INVESTORS' RIGHTS AGREEMENT
MERIDIAN DIAGNOSTICS, INC.
a Delaware corporation
Dated as of February 9, 2026
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INVESTORS' RIGHTS AGREEMENT
This INVESTORS' RIGHTS AGREEMENT (this "Agreement") is made and entered into as of February 9, 2026, by and among Meridian Diagnostics, Inc., a Delaware corporation (the "Company"), having its principal office at 225 Binney Street, Suite 400, Cambridge, Massachusetts 02142, and the investors listed on Exhibit A attached hereto (each an "Investor" and collectively the "Investors").
RECITALS
WHEREAS, the Company and the Investors are parties to that certain Series Seed Preferred Stock Purchase Agreement, dated as of February 9, 2026 (the "Purchase Agreement"), pursuant to which the Company has agreed to sell and issue, and the Investors have agreed to purchase, an aggregate of 4,479,981 shares of Series Seed Preferred Stock of the Company, par value $0.0001 per share (the "Series Seed Preferred Stock"), at a price per share of $2.6786, for aggregate consideration of $12,000,000;
WHEREAS, in connection with those certain convertible promissory notes originally issued on September 12, 2023, pursuant to that certain Convertible Note Purchase Agreement dated September 12, 2023, by and among the Company, Dr. Margaret Liu, and Clearwater Bridge Associates, LLC, an additional 1,098,362 shares of Series Seed Preferred Stock will be issued upon conversion of such notes, and the holders thereof shall become parties to this Agreement upon such conversion in accordance with Section 6.11 hereof;
WHEREAS, in connection with and as a condition to the closing of the transactions contemplated by the Purchase Agreement, and in order to induce the Investors to enter into the Purchase Agreement, the Company has agreed that the Investors shall be entitled to the rights set forth in this Agreement; and
WHEREAS, the Amended and Restated Certificate of Incorporation of the Company has been filed with the Secretary of State of the State of Delaware on February 9, 2026 (the "Restated Certificate"), setting forth the rights, preferences, privileges, and restrictions of the Series Seed Preferred Stock.
NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE 1: DEFINITIONS
Section 1.1 — Definitions
As used in this Agreement, the following terms shall have the following respective meanings:
"Affiliate" means, with respect to any specified person or entity, any other person or entity that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person or entity. For purposes of this definition, "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person or entity, whether through the ownership of voting securities, by contract, or otherwise. Without limiting the foregoing, for purposes of this Agreement, with respect to any Investor that is a limited partnership or limited liability company, "Affiliate" shall include its general partner, managing member, fund manager, or any fund or investment vehicle managed by the same manager or general partner.
"Board of Directors" or "Board" means the board of directors of the Company as constituted from time to time. As of the date hereof, the Board consists of five (5) seats: two (2) directors elected by the holders of Common Stock (currently Dr. Priya Ramaswamy and Dr. Julian Ochoa), one (1) director elected by the holders of Series Seed Preferred Stock (currently David Hargrove, as the designee of Cobalt Ventures Fund III, LP), and two (2) independent directors to be mutually agreed upon by the holders of a majority of the Common Stock and the holders of a majority of the Series Seed Preferred Stock, each voting as a separate class, in accordance with the Voting Agreement dated as of the date hereof.
"Common Stock" means the Common Stock, par value $0.0001 per share, of the Company.
"Company" means Meridian Diagnostics, Inc., a Delaware corporation, Employer Identification Number 93-4127856, and any successor entity thereto.
"Damages" means any losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees, court costs, and expenses of investigation and litigation) actually incurred by an indemnified party.
"Deemed Liquidation Event" has the meaning ascribed to such term in the Restated Certificate.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Excluded Registration" means (a) a registration relating to the sale of securities to employees of the Company or its subsidiaries pursuant to a stock option, stock purchase, or similar equity compensation plan, effected on a Registration Statement on Form S-8 (or any successor form), (b) a registration effected on a Registration Statement on Form S-4 (or any successor form) in connection with a merger, consolidation, acquisition, or other business combination, (c) a registration in which the only Common Stock being registered is Common Stock issuable upon conversion of debt securities that are also being registered, or (d) any other registration that does not contemplate a public offering of securities.
"Form S-1" means a Registration Statement on Form S-1 under the Securities Act, or any successor registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
"Form S-3" means a Registration Statement on Form S-3 under the Securities Act, or any successor registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.
"GAAP" means generally accepted accounting principles in the United States of America, as in effect from time to time.
