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MANAGEMENT RIGHTS LETTER

DRAFT — June 15, 2022

Prepared by: Calderwood & Harkness LLP, 101 Montgomery Street, Suite 3500, San Francisco, CA 94104

Status: DRAFT — Subject to Execution at Closing

Calderwood & Harkness LLP Matter No. 1002-00004 / Client No. PIN-0042

This draft management rights letter is being circulated in connection with the proposed Series D Preferred Stock investment by Pinnacle Venture Fund II LP in Verdana Software, Inc. and is subject to further negotiation and revision. This document does not constitute a binding obligation of any party until duly executed and delivered in accordance with its terms.

VERDANA SOFTWARE, INC. 1175 NW Couch Street, Suite 800 Portland, OR 97209

[__], 2022

Pinnacle Venture Fund II LP 2400 Sand Hill Road, Suite 310 Menlo Park, CA 94025

Attention: Marcus Trejo, Partner, Head of Growth Equity

Dear Mr. Trejo:

Reference is hereby made to that certain Series D Preferred Stock Purchase Agreement dated as of [__], 2022 (as may be amended, restated, supplemented, or otherwise modified from time to time, the "Purchase Agreement"), by and among Verdana Software, Inc., a Delaware corporation (the "Company"), and Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Investor"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement or, as applicable, the Investors' Rights Agreement (each as defined below).

Pursuant to the Purchase Agreement, the Investor is purchasing 15,000,000 shares of Series D Preferred Stock of the Company at a price of $4.00 per share (or such other price per share as finally agreed by the parties and set forth in the Purchase Agreement) for an aggregate purchase price of Sixty Million Dollars ($60,000,000). Pinnacle Capital Management LLC, a Delaware limited liability company ("Pinnacle Capital Management"), serves as the general partner of the Investor and exercises investment discretion and management authority with respect to the Investor's assets and investment activities.

Reference is further made to that certain Amended and Restated Investors' Rights Agreement dated as of [__], 2022, by and among the Company, the Investor, and the other investors party thereto (the "Investors' Rights Agreement"), which sets forth certain information rights, registration rights, and other rights of the Investor with respect to its investment in the Company.

This management rights letter (this "Letter") is being delivered by the Company to the Investor pursuant to the Purchase Agreement and the Investors' Rights Agreement as a condition to the Closing (as defined in the Purchase Agreement). The purpose of this Letter is to grant the Investor certain contractual management rights with respect to the Company sufficient to qualify the Investor's investment in the Company as a "venture capital investment" within the meaning of (i) Rule 203(l)-1 under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the interpretive guidance issued by the staff of the U.S. Securities and Exchange Commission thereunder, and (ii) the regulations promulgated under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including specifically 29 C.F.R. § 2510.3-101(d)(3)(i), as modified by Section 3(42) of ERISA (collectively, the "Plan Asset Regulation"). As used herein, the term "Management Rights" refers collectively to the rights granted to the Investor as set forth in this Letter.

In consideration of the Investor's agreement to consummate the transactions contemplated by the Purchase Agreement and the other Transaction Agreements, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby agrees as follows:

1. Grant of Management Rights

The Company hereby grants to the Investor the contractual right to substantially participate in, or substantially influence the conduct of, the management of the Company, as more particularly described in this Letter. The Management Rights granted herein are intended to be, and shall be construed as, contractual rights of the Investor that are legally enforceable against the Company in accordance with their terms. This grant of Management Rights is irrevocable and shall remain in full force and effect for so long as the Investor (or any of its affiliates, including Pinnacle Capital Management) holds any shares of Series D Preferred Stock of the Company (or any shares of Common Stock of the Company issued upon conversion thereof), subject only to the termination provisions set forth in Section 9 hereof.

The Company acknowledges that the Management Rights granted herein are a material inducement to the Investor's agreement to consummate the investment contemplated by the Purchase Agreement and that the Investor is relying upon the grant of such Management Rights in connection with its compliance with applicable regulatory requirements, including the Advisers Act and ERISA.

2. Consultation Rights

2.1 Right to Consult with Management

The Investor, including Pinnacle Capital Management (in its capacity as general partner of the Investor) and their respective officers, employees, partners, members, and designated representatives (collectively, "Investor Representatives"), shall have the right, at any time and from time to time, to consult with and advise the management of the Company regarding the management, business, operations, financial condition, prospects, and financial affairs of the Company. Without limiting the foregoing, the Investor shall have the right to consult directly with the Company's Chief Executive Officer, Raj Anand, the Company's Chief Financial Officer, Thomas Brightwell, and such other senior officers and key employees of the Company as the Investor may reasonably identify from time to time. Such consultation may take the form of in-person meetings at the Company's offices or other mutually agreeable locations, telephonic conferences, video conferences, or written correspondence, as the Investor may elect. The Company's management shall make itself reasonably available for such consultation upon reasonable advance notice from the Investor, it being understood that such availability shall include meetings, calls, or other interactions at times and frequencies reasonably requested by the Investor in light of the significance and nature of the matters to be discussed. The Company shall use commercially reasonable efforts to respond to any consultation request from the Investor within five (5) business days of receipt thereof.

2.2 Right to Consult on Significant Business Matters

Without limiting the generality of Section 2.1, the Investor shall have the specific right to consult with, and provide advice and recommendations to, management of the Company regarding the following significant business matters:

(a) Strategic Planning and Budgeting. The Company's strategic planning initiatives, long-range business plans, annual operating budgets, and any material deviations from approved budgets, including any revisions to the Company's growth strategy, market expansion plans, or competitive positioning.

(b) Significant Customer Relationships. Significant customer relationships and contract renewals, including but not limited to the Company's relationship with Meridian Logistics Corp. and other material customers generating annual recurring revenue in excess of $500,000, as well as the Company's customer acquisition and retention strategies.

(c) Product Development. The product development roadmap for the Company's Verdana SCX platform, including planned feature releases, technology architecture decisions, platform scalability initiatives, and competitive product assessments, as well as any plans to develop, acquire, or discontinue material product lines or service offerings.

(d) Senior Management and Talent. The hiring, compensation, retention, and termination of senior management personnel, including any changes to the executive leadership team, succession planning, and the adoption or amendment of equity incentive plans or other material compensation arrangements.

(e) Capital Expenditures. Capital expenditure plans, including any individual expenditure or series of related expenditures in excess of $250,000, as well as the Company's overall capital allocation strategy and infrastructure investment plans.

(f) Financing Activities. Financing activities of the Company, including any drawdowns, amendments, renewals, or refinancings related to the Company's revolving credit facility with Pacific Summit Bank, N.A., any issuances of equity or debt securities, and any other material indebtedness or credit arrangements.

(g) Acquisitions and Strategic Transactions. Potential acquisitions, mergers, dispositions of assets or business lines, joint ventures, strategic partnerships, licensing arrangements, and any other strategic transactions under consideration by the Company or its Board of Directors.

