CALDERWOOD & HARKNESS LLP Attorneys at Law
1800 Page Mill Road, Suite 200 Menlo Park, California 94025 Telephone: (650) 555-1200 Facsimile: (650) 555-1201 www.calderwoodharkness.com
PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT
This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is prepared solely for the internal use of Cobalt Ventures LP and Calderwood & Harkness LLP. Any dissemination, distribution, or copying of this memorandum or any attachment hereto without the prior written consent of Calderwood & Harkness LLP is strictly prohibited.
Matter No.: 1004-00001
I. PURPOSE AND SCOPE
This memorandum compares the material terms of the negotiated Series Seed Preferred Stock Purchase Agreement (the "SPA") and the related ancillary transaction documents for the Series Seed financing of Meridian Diagnostics, Inc., a Delaware C-corporation (the "Company"), against the binding term sheet executed on December 18, 2025 (the "Term Sheet") between Cobalt Ventures Fund III, LP ("Cobalt" or the "Lead Investor") and the Company. The purpose of this comparison is to confirm that the definitive documentation accurately and completely reflects the economic and governance terms agreed upon by the parties in the Term Sheet and to identify and analyze any deviations, additions, or clarifications that have been introduced during the course of negotiation.
The SPA and all ancillary documents — including the Amended and Restated Certificate of Incorporation (the "A&R Certificate"), the Investors' Rights Agreement, the Right of First Refusal and Co-Sale Agreement, the Voting Agreement, the Founder Stock Restriction Agreements, the Cobalt Side Letter, the Pinewood Side Letter, the Indemnification Agreement, and the Escrow Agreement — are in final form and have been circulated to all parties and their respective counsel. The transaction is scheduled for simultaneous sign-and-close on February 9, 2026.
This memorandum is organized by deal term, proceeding through the core economic provisions (valuation, pricing, capitalization, liquidation preference, anti-dilution, dividends), governance provisions (board composition, protective provisions, drag-along), investor rights provisions (information rights, pro rata rights, ROFR/co-sale, registration rights), founder-specific provisions (vesting, lock-up), side letter provisions, conditions to closing, and regulatory matters. For each term, the memorandum presents the relevant provision of the Term Sheet, the corresponding provision of the SPA or applicable ancillary document, and a comparison noting whether the terms are consistent or whether any deviation, addition, or clarification exists. Where terms are consistent and no deviation has been identified, the memorandum confirms alignment.
This memorandum is prepared for the internal use of Cobalt Ventures LP and Calderwood & Harkness LLP and constitutes attorney work product protected by the attorney-client privilege and the work product doctrine. It should not be shared with, or disclosed to, any third party — including the Company, Company counsel, co-investors, or their respective advisors — without the prior written consent of Calderwood & Harkness LLP.
II. TRANSACTION OVERVIEW
The following table summarizes the key structural parameters of the transaction:
The transaction involves a new-money investment of $12,000,000 in aggregate, with Cobalt serving as lead investor and committing $7,200,000, representing 60.0% of the round. Three co-investors are participating: Pinewood Health Ventures, LLC, committing $2,400,000 (20.0%); Thornfield Capital Partners, LP, committing $1,800,000 (15.0%); and Atlas Point Angel Syndicate, LLC, committing $600,000 (5.0%). In addition to the new-money investment, outstanding convertible notes in the aggregate principal amount of $2,100,000 will convert into Series Seed Preferred Stock at closing, as discussed in further detail in Section IV.C below.
The closing is structured as a simultaneous sign-and-close, with all documents to be executed and all consideration to be delivered on February 9, 2026. Investment proceeds will be wired to an escrow account held by Granite Trust Company, N.A., and released to the Company upon satisfaction of all closing conditions and confirmation of the filing of the A&R Certificate with the Delaware Secretary of State.
Comparison: The Term Sheet and the SPA are in alignment on all transaction overview parameters. No material deviations have been identified with respect to the structural terms of the transaction.
III. VALUATION AND PRICING
A. Pre-Money and Post-Money Valuation
Term Sheet: The Term Sheet established a pre-money valuation of $30,000,000 for the Company. Based on the $12,000,000 aggregate new-money investment, the implied post-money valuation is $42,000,000 ($30,000,000 pre-money + $12,000,000 new money).
SPA: The SPA is consistent with the Term Sheet. Section 1.1 of the SPA recites a pre-money valuation of $30,000,000 and a post-money valuation of $42,000,000. These figures are used as the basis for the per-share pricing and share allocation set forth in the Schedule of Investors.
Comparison: No deviation. The pre-money and post-money valuations are identical in the Term Sheet and the SPA.
B. Price Per Share
Term Sheet: The Term Sheet provided that the price per share of Series Seed Preferred Stock would be calculated based on the pre-money valuation divided by the pre-money fully-diluted capitalization, with the understanding that the pre-money fully-diluted capitalization would include the option pool increase contemplated by the Term Sheet.