"Holder" means any holder of Registrable Securities who is a party to this Agreement (including any transferee who becomes a party to this Agreement in accordance with Section 6.1 hereof).
"Immediate Family Member" means, with respect to any natural person, such person's spouse, domestic partner, lineal descendants (including adopted children and stepchildren), parents, grandparents, siblings, and trusts established solely for the benefit of any of the foregoing.
"Initiating Holders" means, collectively, Holders holding a majority of the then-outstanding Registrable Securities.
"Investors" means the investors listed on Exhibit A attached hereto, being:
(a) Cobalt Ventures Fund III, LP, a Delaware limited partnership, which is purchasing 2,687,989 shares of Series Seed Preferred Stock for an aggregate purchase price of $7,200,000, representing 60.0% of the aggregate investment amount in this financing round;
(b) Pinewood Health Ventures, LLC, a Delaware limited liability company, which is purchasing 895,996 shares of Series Seed Preferred Stock for an aggregate purchase price of $2,400,000, representing 20.0% of the aggregate investment amount in this financing round;
(c) Thornfield Capital Partners, LP, a Delaware limited partnership, which is purchasing 671,997 shares of Series Seed Preferred Stock for an aggregate purchase price of $1,800,000, representing 15.0% of the aggregate investment amount in this financing round;
(d) Atlas Point Angel Syndicate, LLC, a Texas limited liability company, which is purchasing 223,999 shares of Series Seed Preferred Stock for an aggregate purchase price of $600,000, representing 5.0% of the aggregate investment amount in this financing round; and
(e) together with any holders of shares of Series Seed Preferred Stock issued upon conversion of the outstanding convertible notes described in the Recitals, who become parties to this Agreement in accordance with Section 6.11 hereof.
"IPO" means the Company's first firm-commitment underwritten public offering of shares of Common Stock under the Securities Act, registered on Form S-1 (or any successor form), resulting in the listing of the Common Stock on a national securities exchange.
"Key Employee" means each of Dr. Priya Ramaswamy and Dr. Julian Ochoa, and any other employee of the Company designated as a "Key Employee" by the Board of Directors from time to time.
"Key Holder" means each of Dr. Priya Ramaswamy and Dr. Julian Ochoa, each of whom is a co-founder of the Company.
"Major Investor" means any Investor that, individually or together with such Investor's Affiliates, holds at least 1,000,000 shares of Series Seed Preferred Stock (or an equivalent number of shares of Common Stock issued upon conversion thereof), subject to appropriate adjustment for any stock splits, stock dividends, combinations, recapitalizations, and similar events affecting the Common Stock or the Series Seed Preferred Stock. As of the date hereof, Cobalt Ventures Fund III, LP (holding 2,687,989 shares of Series Seed Preferred Stock) qualifies as a Major Investor. For the avoidance of doubt, as of the date hereof, Pinewood Health Ventures, LLC (holding 895,996 shares), Thornfield Capital Partners, LP (holding 671,997 shares), and Atlas Point Angel Syndicate, LLC (holding 223,999 shares) do not individually meet the Major Investor threshold; provided, however, that the foregoing shall not preclude any such Investor from qualifying as a Major Investor in the future through additional purchases of shares or through aggregation with Affiliates pursuant to Section 6.10 hereof.
"New Securities" has the meaning set forth in Section 4.2.
"Purchase Agreement" means the Series Seed Preferred Stock Purchase Agreement, dated as of February 9, 2026, by and among the Company and the Investors.
"Registrable Securities" means (a) the shares of Common Stock issuable or issued upon conversion of the Series Seed Preferred Stock held by the Investors, and (b) any shares of Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right, or other security that is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares referenced in clause (a); provided, however, that shares of Common Stock shall cease to be Registrable Securities upon the earliest to occur of: (i) a Registration Statement covering the resale of such shares has been declared effective under the Securities Act and such shares have been disposed of in accordance with such effective Registration Statement; (ii) such shares have been sold pursuant to Rule 144 promulgated under the Securities Act (or any successor provision); (iii) such shares are eligible for sale pursuant to Rule 144 without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144; or (iv) such shares have ceased to be outstanding.
"Registrable Securities then outstanding" means the number of shares of Common Stock that are Registrable Securities and are then issued and outstanding or would be outstanding assuming full conversion of all outstanding shares of Series Seed Preferred Stock held by Holders.