(h) Material Litigation and Regulatory Matters. Material litigation, arbitration, administrative proceedings, government investigations, or regulatory matters involving the Company or any of its subsidiaries, including any threatened claims or proceedings that could reasonably be expected to have a material adverse effect on the Company.

(i) intellectual Property. The Company's strategy with respect to the protection, prosecution, licensing, and enforcement of its intellectual property portfolio, including patents, trademarks, copyrights, and trade secrets.

(j) Other Material Matters. Any other matters that could reasonably be expected to have a material impact on the business, financial condition, results of operations, or prospects of the Company.

The Company acknowledges and agrees that the Investor's right to consult on the foregoing matters includes the right to offer advice, make recommendations, and express views to the Company's management and Board of Directors, and that the Company's management shall give due consideration to any such advice, recommendations, or views offered by the Investor. For the avoidance of doubt, nothing in this Section 2.2 shall require the Company to follow or implement any particular recommendation or advice offered by the Investor, provided that the Company shall not unreasonably refuse to engage in consultation as contemplated hereby.

3. Board Representation

Reference is hereby made to that certain Amended and Restated Voting Agreement dated as of [__], 2022, by and among the Company and the stockholders party thereto (the "Voting Agreement"), pursuant to which the Investor has the right to designate one (1) member to the Board of Directors of the Company (the "Board"). The Investor has designated Marcus Trejo (or his designee) as the initial Pinnacle designee to the Board.

Following the Closing, the Board is expected to be composed of seven (7) members, as follows:

(a) two (2) members designated by the Founders (as defined in the Voting Agreement);

(b) one (1) member designated by Ridgeline Ventures Fund III LP;

(d) one (1) member designated by Brindoval Capital Group LLC;

(e) one (1) member designated by the Investor (initially Marcus Trejo or his designee); and

(f) one (1) independent director mutually agreed upon by the holders of a majority of the outstanding Preferred Stock and the Founders.

The Company acknowledges and agrees that the Investor's board designation right under the Voting Agreement provides a further and independent basis for the Investor to substantially participate in and substantially influence the conduct of the management of the Company. Through its designated Board member, the Investor will have the ability to participate in deliberations of the Board, vote on matters presented to the Board, serve on committees of the Board, and otherwise exercise the rights and fulfill the responsibilities of a member of the Board in accordance with applicable law and the Company's Amended and Restated Certificate of Incorporation and Bylaws.

The Management Rights set forth in this Letter are in addition to, and not in limitation of, the Investor's rights arising from its board designation right under the Voting Agreement, its rights under the Investors' Rights Agreement, and any other rights of the Investor under the Transaction Agreements. The Management Rights granted herein shall not be diminished or affected by the Investor's exercise or non-exercise of its board designation right or any other rights under the Transaction Agreements, and the Investor's board designation right shall not be diminished or affected by the Investor's exercise or non-exercise of the Management Rights granted herein.

4. Access to Facilities, Books, and Records

4.1 Facility Access

The Company shall permit the Investor and its Investor Representatives to visit and inspect any of the properties, offices, facilities, and other premises owned, leased, or operated by the Company and its subsidiaries, including the Company's headquarters located at 1175 NW Couch Street, Suite 800, Portland, OR 97209, and any other current or future offices, facilities, data centers, or other locations. Such visits and inspections shall be conducted during normal business hours (generally 9:00 a.m. to 6:00 p.m. Pacific Time, Monday through Friday, excluding federal holidays) and upon reasonable advance notice to the Company of not less than two (2) business days, unless the Investor reasonably determines that circumstances warrant shorter notice, in which case the Company shall use commercially reasonable efforts to accommodate such request. The Investor and its Investor Representatives shall comply with the Company's reasonable security, safety, and visitor policies during any such visit. The Company shall not be required to allow access to the extent that such access would unreasonably disrupt the Company's normal business operations, provided that the Company shall use good faith efforts to accommodate any access request and shall propose reasonable alternative arrangements if a particular request cannot be accommodated as originally proposed.

4.2 Books and Records Access

The Company shall permit the Investor and its Investor Representatives to examine, review, and make copies and extracts of the books of account, records, reports, and other papers of the Company and its subsidiaries, including but not limited to:

(a) corporate minute books, resolutions of the Board of Directors and stockholders, and stockholder records, including the Company's capitalization table and stock ledger;

(b) financial statements (whether audited or unaudited), general ledger, trial balances, journals, accounting records, and all supporting work papers and schedules;

(c) material contracts, agreements, licenses, and leases to which the Company or any of its subsidiaries is a party, including customer agreements, vendor agreements, employment agreements, and intellectual property licenses;

(d) federal, state, and local tax returns and related work papers, schedules, and correspondence with taxing authorities, subject to applicable attorney-client privilege and work product protections;

(e) records relating to the Company's intellectual property portfolio, including patent filings and prosecution files, trademark registrations, copyright registrations, domain name registrations, and records of trade secret protections;

(f) employee records and human resources files, to the extent permitted by applicable law, including records relating to equity incentive grants and vesting schedules; and

(g) such other books, records, documents, and information as the Investor may reasonably request from time to time.

Access to books and records under this Section 4.2 shall be provided during normal business hours upon reasonable advance notice to the Company. The Company shall use commercially reasonable efforts to provide requested materials in electronic format where reasonably practicable.

4.3 Personnel Access

The Company shall make available its officers, directors, employees, independent contractors, accountants (including the Company's independent auditors, Whitfield & Greer LLP), legal counsel (including the Company's General Counsel, Sandra Mikkelsen, and the Company's outside counsel), and other advisors for discussion, consultation, and inquiry as reasonably requested by the Investor or its Investor Representatives. Such access shall include, without limitation, the right to discuss the Company's business, affairs, finances, accounts, operations, prospects, compliance matters, and such other matters as the Investor may deem relevant to its investment in the Company. The Company shall use commercially reasonable efforts to facilitate such discussions and to ensure that the relevant personnel are reasonably available to respond to the Investor's inquiries in a timely manner. Nothing in this Section 4.3 shall be construed to require the Company to waive any applicable attorney-client privilege, work product protection, or similar legal privilege, provided that the Company shall notify the Investor if any requested access is being withheld on the basis of such privilege and shall use commercially reasonable efforts to provide alternative access to the substance of the requested information to the extent practicable without waiving such privilege.

5. Information Rights

Reference is hereby made to the information rights of the Investor set forth in the Investors' Rights Agreement, which include, among other things, the following:

(a) Quarterly Financial Statements. Unaudited financial statements of the Company (including a balance sheet, income statement, statement of cash flows, and statement of stockholders' equity), prepared in accordance with generally accepted accounting principles consistently applied, delivered within forty-five (45) days after the end of each fiscal quarter of the Company.

(b) Annual Audited Financial Statements. Annual financial statements of the Company, audited by the Company's independent auditors, Whitfield & Greer LLP (or such other nationally or regionally recognized accounting firm as may be selected by the Board), delivered within ninety (90) days after the end of each fiscal year of the Company.