SPA: The SPA sets the price per share at $2.6786, calculated as follows:
$30,000,000 (pre-money valuation) ÷ 11,200,000 (pre-money fully-diluted shares) = $2.6786 per share (rounded to four decimal places)
The pre-money fully-diluted share count of 11,200,000 includes 10,000,000 shares of Common Stock outstanding prior to the financing and 1,200,000 new shares added to the option pool as part of the option pool expansion, which is counted in the pre-money denominator consistent with market practice and the express terms of the Term Sheet.
Comparison: Consistent with Term Sheet methodology. The SPA sets forth the definitive per-share price, which was left to be calculated in the Term Sheet. The calculation methodology is precisely as described in the Term Sheet, and the resulting per-share price accurately reflects the agreed-upon pre-money valuation and fully-diluted capitalization.
C. Shares Issued
SPA: A total of 4,479,981 shares of Series Seed Preferred Stock will be issued to the new-money investors at a price of $2.6786 per share. The allocation among the investors is as follows:
The foregoing allocation is set forth in the Schedule of Investors attached as Exhibit A to the SPA. Any rounding differences resulting from the application of the per-share price to each investor's commitment amount have been resolved to the nearest whole share, with fractional shares rounded down.
Comparison: Consistent with Term Sheet economics. The share allocation is pro rata based on each investor's commitment amount and the agreed-upon per-share price. The Schedule of Investors attached to the SPA reflects the final allocation.
D. Pre-Money Fully-Diluted Capitalization
The pre-money fully-diluted capitalization used for pricing purposes is comprised of the following:
The 10,000,000 shares of pre-financing Common Stock include all shares held by the founders, early employees, and shares reserved under the existing option pool (including both granted and unallocated options). The 1,200,000-share option pool increase is counted in the pre-money denominator, consistent with the Term Sheet and standard venture capital practice, which has the effect of allocating the dilution from the option pool expansion to the existing stockholders rather than to the new-money investors.
Comparison: The Term Sheet expressly contemplated that the option pool increase would be included in the pre-money fully-diluted capitalization for pricing purposes. The SPA is consistent with this approach. No deviation.
IV. CAPITALIZATION
A. Pre-Financing Common Stock
The Company's pre-financing capitalization consists of 10,000,000 shares of Common Stock, allocated as follows:
Dr. Ramaswamy and Dr. Ochoa hold their shares subject to Founder Stock Restriction Agreements, as discussed in Section XV below. Nadia Chen's shares are subject to a standard employee vesting arrangement with a four-year vesting period, a one-year cliff, and monthly vesting thereafter. As of the anticipated closing date of February 9, 2026, Ms. Chen will have been with the Company for approximately 18 months, meaning she will have vested through her one-year cliff and an additional six months of monthly vesting.
The Company's 2024 Equity Incentive Plan (the "Plan"), adopted by the Board on March 1, 2024, originally reserved 400,000 shares for issuance. Of these, 175,000 shares are subject to outstanding option grants to employees and advisors, and 225,000 shares remain unallocated and available for future grants.
B. Post-Financing Capitalization (New Money)
Following the issuance of 4,479,981 shares of Series Seed Preferred Stock to the new-money investors, the Company's post-money fully-diluted capitalization (excluding the convertible note conversion) will be as follows:
The investors' aggregate ownership of 28.57% is consistent with the expected ownership implied by the agreed-upon valuation: $12,000,000 / $42,000,000 = 28.57%. This confirms that the pricing, share issuance, and capitalization are internally consistent with the economic terms of the Term Sheet.
C. Convertible Note Conversion
In addition to the new-money investment, outstanding convertible promissory notes in the aggregate principal amount of $2,100,000 will convert into shares of Series Seed Preferred Stock at closing. The notes were issued on September 12, 2023, to two noteholders, as follows:
The key terms of the convertible notes and the mechanics of conversion are summarized below:
Accrued Interest. The notes bear simple interest at a rate of 5.0% per annum. As of the anticipated closing date of February 9, 2026, approximately 29 months will have elapsed since the date of issuance. Accrued interest through closing is estimated at approximately $253,750, calculated as follows:
$2,100,000 × 5.0% × (29 / 12) = approximately $253,750
Total Conversion Amount. The total amount converting into Series Seed Preferred Stock — including both principal and accrued interest — is approximately $2,353,750.
Conversion discount. The notes provide for a 20% conversion discount, meaning the noteholders convert at a price per share equal to 80% of the price per share paid by the new-money investors. The discount price is calculated as follows:
$2.6786 (new-money price per share) × 0.80 = $2.1429 (Discount price)
Conversion Cap. The notes also include a $25,000,000 pre-money valuation cap. The cap price per share is calculated as follows:
$25,000,000 (cap) ÷ 11,200,000 (pre-money fully-diluted shares) = $2.2321 (cap price)
Applicable Conversion Price. Under the terms of the notes, the applicable conversion price is the lower of the discount price and the cap price. Because the discount price ($2.1429) is lower than the cap price ($2.2321), the applicable conversion price is $2.1429 per share.