"Registration Expenses" means all expenses incurred by the Company in complying with its obligations under Article 2 hereof, including all registration and filing fees, fees and expenses of compliance with securities and blue sky laws, printing and copying expenses, messenger and delivery expenses, internal expenses of the Company (including salaries and expenses of its officers and employees performing legal or accounting duties), fees and disbursements of counsel for the Company (including Whitfield & Ames LLP), fees and disbursements of one special counsel for the selling Holders (not to exceed $35,000), fees and disbursements of the Company's independent certified public accountants (including Graystone & Pallister CPAs, LLP), fees of the Financial Industry Regulatory Authority ("FINRA"), fees and expenses of listing on any securities exchange, transfer agent and registrar fees, and all other costs and expenses incident to the performance of or compliance with Article 2, but excluding Selling Expenses.
"Restated Certificate" means the Amended and Restated Certificate of Incorporation of the Company, as filed with the Secretary of State of the State of Delaware on February 9, 2026, as the same may be amended, restated, supplemented, or otherwise modified from time to time.
"Restricted Securities" means the securities of the Company required to bear the restrictive legend set forth in the Purchase Agreement or any other legend restricting transfer.
"SEC" or "Commission" means the United States Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
"Selling Expenses" means all underwriting discounts, selling commissions, and stock transfer taxes applicable to the sale of Registrable Securities, and fees and disbursements of counsel for any Holder (other than the fees and disbursements of one special counsel included in Registration Expenses).
"Series Seed Preferred Stock" means the Series Seed Preferred Stock, par value $0.0001 per share, of the Company, having the rights, preferences, privileges, and restrictions set forth in the Restated Certificate.
"Special Registration Statement" means any Excluded Registration, as defined above.
Section 1.2 — Rules of Construction
Unless the context otherwise requires: (a) references in this Agreement to Sections, Articles, and Exhibits are references to Sections and Articles of, and Exhibits to, this Agreement; (b) the headings and captions used in this Agreement are inserted for convenience of reference only and shall not affect the meaning or interpretation of any provision hereof; (c) the word "including" (and correlative words such as "include" and "includes") means "including without limitation"; (d) the word "or" is not exclusive; (e) the words "herein," "hereof," "hereby," "hereto," and "hereunder" refer to this Agreement as a whole; (f) words importing the singular include the plural and vice versa; (g) words importing a gender include any gender; (h) references to any statute or regulation shall be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing, or interpreting such statute or regulation; and (i) all references to Delaware law mean the laws of the State of Delaware as in effect from time to time.
ARTICLE 2: REGISTRATION RIGHTS
Section 2.1 — Demand Registration
(a) Request for Registration. At any time after the earlier of (i) five (5) years after the date of this Agreement (i.e., February 9, 2031) or (ii) one hundred eighty (180) days after the effective date of the registration statement filed in connection with the Company's IPO, the Initiating Holders may request in writing that the Company effect a registration under the Securities Act on Form S-1 (or any successor form thereto) of all or part of the Registrable Securities held by such Initiating Holders. Such request shall specify the number of Registrable Securities proposed to be sold and the intended method or methods of disposition thereof, including whether the Initiating Holders intend for such registration to involve an underwritten offering.
(b) Number of Demand Registrations. The Company shall not be obligated to effect, in the aggregate, more than two (2) registrations pursuant to this Section 2.1. A registration requested pursuant to this Section 2.1 shall not be counted as a demand registration unless and until it has been declared or ordered effective by the SEC and the Company has complied with its obligations under this Article 2 with respect thereto; provided, however, that if, after a registration statement has been declared effective, the offering of Registrable Securities pursuant thereto is interfered with by any stop order, injunction, or other order or requirement of the SEC or other governmental authority, such registration shall be deemed not to have been effected and shall not count as a demand registration.
(c) Minimum Threshold. The Company shall not be obligated to effect any demand registration pursuant to this Section 2.1 unless the Registrable Securities requested to be included in such registration have an anticipated aggregate offering price to the public (before deduction of underwriting discounts, commissions, and expenses) of at least Five Million Dollars ($5,000,000).
(d) Company Obligations. Upon receipt of a valid request for a demand registration under this Section 2.1, the Company shall:
(i) within ten (10) business days of the receipt of such request, give written notice of the proposed registration to all other Holders of Registrable Securities; and
(ii) as soon as practicable, and in any event within sixty (60) days of the receipt of such request, file a registration statement with the SEC covering all Registrable Securities that the Initiating Holders and any other Holders (by written notice to the Company delivered within fifteen (15) days after the date of the Company's notice under clause (i) above) have requested to be included in such registration, and use commercially reasonable efforts to cause such registration statement to become effective as promptly as practicable.