(c) Monthly Management Reports. Monthly management reports in a format mutually agreed upon by the Company and the Investor, including key performance indicators, revenue and bookings metrics, cash burn and runway analysis, headcount data, and such other information as the Investor may reasonably request.

The foregoing information rights set forth in the Investors' Rights Agreement are incorporated herein by reference and shall constitute an additional component of the Management Rights granted to the Investor under this Letter. The Company shall provide such additional financial, operational, and other information as the Investor may reasonably request from time to time in connection with the exercise of its Management Rights hereunder, including, without limitation, budget-to-actual variance analyses, revenue pipeline reports, customer churn data, and other metrics reasonably necessary for the Investor to monitor and evaluate the performance of its investment in the Company.

6. Scope and Purpose; Venture Capital Investment Qualification

6.1 Investment Advisers Act

The parties acknowledge and agree that the Management Rights granted herein are intended to ensure that the Investor's investment in the Company qualifies as a "venture capital investment" for purposes of the exemption from registration as an investment adviser under Section 203(l) of the Advisers Act and Rule 203(l)-1 promulgated thereunder (the "Venture Capital Fund Adviser Exemption"). The parties further acknowledge that, in order to qualify for the Venture Capital Fund Adviser Exemption, the Investor must, among other things, obtain contractual rights to substantially participate in, or substantially influence the conduct of, the management of each qualifying portfolio company in which it invests, and this Letter is intended to provide such contractual rights with respect to the Company. The Company agrees to cooperate in good faith with the Investor, and to take such actions and execute such documents as may be reasonably requested by the Investor, in connection with establishing and maintaining the qualification of the Investor's investment in the Company as a "venture capital investment" under the Advisers Act and the rules and interpretive guidance issued thereunder.

6.2 ERISA — Plan Asset Regulation

The parties further acknowledge and agree that the Management Rights granted herein are intended to satisfy the requirements of 29 C.F.R. § 2510.3-101(d)(3)(i), as modified by Section 3(42) of ERISA (the Plan Asset Regulation), so that the Investor's interest in the Company constitutes a "venture capital investment" and the underlying assets of the Company are not deemed to be "plan assets" of any employee benefit plan (within the meaning of Section 3(3) of ERISA) that is a direct or indirect investor in the Investor. The Company acknowledges the importance of maintaining such qualification and agrees not to take any action, or fail to take any action, that would cause the Management Rights granted herein to be ineffective for purposes of satisfying the requirements of the Plan Asset Regulation. In the event that the Investor determines in good faith that any action or omission by the Company could jeopardize the effectiveness of the Management Rights for purposes of the Plan Asset Regulation, the Company shall promptly take such corrective action as the Investor may reasonably request.

6.3 Interpretation. This Letter shall be interpreted and construed broadly to provide the Investor with Management Rights sufficient to qualify the Investor's investment in the Company as a "venture capital investment" under both the Advisers Act (including Rule 203(l)-1 thereunder) and ERISA (including the Plan Asset Regulation). In furtherance of the foregoing, the Company shall not unreasonably withhold, condition, or delay the exercise by the Investor of any Management Rights granted herein. If any provision of this Letter is susceptible to two or more constructions, the construction that would preserve and give effect to the Management Rights in a manner consistent with the regulatory purposes described in this Section 6 shall be adopted. In the event that any change in applicable law, regulation, or interpretive guidance would require the Investor to obtain additional or modified management rights in order to maintain the qualification of its investment in the Company as a "venture capital investment," the Company agrees to negotiate in good faith with the Investor to amend this Letter to provide such additional or modified management rights.

7. Confidentiality

The Investor acknowledges that, in the course of exercising the Management Rights granted herein, including through its access to the Company's facilities, books, records, personnel, and information, the Investor and its Investor Representatives may receive or become aware of confidential and proprietary information of the Company and its subsidiaries, including trade secrets, financial data, business plans, customer information, technology and product information, and other non-public information (collectively, "Confidential Information").

The Investor agrees to treat all Confidential Information as confidential and not to disclose or use any Confidential Information except as permitted herein or in connection with the Investor's evaluation and monitoring of its investment in the Company. The foregoing obligations of confidentiality shall not apply to any information that: (a) is or becomes generally available to the public other than as a result of a disclosure by the Investor or any of its Investor Representatives in violation of this Section 7; (b) was available to the Investor on a non-confidential basis prior to its disclosure by the Company; (c) is independently developed by the Investor or its Investor Representatives without use of or reference to the Confidential Information; (d) becomes available to the Investor on a non-confidential basis from a source other than the Company, provided that such source is not, to the Investor's knowledge, bound by a confidentiality obligation to the Company with respect to such information; or (e) is required to be disclosed by applicable law, regulation, legal process, or governmental order, provided that the Investor shall, to the extent legally permitted, provide the Company with prompt written notice of any such requirement prior to disclosure so that the Company may seek a protective order or other appropriate remedy.

Notwithstanding the foregoing, the Investor may disclose Confidential Information to: (i) its general partner, Pinnacle Capital Management LLC; (ii) its managing partners, Elaine Whitford and Derek Sung; (iii) its investment professionals, analysts, associates, and other personnel who have a need to know such information in connection with the Investor's investment in the Company; (iv) its fund administrator, Dralvecen Fund Services LLC; (v) its auditors, Calloway & Cascade Insurance Brokers; and (vi) its legal advisors, including Calderwood & Harkness LLP (collectively, "Permitted Recipients"), in each case provided that such Permitted Recipients are bound by confidentiality obligations no less restrictive than those set forth in this Section 7, whether pursuant to professional ethical obligations, separate confidentiality agreements, or partnership or employment agreements, as applicable.

The obligations set forth in this Section 7 are in addition to, and not in limitation of, the confidentiality obligations of the Investor under any separate non-disclosure agreement or similar agreement entered into between the Company and the Investor or its affiliates, and such separate agreements shall remain in full force and effect in accordance with their respective terms.

8. No Management Obligation; No Fiduciary Duty of Investor

Nothing in this Letter shall obligate the Investor or any of its Investor Representatives to exercise any of the Management Rights granted herein, to consult with or advise the Company's management on any particular matter, to attend any particular meeting, or to take any particular action with respect to the Company or its business. The Management Rights are permissive and not mandatory, and the Investor shall be free to exercise or decline to exercise such rights in its sole and absolute discretion.

The grant of Management Rights pursuant to this Letter shall not create any fiduciary duty on the part of the Investor to the Company, to any other stockholder of the Company, or to any other person or entity, other than any duties that may arise solely from the service of the Investor's board designee as a member of the Board of Directors of the Company in his or her capacity as a director. For the avoidance of doubt, the Investor shall not, by virtue of this Letter or the Management Rights granted herein, be deemed to owe any duty of care, duty of loyalty, or other fiduciary duty to the Company or its stockholders (other than as expressly set forth in the preceding sentence).

The Investor shall not be deemed an employee, officer, agent, or controlling person of the Company by virtue of this Letter or the exercise of any Management Rights hereunder, and the Investor shall have no authority to bind the Company or to act on behalf of the Company in any capacity. Nothing herein shall be construed to create a partnership, joint venture, or agency relationship between the Company and the Investor.