Shares Issued on Conversion. The total number of shares of Series Seed Preferred Stock to be issued upon conversion is approximately:
$2,353,750 ÷ $2.1429 ≈ 1,098,362 shares
Post-Money Fully-Diluted Capitalization (Including Note Conversion). After giving effect to the new-money investment and the convertible note conversion, the Company's post-money fully-diluted capitalization will be:
Comparison: The Term Sheet contemplated that the outstanding convertible notes would convert into Series Seed Preferred Stock at closing, at the lower of a 20% discount to the per-share price paid by new-money investors or the price implied by the $25,000,000 pre-money valuation cap. The SPA is consistent with these terms. The detailed mechanics of the note conversion, including the precise share allocation between Dr. Liu and Clearwater Bridge Associates, LLC, are confirmed in a separate Convertible Note Conversion Analysis Memorandum previously circulated to the team.
V. LIQUIDATION PREFERENCE
Term Sheet: The Term Sheet specified a 1x non-participating preferred liquidation preference for the Series Seed Preferred Stock.
SPA / A&R Certificate of Incorporation: Article IV, Section 2 of the A&R Certificate provides for a 1x non-participating preferred liquidation preference. In the event of a Deemed Liquidation Event — defined to include (i) a merger or consolidation (other than one in which the Company's stockholders continue to hold more than 50% of the voting power of the surviving entity), (ii) a sale, lease, exclusive license, or other disposition of all or substantially all of the Company's assets, or (iii) a change of control — each share of Series Seed Preferred Stock is entitled to receive, prior and in preference to any distribution to holders of Common Stock, the greater of:
(a) the Original Issue Price of $2.6786 per share (as adjusted for any stock splits, stock dividends, recapitalizations, or similar events occurring after the original issuance), plus any declared but unpaid dividends thereon; or
(b) the amount that the holder of such share would have received if such share had been converted into Common Stock immediately prior to such Deemed Liquidation Event (the "as-converted amount").
The non-participating structure means that holders of Series Seed Preferred Stock do not receive both their liquidation preference and a pro rata share of the remaining proceeds. Rather, each holder must elect — at the time of a Deemed Liquidation Event — to receive either the liquidation preference or the as-converted amount, whichever is greater. In economic terms, this provides downside protection equal to the original investment amount (plus declared but unpaid dividends) while allowing holders to participate in upside through conversion when the total proceeds are sufficiently large to make the as-converted amount more favorable.
Comparison: Consistent with the Term Sheet. The 1x non-participating preferred structure is precisely as agreed. No deviation.
VI. ANTI-DILUTION PROTECTION
Term Sheet: The Term Sheet specified broad-based weighted average anti-dilution protection for the Series Seed Preferred Stock.
SPA / A&R Certificate of Incorporation: Article IV, Section 4 of the A&R Certificate provides for a broad-based weighted average anti-dilution adjustment to the conversion price of the Series Seed Preferred Stock. In the event the Company issues additional shares of Common Stock (or securities convertible into Common Stock) at a price per share less than the then-applicable conversion price of the Series Seed Preferred Stock (a "down round"), the conversion price will be adjusted downward using the standard broad-based weighted average formula:
CP₂ = CP₁ × (A + B) / (A + C)
Where:
• CP₂ = the new conversion price
• CP₁ = the conversion price in effect immediately prior to the dilutive issuance
• A = the number of shares of Common Stock outstanding immediately prior to the dilutive issuance (on a fully-diluted, as-converted basis)
• B = the number of shares of Common Stock that would have been issued at CP₁ for the aggregate consideration received in the dilutive issuance
• C = the actual number of shares of Common Stock issued (or issuable) in the dilutive issuance
The A&R Certificate includes the following customary carve-outs from the anti-dilution adjustment, meaning the following issuances will not trigger a conversion price adjustment:
(i) Shares issued or issuable upon exercise of options or restricted stock units granted under the 2024 Equity Incentive Plan, as expanded by the option pool increase approved in connection with this financing;
(ii) Shares issued or issuable upon conversion of the outstanding convertible promissory notes held by Dr. Margaret Liu and Clearwater Bridge Associates, LLC;
(iii) Shares issued in connection with bona fide strategic partnerships, collaborations, equipment leases, bank credit facilities, or similar commercial transactions, provided that such issuances are approved by the Board of Directors (including the affirmative vote of the Series Seed Preferred director);
(iv) Shares issued in connection with any stock split, stock dividend, or recapitalization applicable to all outstanding shares; and
(v) Shares issued in connection with the acquisition of another entity, provided that such acquisition is approved by the Board of Directors (including the affirmative vote of the Series Seed Preferred director).
Comparison: Consistent with the Term Sheet. The Term Sheet specified broad-based weighted average anti-dilution protection, and the A&R Certificate implements this protection using the standard NVCA-form formula. The specific carve-outs enumerated above were not explicitly itemized in the Term Sheet, but they represent customary and market-standard exceptions that would be expected in any definitive Series Seed financing document. The inclusion of these carve-outs does not represent a deviation from the Term Sheet and is within the range of market expectations for a transaction of this nature.
