Side Letter Compilation, the MFN Election Form, and the contents thereof constitute confidential information of the Fund and the General Partner. By accepting delivery of this Letter and the enclosed materials, the Limited Partner acknowledges and agrees to hold the MFN Side Letter Compilation, the MFN Election Form, and all terms, provisions, and information described therein or derived therefrom in strict confidence, subject to and in accordance with the confidentiality provisions set forth in the LPA and the Limited Partner's Side Letter.
Notwithstanding the foregoing, the Limited Partner may disclose the MFN Side Letter Compilation and the MFN Election Form to its legal counsel, tax advisors, financial advisors, auditors, and other professional advisors (collectively, "Permitted Recipients") who (a) have a bona fide need to know such information in connection with the Limited Partner's evaluation of its most favored nation election rights and (b) are bound by obligations of confidentiality no less restrictive than those set forth in the LPA and the Side Letter, whether by contract, professional duty, or applicable law.
The Limited Partner further acknowledges that the confidentiality obligations set forth herein are subject to any applicable exceptions for disclosures required by applicable law, regulation, or judicial or administrative process, in each case subject to the prior notice and cooperation provisions set forth in the Limited Partner's Side Letter. To the extent the Limited Partner is required by applicable law, regulation, or valid legal process to disclose any information contained in the MFN Side Letter Compilation, the Limited Partner shall, to the extent legally permissible, provide the General Partner with prompt written notice of such requirement prior to making any such disclosure, and shall cooperate with the General Partner, at the General Partner's expense, in seeking a protective order or other appropriate remedy to limit the scope of such disclosure.
8. No Modification of Other Terms
This Letter and any elections made hereunder do not, and shall not be deemed to, modify, amend, supplement, or waive any terms, provisions, rights, or obligations of the LPA or the Limited Partner's Side Letter, except as expressly set forth in any MFN Supplemental Side Letter duly executed and delivered in accordance with Section 6 above. Until such time as an MFN Supplemental Side Letter is executed and delivered, all terms of the LPA and the Side Letter shall remain in full force and effect, unmodified by this Letter or any MFN Election Form submitted hereunder.
In the event of any conflict or inconsistency between an elected provision incorporated in an MFN Supplemental Side Letter and the existing terms of the Limited Partner's Side Letter or the LPA, the MFN Supplemental Side Letter shall control solely with respect to the specific subject matter of the elected provision giving rise to such conflict or inconsistency. All other terms of the LPA and the Side Letter shall remain unaffected and shall continue to govern the relationship between the General Partner and the Limited Partner in all other respects.
9. Governing Law
This Letter and the rights and obligations of the parties arising hereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles thereof that would cause the application of the laws of any other jurisdiction.
10. Contact Information / Questions
If you have any questions regarding this Letter, the MFN Side Letter Compilation, the MFN Election Form, or the election procedures described herein, please do not hesitate to contact:
[Insert Name] [Insert Title] Pinnacle Venture Capital Management LLC 2400 Sand Hill Road, Suite 320 Menlo Park, CA 94025 Telephone: [Insert Phone Number]
Email: [Insert Email Address]
Alternatively, you may direct inquiries to the Fund's outside legal counsel:
[Insert Name] [Insert Law Firm Name] [Insert Address] Telephone: [Insert Phone Number]
Email: [Insert Email Address]
We look forward to working with you through this process and appreciate your continued partnership as a valued limited partner of the Fund.
Sincerely,
PINNACLE VENTURE CAPITAL MANAGEMENT LLC
By: ________
Name: [Insert Name]
Title: [Insert Title]
In its capacity as General Partner of Pinnacle Venture Fund II LP
Enclosures:
Exhibit A — Most Favored Nation Side Letter Compilation [Not attached to this template — to be prepared and included at time of delivery]
Exhibit B — Most Favored Nation Election Form [Template form attached separately]
EXHIBIT A
Most Favored Nation Side Letter Compilation
[To be prepared by the General Partner and attached at the time of delivery of this letter. The MFN Side Letter Compilation will set forth, in redacted form, the side letter provisions available for election by MFN-eligible Limited Partners. Each available provision will be identified by a unique section reference number (e.g., "SL-1," "SL-2," etc.) for purposes of completing the MFN Election Form. The identities of the limited partners to whom such side letter provisions were originally granted will be redacted and will not be disclosed. Excluded Provisions (as defined and described in Section 4 of this Letter) will be omitted from the MFN Side Letter Compilation and will not be available for most favored nation election.]
Instructional Note to GP: Prior to delivery, the General Partner should compile all non-excluded side letter provisions, assign unique section reference numbers, redact limited partner identities, and organize provisions by subject matter category for ease of review by the electing Limited Partner. The compilation should be reviewed by Fund counsel prior to distribution.
EXHIBIT B
Most Favored Nation Election Form
[See separately attached MFN Election Form template.]
Instructional Note: The MFN Election Form is maintained as a standalone template document. Cross-reference file: mfn-election-form-template.docx. The MFN Election Form template should be enclosed with this Letter at the time of delivery to each MFN-eligible Limited Partner. The election form will require the Limited Partner to identify each elected provision by section reference number, provide its full legal name and capital commitment amount, make certain representations and certifications, and execute the form through a duly authorized representative.

CONFIDENTIAL

PINNACLE VENTURE CAPITAL MANAGEMENT LLC

EXHIBIT A

EXHIBIT B

Record

Parties

Dates

Amounts