9. Duration and Termination

The Management Rights granted herein shall continue in full force and effect for so long as the Investor, or any of its affiliates (including Pinnacle Capital Management LLC and any successor general partner of the Investor), holds any shares of Series D Preferred Stock of the Company, or any shares of Common Stock of the Company issued upon conversion of such Series D Preferred Stock.

Upon the Investor and all of its affiliates ceasing to hold any shares of Series D Preferred Stock (or Common Stock issued upon conversion thereof) of the Company, the Management Rights granted herein shall automatically terminate without further action by any party, and neither party shall have any further obligations hereunder, except that the obligations of the Investor under Section 7 (Confidentiality) shall survive such termination for a period of two (2) years following the date of termination.

This Letter shall also terminate, and the Management Rights granted herein shall cease to be effective, upon the earliest to occur of: (a) the consummation of a Qualified IPO (as defined in the Investors' Rights Agreement); (b) the consummation of a Deemed Liquidation Event (as defined in the Amended and Restated Certificate of Incorporation of the Company, as may be amended from time to time); or (c) the mutual written agreement of the Company and the Investor to terminate this Letter. For the avoidance of doubt, the termination of this Letter shall not affect any rights or obligations of the parties that accrued prior to such termination.

10. Remedies

The Investor shall be entitled to specific performance and injunctive relief (including temporary restraining orders, preliminary injunctions, and permanent injunctions) in the event of any breach or threatened breach of this Letter by the Company, in addition to any and all other remedies available at law or in equity. The Company hereby acknowledges and agrees that (a) a breach or threatened breach of the Management Rights granted herein could cause irreparable and continuing harm to the Investor for which monetary damages would not be an adequate remedy, including, without limitation, the potential loss of the Investor's qualification as a venture capital operating company under ERISA or the Investor's reliance on the Venture Capital Fund Adviser Exemption under the Advisers Act, and (b) the Investor shall not be required to post any bond or other security in connection with seeking any such equitable relief. The Company further acknowledges that the remedies set forth in this Section 10 are cumulative and not exclusive and that the exercise of any remedy shall not preclude the exercise of any other remedy.

11. Miscellaneous

11.1 Governing Law

This Letter shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts located in the State of Delaware for the purpose of any suit, action, or other proceeding arising out of or relating to this Letter, and each party irrevocably waives any objection it may now or hereafter have to the laying of venue in any such court and any claim that any such suit, action, or proceeding has been brought in an inconvenient forum.

11.2 Amendment. This Letter may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Company and the Investor. No failure or delay by any party in exercising any right, power, or privilege under this Letter shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder.

11.3 Assignment. The Investor may assign its rights under this Letter, in whole or in part, to (a) any affiliate of the Investor (including Pinnacle Capital Management LLC and any successor general partner of the Investor), or (b) any transferee of the Investor's shares of Series D Preferred Stock (or Common Stock issued upon conversion thereof) in accordance with the terms of the Purchase Agreement and the Investors' Rights Agreement, in each case without the prior written consent of the Company, provided that any such assignee agrees in writing to be bound by the terms and conditions of this Letter. The Company may not assign its obligations under this Letter without the prior written consent of the Investor, and any purported assignment in violation of this Section 11.3 shall be null and void and of no force or effect. Subject to the foregoing, this Letter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.

11.4 Notices. All notices, requests, demands, consents, and other communications required or permitted under this Letter shall be in writing and shall be deemed to have been duly given when (a) delivered personally, (b) sent by confirmed email transmission, (c) sent by nationally recognized overnight courier service, or (d) sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as a party may designate by written notice in accordance with this Section 11.4):

If to the Company:

Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209

Attention: Raj Anand, Chief Executive Officer

Email: [__]

with a copy (which shall not constitute notice) to:

Sandra Mikkelsen, General Counsel Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209

Email: [__]

and a copy (which shall not constitute notice) to:

Langford Price & Associates LLP 1000 SW Broadway, Suite 1600 Portland, OR 97205

Attention: Jonathan Hale

Email: [__]

If to the Investor:

Pinnacle Venture Fund II LP 2400 Sand Hill Road, Suite 310 Menlo Park, CA 94025

Attention: Marcus Trejo, Partner, Head of Growth Equity

Email: [__]

with a copy (which shall not constitute notice) to:

Calderwood & Harkness LLP 101 Montgomery Street, Suite 3500 San Francisco, CA 94104

Attention: Harrison Wexford

Email: [__]

11.5 Entire Agreement

This Letter, together with the Purchase Agreement, the Investors' Rights Agreement, the Voting Agreement, and the other Transaction Agreements (as defined in the Purchase Agreement), constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, offers, contracts, and writings (whether written or oral) relating to such subject matter. In the event of any conflict between the terms of this Letter and the terms of any other Transaction Agreement with respect to the Management Rights granted herein, the terms of this Letter shall control.

11.6 Counterparts. This Letter may be executed in one or more counterparts (including by means of facsimile or portable document format (.pdf) signature pages), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Letter by facsimile or electronic transmission (including .pdf) shall be effective as delivery of a manually executed counterpart of this Letter.

11.7 Severability. If any provision of this Letter (or any portion thereof) is held to be invalid, illegal, or unenforceable under applicable law by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Letter, and this Letter shall be construed as if such invalid, illegal, or unenforceable provision (or portion thereof) had never been contained herein. In such event, the parties shall negotiate in good faith to replace such invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that achieves, to the greatest extent practicable, the economic, legal, and commercial objectives of the invalid, illegal, or unenforceable provision. The remaining provisions of this Letter shall continue in full force and effect and shall not be affected by the invalidity, illegality, or unenforceability of any other provision.

[Signature Pages Follow]

If the foregoing accurately sets forth our agreement with respect to the Management Rights described herein, please indicate your acceptance by signing and returning a counterpart of this Letter to the undersigned.

Very truly yours,

VERDANA SOFTWARE, INC.