VII. DIVIDENDS
Term Sheet: The Term Sheet provided for non-cumulative dividends on the Series Seed Preferred Stock, payable when, as, and if declared by the Board of Directors.
SPA / A&R Certificate of Incorporation: Article IV, Section 1 of the A&R Certificate provides that holders of Series Seed Preferred Stock are entitled to receive non-cumulative dividends when, as, and if declared by the Board of Directors. The Series Seed Preferred participates in any dividend declared on an as-converted basis with the Common Stock, meaning that if the Board declares a dividend on the Common Stock, holders of Series Seed Preferred Stock are entitled to receive a dividend equal to the amount they would have received had they converted their shares into Common Stock immediately prior to the record date for such dividend.
There is no mandatory dividend obligation. The Company is not required to declare or pay dividends at any time. The declaration of any dividend on any shares of the Company's capital stock is subject to the protective provisions discussed in Section X below, which require the consent of the holders of a majority of the then-outstanding shares of Series Seed Preferred Stock.
Comparison: Consistent with the Term Sheet. The non-cumulative dividend provision and the as-converted participation right are standard NVCA provisions for seed-stage preferred stock. No deviation.
VIII. BOARD COMPOSITION
Term Sheet: The Term Sheet provided for a five-member Board of Directors, composed of two directors designated by the holders of Common Stock (the founders), one director designated by the holders of a majority of the Series Seed Preferred Stock (the Cobalt designee), and two independent directors mutually agreed upon by the holders of Common Stock and the holders of Series Seed Preferred Stock.
Voting Agreement: Section 1.2 of the Voting Agreement, executed by the Company, the Investors, and the Key Holders (Dr. Ramaswamy and Dr. Ochoa), provides for a five-member Board of Directors composed as follows:
(1) Dr. Priya Ramaswamy, designated by the holders of a majority of the outstanding shares of Common Stock;
(2) Dr. Julian Ochoa, designated by the holders of a majority of the outstanding shares of Common Stock;
(3) David Hargrove, designated by the holders of a majority of the outstanding shares of Series Seed Preferred Stock (serving as the Cobalt designee);
(4) One independent director, mutually agreed upon by the holders of a majority of the outstanding shares of Common Stock and the holders of a majority of the outstanding shares of Series Seed Preferred Stock; and
(5) One independent director, mutually agreed upon by the holders of a majority of the outstanding shares of Common Stock and the holders of a majority of the outstanding shares of Series Seed Preferred Stock.
The two independent director seats are to be filled by mutual agreement of the Common and Preferred holders. As of the date of this memorandum, the parties have not yet identified specific individuals for these seats; however, the Voting Agreement requires that the independent directors be identified and nominated within 90 days following the closing. In the interim, the Board will operate with three seated directors.
In addition to David Hargrove's seat as a voting Board member, the Cobalt Side Letter (discussed in Section XVI.A below) provides Cobalt with the right to designate one additional representative to attend all Board meetings in a non-voting observer capacity. This observer right was contemplated in the Term Sheet and is reflected in the final documentation.
Comparison: Consistent with the Term Sheet. The five-member board structure and the allocation of designation rights are precisely as set forth in the Term Sheet. The Board observer right for Cobalt is addressed in the Cobalt Side Letter, as contemplated. No deviation.
IX. OPTION POOL EXPANSION
Term Sheet: The Term Sheet contemplated an increase to the Company's stock option pool to approximately 15% of the pre-money fully-diluted capitalization, with the increase counted in the pre-money denominator for pricing purposes.
SPA / Board Consent / Stockholder Consent: The definitive documents provide for an increase of 1,200,000 new shares reserved for issuance under the Company's 2024 Equity Incentive Plan. The relevant details are as follows:
The post-increase total option pool of 1,600,000 shares represents approximately 14.3% of the pre-money fully-diluted capitalization of 11,200,000 shares (1,600,000 / 11,200,000 = 14.29%). The 15% target referenced in the Term Sheet was described as approximate, and 14.3% is within the range contemplated by the parties. The 1,200,000-share increase is included in the 11,200,000-share pre-money denominator used for pricing, consistent with the Term Sheet and standard venture capital practice.
The option pool increase will be effectuated through a Board resolution and stockholder consent adopted simultaneously with the execution and delivery of the SPA and ancillary documents at closing. The 2024 Equity Incentive Plan, as amended to reflect the additional 1,200,000 shares, will be attached as an exhibit to the Board consent.
Any future increase to the shares reserved under the 2024 Equity Incentive Plan, or the adoption of any new equity incentive plan, will require the consent of the holders of a majority of the then-outstanding shares of Series Seed Preferred Stock pursuant to the protective provisions set forth in the A&R Certificate (see Section X below).
Comparison: Consistent with the Term Sheet. The 15% target stated in the Term Sheet was explicitly described as approximate, and the actual pool percentage of 14.3% falls within the expected range. The inclusion of the option pool increase in the pre-money denominator is as agreed. No material deviation.
X. PROTECTIVE PROVISIONS
Term Sheet: The Term Sheet specified that standard NVCA-style protective provisions for seed rounds would apply, requiring the consent of the holders of a majority of the then-outstanding shares of Series Seed Preferred Stock, voting as a separate class, for specified material actions.