(e) Deferral. Notwithstanding the foregoing provisions of this Section 2.1, if the Board of Directors determines in its good faith judgment that the filing of a registration statement pursuant to a demand registration under this Section 2.1 would (i) require the Company to make a public disclosure of material information that the Company has a bona fide business purpose for preserving as confidential, or (ii) be seriously detrimental to the Company and its stockholders, then the Company may defer the filing of such registration statement for a period not to exceed ninety (90) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not exercise this deferral right more than once in any twelve (12)-month period. The Company shall promptly notify the Initiating Holders in writing of any such deferral, stating the basis for such deferral in reasonable detail (to the extent such disclosure would not compromise the confidential nature of the information sought to be protected), and in any event shall file such registration statement no later than the expiration of the applicable deferral period.
(f) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1(a), and the Company shall include such information in the notice given pursuant to Section 2.1(d)(i). In such event, the right of any Holder to include its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by such Holder and the Initiating Holders) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Initiating Holders (which managing underwriter or underwriters shall be reasonably acceptable to the Company). Notwithstanding any other provision of this Section 2.1, if the managing underwriter advises the Company and the Initiating Holders in writing that marketing factors require a limitation of the number of securities to be underwritten, then the Company shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated as follows: (i) first, among the Holders requesting inclusion in such registration, pro rata based on the total number of Registrable Securities then held by each such Holder (including securities held on an as-converted basis), (ii) second, to the Company, and (iii) third, to any other stockholders of the Company. No Registrable Securities excluded from the underwriting by reason of the managing underwriter's marketing limitation shall be included in such registration.
Section 2.2 — Piggyback Registration
(a) Notice. If at any time after the date of this Agreement, the Company proposes to register any of its securities under the Securities Act in connection with the public offering of such securities solely for cash (other than in an Excluded Registration), the Company shall, at each such time, give prompt written notice to all Holders of Registrable Securities of its intention to effect such registration at least twenty (20) days prior to the anticipated filing date of the registration statement relating to such registration, which notice shall describe the amount and type of securities to be included in such offering, the intended method or methods of distribution, and the name of the proposed managing underwriter or underwriters, if any.
(b) Inclusion. Upon the written request of any Holder made within fifteen (15) days after the receipt of any such notice by the Company (which request shall specify the Registrable Securities intended to be disposed of by such Holder and the intended method of disposition thereof), the Company shall use commercially reasonable efforts to effect the registration under the Securities Act of all Registrable Securities that each such Holder has so requested to be included in the registration; provided, however, that if at any time after giving written notice of its intention to register any securities and prior to the effective date of the registration statement filed in connection with such registration, the Company determines for any reason not to proceed with the proposed registration, the Company may, at its election, give written notice of such determination to each Holder of Registrable Securities and thereupon shall be relieved of its obligation to register any Registrable Securities in connection with such registration (without prejudice, however, to the rights of Holders to request that such registration be effected as a registration under Section 2.1 or Section 2.3 hereof).
(c) Underwriter Cutback. If a registration pursuant to this Section 2.2 involves an underwritten offering, and the managing underwriter advises the Company in writing that, in its reasonable and good faith opinion, the number of securities (including Registrable Securities) that the Company, the Holders, and any other persons or entities intend to include in such offering exceeds the number of securities that can be sold in an orderly manner in such offering within a price range acceptable to the Company, then the Company shall include in such registration:
(i) first, all securities the Company proposes to sell for its own account;
(ii) second, the Registrable Securities of the Holders who have requested inclusion in such registration, allocated pro rata among such Holders based on the number of Registrable Securities that each such Holder has requested to be included in such registration; and
(iii) third, any other securities of the Company requested to be included in such registration by other stockholders, allocated pro rata among such other stockholders on the basis of the number of shares of Common Stock (or Common Stock equivalents) requested to be included by each such stockholder.
(d) Withdrawal. Any Holder of Registrable Securities may withdraw its request for inclusion in any piggyback registration by giving written notice to the Company at any time prior to the effective date of the registration statement relating thereto. The Company (whether on its own determination or as the result of a withdrawal by persons making a registration request pursuant to the Securities Act) may withdraw a registration statement at any time prior to the effectiveness of such registration statement. Notwithstanding any such withdrawal, the Company shall pay all Registration Expenses in connection with any registration so withdrawn.