By: ________

Name: Raj Anand

Title: Chief Executive Officer

Date: ________

ACKNOWLEDGED AND AGREED:

PINNACLE VENTURE FUND II LP

By: Pinnacle Capital Management LLC,

its General Partner

By: ________

Name: Marcus Trejo

Title: Partner, Head of Growth Equity

Date: ________

DRAFT — PREPARED BY CALDERWOOD & HARKNESS LLP

FOR DISCUSSION PURPOSES ONLY — NOT YET EXECUTED

Calderwood & Harkness LLP Matter No. 1002-00004 / Client No. PIN-0042

MANAGEMENT RIGHTS LETTER
DRAFT — June 15, 2022
Prepared by: Calderwood & Harkness LLP, 101 Montgomery Street, Suite 3500, San Francisco, CA 94104
Status: DRAFT — Subject to Execution at Closing
Calderwood & Harkness LLP Matter No. 1002-00004 / Client No. PIN-0042
This draft management rights letter is being circulated in connection with the proposed Series D Preferred Stock investment by Pinnacle Venture Fund II LP in Verdana Software, Inc. and is subject to further negotiation and revision. This document does not constitute a binding obligation of any party until duly executed and delivered in accordance with its terms.
VERDANA SOFTWARE, INC. 1175 NW Couch Street, Suite 800 Portland, OR 97209
[__], 2022
Pinnacle Venture Fund II LP 2400 Sand Hill Road, Suite 310 Menlo Park, CA 94025
Attention: Marcus Trejo, Partner, Head of Growth Equity
Dear Mr. Trejo:
Reference is hereby made to that certain Series D Preferred Stock Purchase Agreement dated as of [__], 2022 (as may be amended, restated, supplemented, or otherwise modified from time to time, the "Purchase Agreement"), by and among Verdana Software, Inc., a Delaware corporation (the "Company"), and Pinnacle Venture Fund II LP, a Delaware limited partnership (the "Investor"). Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to such terms in the Purchase Agreement or, as applicable, the Investors' Rights Agreement (each as defined below).
Pursuant to the Purchase Agreement, the Investor is purchasing 15,000,000 shares of Series D Preferred Stock of the Company at a price of $4.00 per share (or such other price per share as finally agreed by the parties and set forth in the Purchase Agreement) for an aggregate purchase price of Sixty Million Dollars ($60,000,000). Pinnacle Capital Management LLC, a Delaware limited liability company ("Pinnacle Capital Management"), serves as the general partner of the Investor and exercises investment discretion and management authority with respect to the Investor's assets and investment activities.
Reference is further made to that certain Amended and Restated Investors' Rights Agreement dated as of [__], 2022, by and among the Company, the Investor, and the other investors party thereto (the "Investors' Rights Agreement"), which sets forth certain information rights, registration rights, and other rights of the Investor with respect to its investment in the Company.
This management rights letter (this "Letter") is being delivered by the Company to the Investor pursuant to the Purchase Agreement and the Investors' Rights Agreement as a condition to the Closing (as defined in the Purchase Agreement). The purpose of this Letter is to grant the Investor certain contractual management rights with respect to the Company sufficient to qualify the Investor's investment in the Company as a "venture capital investment" within the meaning of (i) Rule 203(l)-1 under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the interpretive guidance issued by the staff of the U.S. Securities and Exchange Commission thereunder, and (ii) the regulations promulgated under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), including specifically 29 C.F.R. § 2510.3-101(d)(3)(i), as modified by Section 3(42) of ERISA (collectively, the "Plan Asset Regulation"). As used herein, the term "Management Rights" refers collectively to the rights granted to the Investor as set forth in this Letter.
In consideration of the Investor's agreement to consummate the transactions contemplated by the Purchase Agreement and the other Transaction Agreements, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Company hereby agrees as follows:
1. Grant of Management Rights
The Company hereby grants to the Investor the contractual right to substantially participate in, or substantially influence the conduct of, the management of the Company, as more particularly described in this Letter. The Management Rights granted herein are intended to be, and shall be construed as, contractual rights of the Investor that are legally enforceable against the Company in accordance with their terms. This grant of Management Rights is irrevocable and shall remain in full force and effect for so long as the Investor (or any of its affiliates, including Pinnacle Capital Management) holds any shares of Series D Preferred Stock of the Company (or any shares of Common Stock of the Company issued upon conversion thereof), subject only to the termination provisions set forth in Section 9 hereof.
The Company acknowledges that the Management Rights granted herein are a material inducement to the Investor's agreement to consummate the investment contemplated by the Purchase Agreement and that the Investor is relying upon the grant of such Management Rights in connection with its compliance with applicable regulatory requirements, including the Advisers Act and ERISA.
2. Consultation Rights
2.1 Right to Consult with Management
The Investor, including Pinnacle Capital Management (in its capacity as general partner of the Investor) and their respective officers, employees, partners, members, and designated representatives (collectively, "Investor Representatives"), shall have the right, at any time and from time to time, to consult with and advise the management of the Company regarding the management, business, operations, financial condition, prospects, and financial affairs of the Company. Without limiting the foregoing, the Investor shall have the right to consult directly with the Company's Chief Executive Officer, Raj Anand, the Company's Chief Financial Officer, Thomas Brightwell, and such other senior officers and key employees of the Company as the Investor may reasonably identify from time to time. Such consultation may take the form of in-person meetings at the Company's offices or other mutually agreeable locations, telephonic conferences, video conferences, or written correspondence, as the Investor may elect. The Company's management shall make itself reasonably available for such consultation upon reasonable advance notice from the Investor, it being understood that such availability shall include meetings, calls, or other interactions at times and frequencies reasonably requested by the Investor in light of the significance and nature of the matters to be discussed. The Company shall use commercially reasonable efforts to respond to any consultation request from the Investor within five (5) business days of receipt thereof.
2.2 Right to Consult on Significant Business Matters
Without limiting the generality of Section 2.1, the Investor shall have the specific right to consult with, and provide advice and recommendations to, management of the Company regarding the following significant business matters:
(a) Strategic Planning and Budgeting. The Company's strategic planning initiatives, long-range business plans, annual operating budgets, and any material deviations from approved budgets, including any revisions to the Company's growth strategy, market expansion plans, or competitive positioning.
(b) Significant Customer Relationships. Significant customer relationships and contract renewals, including but not limited to the Company's relationship with Meridian Logistics Corp. and other material customers generating annual recurring revenue in excess of $500,000, as well as the Company's customer acquisition and retention strategies.
(c) Product Development. The product development roadmap for the Company's Verdana SCX platform, including planned feature releases, technology architecture decisions, platform scalability initiatives, and competitive product assessments, as well as any plans to develop, acquire, or discontinue material product lines or service offerings.
(d) Senior Management and Talent. The hiring, compensation, retention, and termination of senior management personnel, including any changes to the executive leadership team, succession planning, and the adoption or amendment of equity incentive plans or other material compensation arrangements.
(e) Capital Expenditures. Capital expenditure plans, including any individual expenditure or series of related expenditures in excess of $250,000, as well as the Company's overall capital allocation strategy and infrastructure investment plans.
(f) Financing Activities. Financing activities of the Company, including any drawdowns, amendments, renewals, or refinancings related to the Company's revolving credit facility with Pacific Summit Bank, N.A., any issuances of equity or debt securities, and any other material indebtedness or credit arrangements.
(g) Acquisitions and Strategic Transactions. Potential acquisitions, mergers, dispositions of assets or business lines, joint ventures, strategic partnerships, licensing arrangements, and any other strategic transactions under consideration by the Company or its Board of Directors.