A&R Certificate of Incorporation: Article IV, Section 6 of the A&R Certificate provides that the consent of the holders of a majority of the then-outstanding shares of Series Seed Preferred Stock, voting as a separate class, shall be required for any of the following actions:
(a) Senior or Parity Securities. The authorization or issuance of any equity security (including any security convertible into or exercisable for equity) that is senior to or on parity with the Series Seed Preferred Stock with respect to liquidation preference, dividend rights, redemption rights, or voting rights.
(b) Charter and Bylaw Amendments. Any amendment, modification, or restatement of the Company's Certificate of Incorporation (including the A&R Certificate) or Bylaws that adversely affects the rights, preferences, privileges, or powers of the Series Seed Preferred Stock as a class, whether by merger, consolidation, or otherwise.
(c) Dividends. The declaration or payment of any dividend or other distribution on any shares of the Company's capital stock (other than dividends payable solely in shares of Common Stock).
(d) Equity Incentive Plans. Any increase in the aggregate number of shares reserved for issuance under the 2024 Equity Incentive Plan (as amended), or the adoption of any new equity incentive, stock option, restricted stock, or similar compensation plan.
(e) Indebtedness. The incurrence, assumption, or guarantee of any indebtedness in excess of $250,000 in the aggregate outside the ordinary course of business, excluding trade payables, equipment financing, and credit facilities incurred in the ordinary course.
(f) Acquisitions. The acquisition, whether by merger, purchase of assets, stock purchase, or otherwise, of another entity or all or substantially all of the assets of another entity, where the aggregate consideration exceeds $500,000.
(g) Related-Party Transactions. The entry into any transaction or arrangement with any director, officer, founder, or holder of more than 5% of the Company's outstanding capital stock (or any affiliate of any such person) where the aggregate value of such transaction exceeds $100,000, unless such transaction is on arms'-length terms and has been approved by a majority of the disinterested members of the Board of Directors.
Comparison: Consistent with the Term Sheet. The Term Sheet referenced "standard NVCA-style protective provisions" and noted that consent of a majority of the Series Seed Preferred would be required for specified actions. The definitive documents enumerate the specific actions and thresholds, including the $250,000 indebtedness threshold, the $500,000 acquisition threshold, and the $100,000 related-party transaction threshold. These thresholds were referenced in the Term Sheet during discussions and are reflected accurately in the A&R Certificate. No material deviation has been identified.
XI. INFORMATION RIGHTS
Term Sheet: The Term Sheet provided that Major Investors would receive financial and operating information from the Company on a periodic basis.
Investors' Rights Agreement: Section 3.1 of the Investors' Rights Agreement defines "Major Investors" as holders of at least 1,000,000 shares of Series Seed Preferred Stock (or Common Stock issued upon conversion thereof). Based on the share allocations at closing, the following analysis applies:
We note that the shares issued upon conversion of the convertible notes to Dr. Margaret Liu and Clearwater Bridge Associates, LLC may affect this analysis to the extent that either noteholder independently meets the 1,000,000-share threshold following conversion. Based on the preliminary conversion analysis, the total note conversion shares of approximately 1,098,362 would be allocated between Dr. Liu and Clearwater Bridge Associates, LLC in proportion to their respective conversion amounts. The precise allocation will be confirmed at closing. Neither noteholder is expected to independently exceed the Major Investor threshold based on the preliminary allocation, but this should be confirmed upon finalization of the conversion calculations.
Major Investors are entitled to the following information rights under Section 3.2 of the Investors' Rights Agreement:
(i) Annual Audited Financial Statements. Audited financial statements for each fiscal year, prepared in accordance with generally accepted accounting principles (GAAP) and audited by the Company's independent registered public accounting firm (currently Graystone & Pallister CPAs, LLP), to be delivered within 120 days following the end of each fiscal year.
(ii) Quarterly Unaudited Financial Statements. Unaudited financial statements (including a balance sheet, income statement, and statement of cash flows) for each fiscal quarter, to be delivered within 45 days following the end of each quarter.
(iii) Monthly Management Reports. Monthly management reports containing a summary of key operational metrics, revenue and expense data, cash balance and burn rate, and such other information as reasonably requested by a Major Investor, to be delivered within 30 days following the end of each month.
(iv) Annual Budget and Business Plan. A proposed annual budget and business plan for each fiscal year, to be delivered no later than 30 days prior to the beginning of such fiscal year, and to be approved by the Board of Directors (including the Series Seed Preferred director).
Comparison: Consistent with the Term Sheet. The Major Investor threshold of 1,000,000 shares is as stated in the Term Sheet. The categories of information to be provided are consistent with the general description in the Term Sheet. No deviation.
XII. PRO RATA RIGHTS
Term Sheet: The Term Sheet provided that Major Investors would have the right to participate pro rata in future financing rounds to maintain their percentage ownership in the Company.