Section 2.3 — Form S-3 Registration
(a) Eligibility and Request. At such time as the Company becomes eligible to use Form S-3 (or any successor form thereto) for the registration of securities under the Securities Act, the Holders of at least twenty percent (20%) of the then-outstanding Registrable Securities may request in writing that the Company effect a registration on Form S-3 (or such successor form) of Registrable Securities having an anticipated aggregate offering price to the public (before deduction of underwriting discounts, commissions, and expenses) of at least One Million Dollars ($1,000,000). Upon receipt of any such request, the Company shall (i) within ten (10) business days of the receipt thereof, give written notice of the proposed registration to all other Holders of Registrable Securities, and (ii) as soon as practicable, use commercially reasonable efforts to effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder's or Holders' Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request received by the Company within fifteen (15) days after the Company's written notice is given.
(b) Number of S-3 Registrations. The Company shall not be obligated to effect more than two (2) registrations on Form S-3 (or any successor form) in any twelve (12)-month period pursuant to this Section 2.3.
(c) Company Obligations. The Company's obligations under this Section 2.3 shall be subject to the same deferral rights as set forth in Section 2.1(e), and the Company shall use commercially reasonable efforts to cause the registration statement filed pursuant to this Section 2.3 to become effective as promptly as practicable after filing and to remain effective for a period of up to one hundred twenty (120) days (or such shorter period during which all Registrable Securities included therein have been sold).
Section 2.4 — Obligations of the Company
Whenever required under this Article 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use commercially reasonable efforts to cause such registration statement to become effective; keep such registration statement effective for a period of up to one hundred twenty (120) days or, if earlier, until the Holder or Holders have completed the distribution described in the registration statement relating thereto, or such shorter period in which all Registrable Securities covered thereby have been sold.
(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement, and to keep such registration statement effective for the period required by Section 2.4(a).
(c) Furnish to each selling Holder, without charge, such number of copies of the registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), and such other documents as such selling Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder.
(d) Use commercially reasonable efforts to register or qualify the Registrable Securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the selling Holders, including the states of California, Massachusetts, New York, and Texas, and any other states as reasonably requested; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 2.4(d), (ii) subject itself to general taxation in any such jurisdiction, or (iii) file a general consent to service of process in any such jurisdiction.
(e) Promptly notify each selling Holder of Registrable Securities covered by such registration statement of (i) the issuance of any stop order by the SEC in respect of such registration statement, or (ii) the initiation of any proceedings for that purpose, and use commercially reasonable efforts to prevent the issuance of any stop order and, if any stop order is issued, to obtain the withdrawal of such stop order at the earliest practicable moment.
(f) Enter into and perform its obligations under such customary agreements (including an underwriting agreement in customary form with provisions relating to indemnification and contribution) and take such other actions as the managing underwriter or underwriters, if any, reasonably request in order to expedite or facilitate the disposition of such Registrable Securities.
(g) Make available for inspection by any selling Holder, any managing underwriter participating in any disposition of Registrable Securities pursuant to such registration statement, and any attorney, accountant, or other agent retained by any such selling Holder or underwriter, all financial and other records, pertinent corporate documents, and properties of the Company, and cause the Company's officers, directors, employees, and independent auditors (currently Graystone & Pallister CPAs, LLP) to supply all information reasonably requested by any such seller, underwriter, attorney, accountant, or agent in connection with such registration statement, in each case as shall be reasonably necessary to enable them to exercise their due diligence responsibilities; provided, however, that such persons shall first agree in writing to maintain the confidentiality of any non-public information so provided.
(h) Provide and maintain a transfer agent and registrar for the Registrable Securities covered by such registration statement. The Company's current transfer agent is Ledgermark Transfer Services, Inc.
(i) Obtain and deliver a "comfort letter" from the Company's independent certified public accountants (currently Graystone & Pallister CPAs, LLP, engagement partner Robert Milligan) in customary form and covering such matters of the type customarily covered by comfort letters, addressed to the selling Holders and the managing underwriter or underwriters, if any.
(j) Provide to the selling Holders and the managing underwriter or underwriters, if any, a legal opinion or opinions of the Company's counsel (currently Whitfield & Ames LLP) in customary form, addressed to such Holders and underwriters, covering such matters as are customarily covered in opinions delivered in connection with registered offerings.
Section 2.5 — Furnish Information
It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Article 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities and as the Company may reasonably request for inclusion in the registration statement or any amendment or supplement thereto. The Company shall not be required to include any Holder's Registrable Securities in any registration statement if such Holder fails to furnish such information within a reasonable time after receiving such request.