(h) Material Litigation and Regulatory Matters. Material litigation, arbitration, administrative proceedings, government investigations, or regulatory matters involving the Company or any of its subsidiaries, including any threatened claims or proceedings that could reasonably be expected to have a material adverse effect on the Company.
(i) intellectual Property. The Company's strategy with respect to the protection, prosecution, licensing, and enforcement of its intellectual property portfolio, including patents, trademarks, copyrights, and trade secrets.
(j) Other Material Matters. Any other matters that could reasonably be expected to have a material impact on the business, financial condition, results of operations, or prospects of the Company.
The Company acknowledges and agrees that the Investor's right to consult on the foregoing matters includes the right to offer advice, make recommendations, and express views to the Company's management and Board of Directors, and that the Company's management shall give due consideration to any such advice, recommendations, or views offered by the Investor. For the avoidance of doubt, nothing in this Section 2.2 shall require the Company to follow or implement any particular recommendation or advice offered by the Investor, provided that the Company shall not unreasonably refuse to engage in consultation as contemplated hereby.
3. Board Representation
Reference is hereby made to that certain Amended and Restated Voting Agreement dated as of [__], 2022, by and among the Company and the stockholders party thereto (the "Voting Agreement"), pursuant to which the Investor has the right to designate one (1) member to the Board of Directors of the Company (the "Board"). The Investor has designated Marcus Trejo (or his designee) as the initial Pinnacle designee to the Board.
Following the Closing, the Board is expected to be composed of seven (7) members, as follows:
(a) two (2) members designated by the Founders (as defined in the Voting Agreement);
(b) one (1) member designated by Ridgeline Ventures Fund III LP;
(c) one (1) member designated by Northgate Growth Partners Fund II LP;
(d) one (1) member designated by Brindoval Capital Group LLC;
(e) one (1) member designated by the Investor (initially Marcus Trejo or his designee); and
(f) one (1) independent director mutually agreed upon by the holders of a majority of the outstanding Preferred Stock and the Founders.
The Company acknowledges and agrees that the Investor's board designation right under the Voting Agreement provides a further and independent basis for the Investor to substantially participate in and substantially influence the conduct of the management of the Company. Through its designated Board member, the Investor will have the ability to participate in deliberations of the Board, vote on matters presented to the Board, serve on committees of the Board, and otherwise exercise the rights and fulfill the responsibilities of a member of the Board in accordance with applicable law and the Company's Amended and Restated Certificate of Incorporation and Bylaws.
The Management Rights set forth in this Letter are in addition to, and not in limitation of, the Investor's rights arising from its board designation right under the Voting Agreement, its rights under the Investors' Rights Agreement, and any other rights of the Investor under the Transaction Agreements. The Management Rights granted herein shall not be diminished or affected by the Investor's exercise or non-exercise of its board designation right or any other rights under the Transaction Agreements, and the Investor's board designation right shall not be diminished or affected by the Investor's exercise or non-exercise of the Management Rights granted herein.
4. Access to Facilities, Books, and Records
4.1 Facility Access
The Company shall permit the Investor and its Investor Representatives to visit and inspect any of the properties, offices, facilities, and other premises owned, leased, or operated by the Company and its subsidiaries, including the Company's headquarters located at 1175 NW Couch Street, Suite 800, Portland, OR 97209, and any other current or future offices, facilities, data centers, or other locations. Such visits and inspections shall be conducted during normal business hours (generally 9:00 a.m. to 6:00 p.m. Pacific Time, Monday through Friday, excluding federal holidays) and upon reasonable advance notice to the Company of not less than two (2) business days, unless the Investor reasonably determines that circumstances warrant shorter notice, in which case the Company shall use commercially reasonable efforts to accommodate such request. The Investor and its Investor Representatives shall comply with the Company's reasonable security, safety, and visitor policies during any such visit. The Company shall not be required to allow access to the extent that such access would unreasonably disrupt the Company's normal business operations, provided that the Company shall use good faith efforts to accommodate any access request and shall propose reasonable alternative arrangements if a particular request cannot be accommodated as originally proposed.
4.2 Books and Records Access
The Company shall permit the Investor and its Investor Representatives to examine, review, and make copies and extracts of the books of account, records, reports, and other papers of the Company and its subsidiaries, including but not limited to:
(a) corporate minute books, resolutions of the Board of Directors and stockholders, and stockholder records, including the Company's capitalization table and stock ledger;
(b) financial statements (whether audited or unaudited), general ledger, trial balances, journals, accounting records, and all supporting work papers and schedules;
(c) material contracts, agreements, licenses, and leases to which the Company or any of its subsidiaries is a party, including customer agreements, vendor agreements, employment agreements, and intellectual property licenses;
(d) federal, state, and local tax returns and related work papers, schedules, and correspondence with taxing authorities, subject to applicable attorney-client privilege and work product protections;
(e) records relating to the Company's intellectual property portfolio, including patent filings and prosecution files, trademark registrations, copyright registrations, domain name registrations, and records of trade secret protections;
(f) employee records and human resources files, to the extent permitted by applicable law, including records relating to equity incentive grants and vesting schedules; and
(g) such other books, records, documents, and information as the Investor may reasonably request from time to time.
Access to books and records under this Section 4.2 shall be provided during normal business hours upon reasonable advance notice to the Company. The Company shall use commercially reasonable efforts to provide requested materials in electronic format where reasonably practicable.
4.3 Personnel Access
The Company shall make available its officers, directors, employees, independent contractors, accountants (including the Company's independent auditors, Whitfield & Greer LLP), legal counsel (including the Company's General Counsel, Sandra Mikkelsen, and the Company's outside counsel), and other advisors for discussion, consultation, and inquiry as reasonably requested by the Investor or its Investor Representatives. Such access shall include, without limitation, the right to discuss the Company's business, affairs, finances, accounts, operations, prospects, compliance matters, and such other matters as the Investor may deem relevant to its investment in the Company. The Company shall use commercially reasonable efforts to facilitate such discussions and to ensure that the relevant personnel are reasonably available to respond to the Investor's inquiries in a timely manner. Nothing in this Section 4.3 shall be construed to require the Company to waive any applicable attorney-client privilege, work product protection, or similar legal privilege, provided that the Company shall notify the Investor if any requested access is being withheld on the basis of such privilege and shall use commercially reasonable efforts to provide alternative access to the substance of the requested information to the extent practicable without waiving such privilege.
5. Information Rights
Reference is hereby made to the information rights of the Investor set forth in the Investors' Rights Agreement, which include, among other things, the following:
(a) Quarterly Financial Statements. Unaudited financial statements of the Company (including a balance sheet, income statement, statement of cash flows, and statement of stockholders' equity), prepared in accordance with generally accepted accounting principles consistently applied, delivered within forty-five (45) days after the end of each fiscal quarter of the Company.