Investors' Rights Agreement: Section 4.1 of the Investors' Rights Agreement grants Major Investors (as defined above — holders of at least 1,000,000 shares of Series Seed Preferred Stock) a pro rata right to purchase their proportionate share of any new securities issued by the Company in subsequent equity financing rounds. The pro rata right is calculated based on the Major Investor's percentage ownership of the Company on a fully-diluted, as-converted basis as of the record date for the applicable financing.
The pro rata right is subject to customary exclusions, including issuances under the 2024 Equity Incentive Plan, issuances in connection with strategic partnerships or acquisitions approved by the Board, issuances in connection with equipment leases or bank credit facilities, and issuances in connection with stock splits or dividends applicable to all outstanding shares.
Major Investors who wish to exercise their pro rata right must provide written notice to the Company within 15 business days of receiving the Company's notice of a proposed issuance. If a Major Investor does not exercise its pro rata right within such period, the right with respect to such issuance lapses. Any shares not purchased by a Major Investor exercising its pro rata right may be offered to other Major Investors on a pro rata basis (a "super pro rata" right), with any remaining shares to be offered to non-Major Investor participants.
Comparison: Consistent with the Term Sheet. The pro rata participation right is limited to Major Investors as defined in the Investors' Rights Agreement, which is consistent with the Term Sheet. No deviation.
XIII. RIGHT OF FIRST REFUSAL AND CO-SALE
Term Sheet: The Term Sheet contemplated a standard NVCA right of first refusal and co-sale agreement binding the founders.
Right of First Refusal and Co-Sale Agreement: The Right of First Refusal and Co-Sale Agreement (the "ROFR/Co-Sale Agreement") has been executed among the Company, all Investors (including Cobalt, Pinewood, Thornfield, and Atlas Point), and the Key Holders, defined as Dr. Priya Ramaswamy and Dr. Julian Ochoa. The key provisions are as follows:
Right of First Refusal. If any Key Holder proposes to transfer any shares of the Company's capital stock to a third party, the Key Holder must first deliver a written notice (the "Transfer Notice") to the Company and the Investors, specifying the number of shares proposed to be transferred, the identity of the proposed transferee, the proposed purchase price, and all other material terms of the proposed transfer. The Company has the first right to purchase all or any portion of the shares proposed to be transferred, at the price and on the terms specified in the Transfer Notice. If the Company does not exercise its right of first refusal in full, the Investors have the right to purchase the remaining shares on a pro rata basis (based on the number of shares of Series Seed Preferred Stock held by each Investor on an as-converted basis).
Co-Sale Right. If neither the Company nor the Investors exercise their respective rights of first refusal in full, each Investor has the right to participate in the proposed transfer on a pro rata basis, on the same terms and conditions as the Key Holder's proposed transfer. The co-sale right allows Investors to sell a proportionate number of their shares alongside the Key Holder, thereby participating in the liquidity event on equal terms.
Permitted Transfers. The ROFR/Co-Sale Agreement includes customary exceptions for permitted transfers that do not trigger the right of first refusal or co-sale provisions, including transfers to a Key Holder's immediate family members, to revocable trusts established for the benefit of the Key Holder or the Key Holder's immediate family, to estate planning vehicles controlled by the Key Holder, and other customary exemptions. Any transferee receiving shares in a permitted transfer must agree to be bound by the terms of the ROFR/Co-Sale Agreement as a condition of receiving such shares.
Comparison: Consistent with the Term Sheet. The ROFR/Co-Sale Agreement follows the standard NVCA form and implements the right of first refusal and co-sale provisions contemplated in the Term Sheet. No deviation from the Term Sheet has been identified.
XIV. DRAG-ALONG
Term Sheet: The Term Sheet included a drag-along provision applicable to all stockholders, triggered at a transaction value of $84,000,000 or greater, representing 2x the post-money valuation of $42,000,000.
Voting Agreement: Section 3.1 of the Voting Agreement includes a drag-along provision. If a Deemed Liquidation Event is approved by all three of the following:
(i) the Board of Directors (including the affirmative vote of the Series Seed Preferred director);
(ii) the holders of a majority of the then-outstanding shares of Common Stock; and
(iii) the holders of a majority of the then-outstanding shares of Series Seed Preferred Stock;
and the transaction values the Company at $84,000,000 or more (representing 2× the $42,000,000 post-money valuation), then all stockholders — including any dissenting or non-voting stockholders — shall be obligated to (a) vote all of their shares in favor of such transaction, (b) execute and deliver any and all documents and instruments reasonably necessary to consummate such transaction, (c) not exercise any appraisal or dissenters' rights available under applicable law, and (d) take all other actions reasonably necessary to consummate such transaction.
The $84,000,000 threshold is a fixed dollar amount and does not adjust for subsequent financing rounds, dilution, or other changes in the Company's capitalization. The threshold serves as a floor to ensure that the drag-along right cannot be exercised unless the transaction delivers meaningful value to all stockholders.
Comparison: Consistent with the Term Sheet. The $84,000,000 drag-along threshold matches the Term Sheet exactly, and the approval requirements (Board, majority Common, majority Preferred) are as contemplated. No deviation.
