Catherine,
I hope this note finds you well. I am writing in connection with the Series Seed Preferred Stock financing of Meridian Diagnostics, Inc. (the "Company"). As you know, our firm represents Cobalt Ventures Fund III, LP ("Cobalt"), the lead investor in the Company's $12,000,000 Series Seed round, in which Cobalt has committed $7,200,000 (approximately 60% of the round).
Attached for your and Meridian's review is a proposed form of Side Letter Agreement (the "Side Letter") between the Company and Cobalt, to be dated as of the anticipated closing date of February 9, 2026. The Side Letter is supplemental to the Stock Purchase Agreement and ancillary transaction documents (Investors' Rights Agreement, Voting Agreement, Right of First Refusal and Co-Sale Agreement, and Amended and Restated Certificate of Incorporation) previously transmitted on January 10, 2026 and currently under negotiation. Consistent with those documents, the Side Letter would be governed by the laws of the State of Delaware.
We would appreciate receiving Meridian's and Whitfield & Ames's comments at your earliest convenience, and ideally no later than January 31, 2026, so that we can remain aligned with the closing timeline.
Set forth below is a brief walkthrough of the five key provisions in the draft, together with our rationale for each.
**(i) Most Favored Nation (MFN) Clause**
The Side Letter includes a standard MFN provision entitling Cobalt to receive the benefit of any more favorable terms granted to any other investor in the round, whether pursuant to a separate side letter, amendment, or otherwise. This is customary for lead investors and consistent with market practice for seed-stage financings. I would note that we understand a parallel MFN clause is also being provided to Pinewood Health Ventures, LLC in a separate side letter, so this should not raise novel issues.
**(ii) Additional Information Rights**
Beyond the information rights already provided to Major Investors (holders of 1,000,000 or more shares of Series Seed Preferred Stock) under the Investors' Rights Agreement — namely, annual audited financial statements, quarterly unaudited financial statements, monthly management reports, and an annual budget and business plan — the Side Letter requests two supplemental deliverables for Cobalt:
- **Monthly KPI Dashboard.** A monthly dashboard reflecting key operational and financial performance indicators for the MeridianPulse platform and the business generally. - **Cap Table Access.** Ongoing access to the Company's current capitalization table, including updates following any option grants or other equity issuances under the 2024 Equity Incentive Plan.
As lead investor holding approximately 2,687,989 shares (60% of the round), Cobalt requires granular visibility into both company performance and equity dilution in order to fulfill its fiduciary obligations to its limited partners and to support its board designee, David Hargrove, in his oversight role.
**(iii) Board Observer Right**
The Side Letter provides Cobalt with the right to designate one additional representative — beyond David Hargrove, who will serve as the Series Seed Preferred director under the Voting Agreement — to attend all meetings of the Board of Directors in a non-voting observer capacity. The observer would receive all materials distributed to directors, subject to customary conflict-of-interest recusal provisions. As you will recall, the Voting Agreement contemplates a five-seat board consisting of two Common/founder seats, one Series Seed Preferred seat designated by Cobalt, and two independent seats mutually agreed by the Common and Preferred holders. The observer right is in addition to, and does not modify, that structure. Cobalt's investment team benefits from having both a voting director and an observer to maintain comprehensive awareness across its portfolio companies, and this is standard practice for Cobalt's investments at this stage.
**(iv) Annual Data Privacy and Security Compliance Audit Right**
The Side Letter grants Cobalt (or a qualified third-party auditor designated by Cobalt) the right to conduct an annual compliance audit of the Company's data privacy and security practices. This provision is particularly relevant given the nature of the MeridianPulse platform, which processes diagnostic health data — including a 14-marker point-of-care blood panel — implicating HIPAA and related regulatory requirements.
As context, our Privacy & Data Security team at Calderwood & Harkness conducted a diligence assessment of Meridian's data practices during the due diligence period and identified this ongoing audit right as a prudent protective measure for Cobalt. The audit would be conducted at Cobalt's sole expense, with reasonable advance notice, during normal business hours, and subject to customary confidentiality protections. Given the sensitivity of the health and diagnostic data handled by the Company, Cobalt views this as an essential component of ongoing governance and one that aligns with growing investor expectations around data security in health-tech and biotech portfolio companies.
**(v) Consent Right over Single Expenditures Exceeding $200,000**
Finally, the Side Letter provides Cobalt with a consent right (not to be unreasonably withheld, conditioned, or delayed) over any single capital or operating expenditure by the Company exceeding $200,000. This right is distinct from, and in addition to, the protective provisions set forth in the Amended and Restated Certificate of Incorporation, which require majority Series Seed Preferred consent for (among other things) indebtedness above $250,000 incurred outside the ordinary course of business, acquisitions above $500,000, and related-party transactions above $100,000.
As an early-stage company with approximately $185,000 in monthly burn and approximately $1.4 million in remaining cash prior to closing, Cobalt believes that prudent cash management oversight is critical during this period of growth. The $200,000 threshold is calibrated to Meridian's current operating scale and is intended to provide an additional check on material unbudgeted outlays. We would note that this is structured as a bilateral consent right specific to Cobalt — reflecting its position as lead investor and largest shareholder of the Series Seed Preferred — rather than as a protective provision requiring a broader investor vote.
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Catherine, these provisions are important to Cobalt and, in our view, reflect market-standard terms for a lead investor at this stage. That said, we recognize this is a collaborative process and welcome any questions, concerns, or proposed modifications you or Thomas may have. Garrett and I are available to discuss by phone at your convenience.
Our goal is to reach agreement on the Side Letter terms in parallel with the remaining open items on the SPA and ancillary agreements, so that we can stay on track for the February 9 simultaneous sign-and-close. We appreciate your and Meridian's collaborative approach to the negotiation throughout, and we look forward to hearing from you.
Best regards,
**Kevin Ostrowski** Partner, Privacy & Data Security Calderwood & Harkness LLP 1800 Page Mill Road, Suite 200 Menlo Park, CA 94025 T: (650) 471-8300
Matter No. 1004-00001
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