(b) Annual Audited Financial Statements. Annual financial statements of the Company, audited by the Company's independent auditors, Whitfield & Greer LLP (or such other nationally or regionally recognized accounting firm as may be selected by the Board), delivered within ninety (90) days after the end of each fiscal year of the Company.
(c) Monthly Management Reports. Monthly management reports in a format mutually agreed upon by the Company and the Investor, including key performance indicators, revenue and bookings metrics, cash burn and runway analysis, headcount data, and such other information as the Investor may reasonably request.
The foregoing information rights set forth in the Investors' Rights Agreement are incorporated herein by reference and shall constitute an additional component of the Management Rights granted to the Investor under this Letter. The Company shall provide such additional financial, operational, and other information as the Investor may reasonably request from time to time in connection with the exercise of its Management Rights hereunder, including, without limitation, budget-to-actual variance analyses, revenue pipeline reports, customer churn data, and other metrics reasonably necessary for the Investor to monitor and evaluate the performance of its investment in the Company.
6. Scope and Purpose; Venture Capital Investment Qualification
6.1 Investment Advisers Act
The parties acknowledge and agree that the Management Rights granted herein are intended to ensure that the Investor's investment in the Company qualifies as a "venture capital investment" for purposes of the exemption from registration as an investment adviser under Section 203(l) of the Advisers Act and Rule 203(l)-1 promulgated thereunder (the "Venture Capital Fund Adviser Exemption"). The parties further acknowledge that, in order to qualify for the Venture Capital Fund Adviser Exemption, the Investor must, among other things, obtain contractual rights to substantially participate in, or substantially influence the conduct of, the management of each qualifying portfolio company in which it invests, and this Letter is intended to provide such contractual rights with respect to the Company. The Company agrees to cooperate in good faith with the Investor, and to take such actions and execute such documents as may be reasonably requested by the Investor, in connection with establishing and maintaining the qualification of the Investor's investment in the Company as a "venture capital investment" under the Advisers Act and the rules and interpretive guidance issued thereunder.
6.2 ERISA — Plan Asset Regulation
The parties further acknowledge and agree that the Management Rights granted herein are intended to satisfy the requirements of 29 C.F.R. § 2510.3-101(d)(3)(i), as modified by Section 3(42) of ERISA (the Plan Asset Regulation), so that the Investor's interest in the Company constitutes a "venture capital investment" and the underlying assets of the Company are not deemed to be "plan assets" of any employee benefit plan (within the meaning of Section 3(3) of ERISA) that is a direct or indirect investor in the Investor. The Company acknowledges the importance of maintaining such qualification and agrees not to take any action, or fail to take any action, that would cause the Management Rights granted herein to be ineffective for purposes of satisfying the requirements of the Plan Asset Regulation. In the event that the Investor determines in good faith that any action or omission by the Company could jeopardize the effectiveness of the Management Rights for purposes of the Plan Asset Regulation, the Company shall promptly take such corrective action as the Investor may reasonably request.
6.3 Interpretation.  This Letter shall be interpreted and construed broadly to provide the Investor with Management Rights sufficient to qualify the Investor's investment in the Company as a "venture capital investment" under both the Advisers Act (including Rule 203(l)-1 thereunder) and ERISA (including the Plan Asset Regulation). In furtherance of the foregoing, the Company shall not unreasonably withhold, condition, or delay the exercise by the Investor of any Management Rights granted herein. If any provision of this Letter is susceptible to two or more constructions, the construction that would preserve and give effect to the Management Rights in a manner consistent with the regulatory purposes described in this Section 6 shall be adopted. In the event that any change in applicable law, regulation, or interpretive guidance would require the Investor to obtain additional or modified management rights in order to maintain the qualification of its investment in the Company as a "venture capital investment," the Company agrees to negotiate in good faith with the Investor to amend this Letter to provide such additional or modified management rights.
7. Confidentiality
The Investor acknowledges that, in the course of exercising the Management Rights granted herein, including through its access to the Company's facilities, books, records, personnel, and information, the Investor and its Investor Representatives may receive or become aware of confidential and proprietary information of the Company and its subsidiaries, including trade secrets, financial data, business plans, customer information, technology and product information, and other non-public information (collectively, "Confidential Information").
The Investor agrees to treat all Confidential Information as confidential and not to disclose or use any Confidential Information except as permitted herein or in connection with the Investor's evaluation and monitoring of its investment in the Company. The foregoing obligations of confidentiality shall not apply to any information that: (a) is or becomes generally available to the public other than as a result of a disclosure by the Investor or any of its Investor Representatives in violation of this Section 7; (b) was available to the Investor on a non-confidential basis prior to its disclosure by the Company; (c) is independently developed by the Investor or its Investor Representatives without use of or reference to the Confidential Information; (d) becomes available to the Investor on a non-confidential basis from a source other than the Company, provided that such source is not, to the Investor's knowledge, bound by a confidentiality obligation to the Company with respect to such information; or (e) is required to be disclosed by applicable law, regulation, legal process, or governmental order, provided that the Investor shall, to the extent legally permitted, provide the Company with prompt written notice of any such requirement prior to disclosure so that the Company may seek a protective order or other appropriate remedy.
Notwithstanding the foregoing, the Investor may disclose Confidential Information to: (i) its general partner, Pinnacle Capital Management LLC; (ii) its managing partners, Elaine Whitford and Derek Sung; (iii) its investment professionals, analysts, associates, and other personnel who have a need to know such information in connection with the Investor's investment in the Company; (iv) its fund administrator, Dralvecen Fund Services LLC; (v) its auditors, Calloway & Cascade Insurance Brokers; and (vi) its legal advisors, including Calderwood & Harkness LLP (collectively, "Permitted Recipients"), in each case provided that such Permitted Recipients are bound by confidentiality obligations no less restrictive than those set forth in this Section 7, whether pursuant to professional ethical obligations, separate confidentiality agreements, or partnership or employment agreements, as applicable.
The obligations set forth in this Section 7 are in addition to, and not in limitation of, the confidentiality obligations of the Investor under any separate non-disclosure agreement or similar agreement entered into between the Company and the Investor or its affiliates, and such separate agreements shall remain in full force and effect in accordance with their respective terms.
8. No Management Obligation; No Fiduciary Duty of Investor
Nothing in this Letter shall obligate the Investor or any of its Investor Representatives to exercise any of the Management Rights granted herein, to consult with or advise the Company's management on any particular matter, to attend any particular meeting, or to take any particular action with respect to the Company or its business. The Management Rights are permissive and not mandatory, and the Investor shall be free to exercise or decline to exercise such rights in its sole and absolute discretion.
The grant of Management Rights pursuant to this Letter shall not create any fiduciary duty on the part of the Investor to the Company, to any other stockholder of the Company, or to any other person or entity, other than any duties that may arise solely from the service of the Investor's board designee as a member of the Board of Directors of the Company in his or her capacity as a director. For the avoidance of doubt, the Investor shall not, by virtue of this Letter or the Management Rights granted herein, be deemed to owe any duty of care, duty of loyalty, or other fiduciary duty to the Company or its stockholders (other than as expressly set forth in the preceding sentence).