XV. FOUNDER VESTING
Term Sheet: The Term Sheet required that both founders be subject to four-year reverse vesting with a one-year cliff, with 25% vesting at the cliff and monthly vesting thereafter. The vesting commencement date was specified as the date of the Company's formation (June 15, 2023).
Founder Stock Restriction Agreements: Each founder has executed a Founder Stock Restriction Agreement (each, a "FSRA") in connection with the closing. The material terms are as follows:
Dr. Priya Ramaswamy:
• Shares subject to reverse vesting: 5,500,000 shares of Common Stock
• Vesting schedule: Four-year reverse vesting with one-year cliff
• Cliff vesting: 25% (1,375,000 shares) vested on June 15, 2024
• Monthly vesting: Remaining 75% (4,125,000 shares) vest in equal monthly installments over the 36-month period following the cliff (approximately 114,583 shares per month)
• Vesting commencement date: June 15, 2023 (Company formation date)
• Repurchase right: The Company has the right to repurchase any unvested shares at the original purchase price upon the founder's termination of service
Dr. Julian Ochoa:
• Shares subject to reverse vesting: 3,500,000 shares of Common Stock
• Vesting schedule: Four-year reverse vesting with one-year cliff
• Cliff vesting: 25% (875,000 shares) vested on June 15, 2024
• Monthly vesting: Remaining 75% (2,625,000 shares) vest in equal monthly installments over the 36-month period following the cliff (approximately 72,917 shares per month)
• Vesting commencement date: June 15, 2023 (Company formation date)
• Repurchase right: The Company has the right to repurchase any unvested shares at the original purchase price upon the founder's termination of service
As of the anticipated closing date of February 9, 2026, approximately 32 months will have elapsed since the vesting commencement date of June 15, 2023. Each founder will have fully vested through the one-year cliff (25% on June 15, 2024) and an additional 20 months of monthly vesting (representing approximately 41.67% of total shares vested post-cliff, based on 20/36 of the remaining 75%), for an aggregate vesting of approximately 66.67% of each founder's total shares as of closing.
Each FSRA includes customary provisions regarding acceleration upon a change of control. Single-trigger acceleration is not provided; however, each FSRA includes a double-trigger acceleration provision, under which 100% of the founder's unvested shares will accelerate and become fully vested if, within 12 months following a change of control, the founder's employment is terminated by the Company (or its successor) without cause or the founder resigns for good reason. This double-trigger acceleration provision was discussed during term sheet negotiations and is consistent with market practice for seed-stage founder vesting arrangements.
Comparison: Consistent with the Term Sheet. The four-year reverse vesting schedule, one-year cliff, monthly vesting, vesting commencement date of June 15, 2023, and Company repurchase right are all as specified in the Term Sheet. No deviation.
XVI. SIDE LETTER PROVISIONS
A. Cobalt Side Letter (Cobalt Ventures Fund III, LP)
Term Sheet: The Term Sheet provided that Cobalt would be entitled to certain additional rights beyond those available to all investors, to be documented in a separate side letter.
Cobalt Side Letter (dated February 9, 2026): The Cobalt Side Letter has been negotiated and finalized in connection with the closing. It contains the following five provisions:
(i) Most Favored Nation Clause. If the Company grants any other investor in this financing round more favorable terms — whether through a side letter, amendment to the SPA or ancillary documents, or otherwise — Cobalt shall have the right to receive the benefit of such more favorable terms. Cobalt must provide written notice to the Company within 30 days of becoming aware of such more favorable terms. This MFN clause provides Cobalt with assurance that its negotiated position will not be undermined by concessions made to other investors.
(ii) Additional Information Rights. In addition to the standard information rights provided to Major Investors under the Investors' Rights Agreement (described in Section XI above), the Company agrees to provide Cobalt with (a) a monthly key performance indicator ("KPI") dashboard, containing such operational and financial metrics as Cobalt may reasonably request from time to time, and (b) real-time access to the Company's capitalization table through a web-based cap table management platform (currently Larkspur Software). These additional information rights are intended to provide Cobalt, as the lead investor, with enhanced visibility into the Company's operations and capitalization.
(iii) Board Observer Right. In addition to David Hargrove's seat as a voting member of the Board of Directors (as the Series Seed Preferred designee under the Voting Agreement), Cobalt is entitled to designate one additional representative to attend all meetings of the Board of Directors in a non-voting observer capacity. The Board observer shall receive the same notice, materials, and access to information as voting Board members, subject to customary exclusions for matters in which Cobalt has a personal interest or where the Board determines that observer attendance would compromise the attorney-client privilege.
(iv) Annual Data Privacy and Security Compliance Audit Right. Given the Company's operations in the diagnostics sector and the sensitivity of patient health data, Cobalt is entitled to conduct (or cause to be conducted by a qualified third-party auditor) an annual audit of the Company's data privacy and security practices, policies, and compliance with applicable laws and regulations (including HIPAA, state privacy laws, and any applicable FDA data integrity requirements). The audit is to be conducted at Cobalt's sole expense, upon reasonable notice and during normal business hours, and the Company agrees to cooperate in good faith with any such audit.
(v) Single Expenditure Consent Right. The Company shall not make any single capital or operating expenditure exceeding $200,000 without the prior written consent of Cobalt Ventures Fund III, LP. This consent right is intended to provide Cobalt with additional oversight over the Company's spending during the early stage of operations and supplements the broader protective provisions requiring Series Seed Preferred majority consent for material transactions.
Comparison: All five provisions of the Cobalt Side Letter were contemplated in the Term Sheet and are reflected in the final side letter. No material deviation has been identified. The specific formulations and implementation mechanics (such as the 30-day notice period for the MFN clause and the use of Sterling Reach Health IT for cap table access) were developed during drafting and are consistent with market practice.
B. Pinewood Side Letter (Pinewood Health Ventures, LLC)
Term Sheet: The Term Sheet provided that Pinewood would be entitled to certain rights to be documented in a separate side letter.
Pinewood Side Letter (dated February 9, 2026): The Pinewood Side Letter has been negotiated and finalized in connection with the closing. It contains the following two provisions:
(i) Most Favored Nation Clause. If the Company grants any other investor in this financing round more favorable terms — whether through a side letter, amendment to the SPA or ancillary documents, or otherwise — Pinewood shall have the right to receive the benefit of such more favorable terms. This MFN clause is substantively identical to the MFN clause in the Cobalt Side Letter.
(ii) Co-Investment Right. Pinewood has the right to co-invest up to $1,500,000 in the Company's next qualified financing round (defined as the Company's next equity financing in which the Company raises aggregate gross proceeds of at least $5,000,000 from one or more institutional investors). The co-investment right is separate from and in addition to any pro rata rights that may be available to Pinewood in connection with such financing. To the extent Pinewood exercises this co-investment right, the investment will be made at the same price and on the same terms as other investors participating in such qualified financing round.
Comparison: Consistent with the Term Sheet. Both provisions of the Pinewood Side Letter were contemplated in the Term Sheet. No deviation.
XVII. REGISTRATION RIGHTS
Term Sheet: The Term Sheet provided for customary registration rights.
Investors' Rights Agreement: Article 2 of the Investors' Rights Agreement contains standard registration rights provisions, including:
(i) Demand Registration. Following the earlier of (a) the fifth anniversary of the closing date or (b) 180 days following the effective date of the Company's initial public offering, the holders of a majority of the Registrable Securities (as defined therein) may demand that the Company file a registration statement under the Securities Act covering the resale of their shares. The Company is obligated to effect up to two demand registrations, subject to customary limitations and deferral rights.
(ii) Registration on Form S-3. If the Company qualifies for registration on Form S-3, holders of Registrable Securities may request that the Company file a registration statement on Form S-3 covering the resale of their shares, provided that the anticipated aggregate offering price (net of underwriting discounts and commissions) exceeds $1,000,000.
(iii) Piggyback Registration. If the Company proposes to file a registration statement under the Securities Act (other than a registration on Form S-4 or S-8 or any successor forms), holders of Registrable Securities are entitled to include their shares in such registration, subject to customary cutback provisions in the event the managing underwriter determines that the inclusion of all requested shares would materially and adversely affect the offering.
All registration rights provisions are subject to customary limitations, including the Company's right to defer a demand registration for up to 90 days if the Board determines that the filing of a registration statement would be materially detrimental to the Company, and standard lock-up and market stand-off provisions (discussed in Section XVIII below).
Comparison: Consistent with the Term Sheet. The registration rights provisions follow the standard NVCA form and implement the "customary registration rights" contemplated in the Term Sheet. No deviation.
XVIII. LOCK-UP / MARKET STAND-OFF
Term Sheet: The Term Sheet specified a 180-day lock-up on founder shares following an initial public offering.
Investors' Rights Agreement: Section 2.11 of the Investors' Rights Agreement includes a 180-day market stand-off provision applicable to the founders (Dr. Priya Ramaswamy and Dr. Julian Ochoa). Each founder agrees that, for a period of 180 days following the effective date of a registration statement filed by the Company in connection with its initial public offering, such founder shall not, without the prior written consent of the managing underwriter:
(a) offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale, or otherwise transfer or dispose of any shares of the Company's capital stock or any securities convertible into, exercisable for, or exchangeable for shares of the Company's capital stock;
(b) enter into any swap, hedge, or other arrangement that transfers, in whole or in part, any of the economic consequences of ownership of any shares of the Company's capital stock; or
(c) publicly disclose the intention to do any of the foregoing.
The 180-day lock-up period commences on the effective date of the Company's IPO registration statement and expires at 11:59 p.m. (Eastern Time) on the 180th day thereafter. The lock-up may be extended by up to an additional 18 days if the Company releases earnings results or material news during the last 17 days of the lock-up period, consistent with FINRA Rule 5131.
Comparison: Consistent with the Term Sheet. The 180-day lock-up period on founder shares post-IPO is as specified in the Term Sheet. No deviation.