The Investor shall not be deemed an employee, officer, agent, or controlling person of the Company by virtue of this Letter or the exercise of any Management Rights hereunder, and the Investor shall have no authority to bind the Company or to act on behalf of the Company in any capacity. Nothing herein shall be construed to create a partnership, joint venture, or agency relationship between the Company and the Investor.
9. Duration and Termination
The Management Rights granted herein shall continue in full force and effect for so long as the Investor, or any of its affiliates (including Pinnacle Capital Management LLC and any successor general partner of the Investor), holds any shares of Series D Preferred Stock of the Company, or any shares of Common Stock of the Company issued upon conversion of such Series D Preferred Stock.
Upon the Investor and all of its affiliates ceasing to hold any shares of Series D Preferred Stock (or Common Stock issued upon conversion thereof) of the Company, the Management Rights granted herein shall automatically terminate without further action by any party, and neither party shall have any further obligations hereunder, except that the obligations of the Investor under Section 7 (Confidentiality) shall survive such termination for a period of two (2) years following the date of termination.
This Letter shall also terminate, and the Management Rights granted herein shall cease to be effective, upon the earliest to occur of: (a) the consummation of a Qualified IPO (as defined in the Investors' Rights Agreement); (b) the consummation of a Deemed Liquidation Event (as defined in the Amended and Restated Certificate of Incorporation of the Company, as may be amended from time to time); or (c) the mutual written agreement of the Company and the Investor to terminate this Letter. For the avoidance of doubt, the termination of this Letter shall not affect any rights or obligations of the parties that accrued prior to such termination.
10. Remedies
The Investor shall be entitled to specific performance and injunctive relief (including temporary restraining orders, preliminary injunctions, and permanent injunctions) in the event of any breach or threatened breach of this Letter by the Company, in addition to any and all other remedies available at law or in equity. The Company hereby acknowledges and agrees that (a) a breach or threatened breach of the Management Rights granted herein could cause irreparable and continuing harm to the Investor for which monetary damages would not be an adequate remedy, including, without limitation, the potential loss of the Investor's qualification as a venture capital operating company under ERISA or the Investor's reliance on the Venture Capital Fund Adviser Exemption under the Advisers Act, and (b) the Investor shall not be required to post any bond or other security in connection with seeking any such equitable relief. The Company further acknowledges that the remedies set forth in this Section 10 are cumulative and not exclusive and that the exercise of any remedy shall not preclude the exercise of any other remedy.
11. Miscellaneous
11.1 Governing Law
This Letter shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without giving effect to any choice or conflict of laws provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts located in the State of Delaware for the purpose of any suit, action, or other proceeding arising out of or relating to this Letter, and each party irrevocably waives any objection it may now or hereafter have to the laying of venue in any such court and any claim that any such suit, action, or proceeding has been brought in an inconvenient forum.
11.2 Amendment.  This Letter may not be amended, modified, supplemented, or waived except by a written instrument duly executed by both the Company and the Investor. No failure or delay by any party in exercising any right, power, or privilege under this Letter shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power, or privilege hereunder.
11.3 Assignment.  The Investor may assign its rights under this Letter, in whole or in part, to (a) any affiliate of the Investor (including Pinnacle Capital Management LLC and any successor general partner of the Investor), or (b) any transferee of the Investor's shares of Series D Preferred Stock (or Common Stock issued upon conversion thereof) in accordance with the terms of the Purchase Agreement and the Investors' Rights Agreement, in each case without the prior written consent of the Company, provided that any such assignee agrees in writing to be bound by the terms and conditions of this Letter. The Company may not assign its obligations under this Letter without the prior written consent of the Investor, and any purported assignment in violation of this Section 11.3 shall be null and void and of no force or effect. Subject to the foregoing, this Letter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
11.4 Notices.  All notices, requests, demands, consents, and other communications required or permitted under this Letter shall be in writing and shall be deemed to have been duly given when (a) delivered personally, (b) sent by confirmed email transmission, (c) sent by nationally recognized overnight courier service, or (d) sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows (or to such other address as a party may designate by written notice in accordance with this Section 11.4):
If to the Company:
Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209
Attention: Raj Anand, Chief Executive Officer
Email: [__]
with a copy (which shall not constitute notice) to:
Sandra Mikkelsen, General Counsel Verdana Software, Inc. 1175 NW Couch Street, Suite 800 Portland, OR 97209
Email: [__]
and a copy (which shall not constitute notice) to:
Langford Price & Associates LLP 1000 SW Broadway, Suite 1600 Portland, OR 97205
Attention: Jonathan Hale
Email: [__]
If to the Investor:
Pinnacle Venture Fund II LP 2400 Sand Hill Road, Suite 310 Menlo Park, CA 94025
Attention: Marcus Trejo, Partner, Head of Growth Equity
Email: [__]
with a copy (which shall not constitute notice) to:
Calderwood & Harkness LLP 101 Montgomery Street, Suite 3500 San Francisco, CA 94104
Attention: Harrison Wexford
Email: [__]
11.5 Entire Agreement
This Letter, together with the Purchase Agreement, the Investors' Rights Agreement, the Voting Agreement, and the other Transaction Agreements (as defined in the Purchase Agreement), constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior negotiations, representations, warranties, commitments, offers, contracts, and writings (whether written or oral) relating to such subject matter. In the event of any conflict between the terms of this Letter and the terms of any other Transaction Agreement with respect to the Management Rights granted herein, the terms of this Letter shall control.
11.6 Counterparts.  This Letter may be executed in one or more counterparts (including by means of facsimile or portable document format (.pdf) signature pages), each of which shall be deemed an original and all of which, taken together, shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Letter by facsimile or electronic transmission (including .pdf) shall be effective as delivery of a manually executed counterpart of this Letter.
11.7 Severability.  If any provision of this Letter (or any portion thereof) is held to be invalid, illegal, or unenforceable under applicable law by a court of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other provision of this Letter, and this Letter shall be construed as if such invalid, illegal, or unenforceable provision (or portion thereof) had never been contained herein. In such event, the parties shall negotiate in good faith to replace such invalid, illegal, or unenforceable provision with a valid, legal, and enforceable provision that achieves, to the greatest extent practicable, the economic, legal, and commercial objectives of the invalid, illegal, or unenforceable provision. The remaining provisions of this Letter shall continue in full force and effect and shall not be affected by the invalidity, illegality, or unenforceability of any other provision.
[Signature Pages Follow]
If the foregoing accurately sets forth our agreement with respect to the Management Rights described herein, please indicate your acceptance by signing and returning a counterpart of this Letter to the undersigned.
Very truly yours,
VERDANA SOFTWARE, INC.
By: ________
Name: Raj Anand
Title: Chief Executive Officer
Date: ________
ACKNOWLEDGED AND AGREED:
PINNACLE VENTURE FUND II LP
By: Pinnacle Capital Management LLC,
its General Partner
By: ________
Name: Marcus Trejo
Title: Partner, Head of Growth Equity
Date: ________
DRAFT — PREPARED BY CALDERWOOD & HARKNESS LLP
FOR DISCUSSION PURPOSES ONLY — NOT YET EXECUTED
Calderwood & Harkness LLP Matter No. 1002-00004 / Client No. PIN-0042

MANAGEMENT RIGHTS LETTER

VERDANA SOFTWARE, INC.

ACKNOWLEDGED AND AGREED:

PINNACLE VENTURE FUND II LP

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