Section 2.6 — Expenses of Registration
All Registration Expenses incurred in connection with any registration, qualification, or compliance pursuant to this Article 2 shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the selling Holders pro rata on the basis of the number of Registrable Securities so registered by each such selling Holder. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.1 if the registration request is subsequently withdrawn at the request of the Initiating Holders (in which case all selling Holders shall bear such expenses pro rata based upon the number of Registrable Securities that were to be included in the withdrawn registration), unless the Initiating Holders agree to forfeit their right to one demand registration pursuant to Section 2.1; provided, however, that if at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness after learning of such information, then the Holders shall not be required to pay any of such expenses and shall retain their right to one demand registration.
Section 2.7 — Indemnification in Connection with Registration
(a) Company Indemnification of Holders. To the extent permitted by law, the Company shall indemnify and hold harmless each selling Holder, and the partners, members, officers, directors, managers, employees, agents, and representatives of each such selling Holder, and each person, if any, who controls such selling Holder within the meaning of the Securities Act or the Exchange Act (each, a "Holder Indemnified Party"), against any and all Damages, joint or several, to which any such Holder Indemnified Party may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such Damages (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon any of the following: (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, any preliminary prospectus, final prospectus, or free writing prospectus, or any amendment or supplement thereto, relating to Registrable Securities; (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law, or any rule or regulation promulgated under the Securities Act, the Exchange Act, or any state securities law; provided, however, that the Company shall not be liable to any Holder Indemnified Party in any such case to the extent that any such Damages arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, preliminary prospectus, final prospectus, or amendment or supplement thereto, in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of such Holder expressly for use therein.
(b) Holder Indemnification of the Company. To the extent permitted by law, each selling Holder, severally and not jointly, shall indemnify and hold harmless the Company, and each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act or the Exchange Act, any underwriter (as defined in the Securities Act), and any other selling Holder, and the partners, members, officers, directors, managers, employees, agents, and representatives of each of the foregoing (each, a "Company Indemnified Party"), against any and all Damages, joint or several, to which any such Company Indemnified Party may become subject under the Securities Act, the Exchange Act, or other federal or state law, insofar as such Damages (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of a material fact contained in any registration statement, any preliminary prospectus, final prospectus, or free writing prospectus, or any amendment or supplement thereto, relating to Registrable Securities, or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information furnished in writing by or on behalf of such selling Holder expressly for use therein; provided, however, that the liability of each selling Holder under this Section 2.7(b) shall be limited to an amount equal to the net proceeds actually received by such selling Holder from the sale of the Registrable Securities giving rise to such indemnification obligation.
(c) Contribution. If the indemnification provided for in Sections 2.7(a) and 2.7(b) is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any Damages referred to therein, the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such Damages in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other hand in connection with the statements or omissions that resulted in such Damages, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. The parties agree that it would not be just and equitable if contribution pursuant to this Section 2.7(c) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in this Section. In no event shall the contribution obligation of a selling Holder exceed the amount of the net proceeds received by such selling Holder from the sale of the Registrable Securities giving rise to such contribution obligation.
(d) Procedures. Promptly after receipt by an indemnified party under this Section 2.7 of notice of the commencement of any action or proceeding (including any governmental action or proceeding), such indemnified party shall, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.7, deliver to the indemnifying party a written notice of the commencement thereof. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly notified, to assume the defense thereof with counsel selected by the indemnifying party and reasonably satisfactory to the indemnified party; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses of not more than one separate counsel for all such indemnified parties to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflicts of interest between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action shall not relieve such indemnifying party of any obligation or liability to the indemnified party under this Section 2.7, except to the extent that the indemnifying party is materially prejudiced by such failure. No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.
(e) Survival. The indemnification and contribution obligations of the parties under this Section 2.7 shall survive the transfer of Registrable Securities by any Holder, the conversion or exchange of any securities of the Company, and the termination of this Agreement, and shall remain in full force and effect regardless of any investigation made by or on behalf of any indemnified party.
Section 2.8 — Reports Under the Exchange Act
With a view to making available to the Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration, the Company agrees to:
(a) make and keep available public information, as those terms are understood and defined in Rule 144, at all times after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after the Company has become subject to such reporting requirements); and
(c) furnish to any Holder, so long as such Holder owns any Registrable Securities, forthwith upon written request (i) a written statement by the Company that it has complied with the reporting requirements of Rule 144, the Securities Act, and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.
Section 2.9 — Limitations on Subsequent Registration Rights
From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of at least a majority of the then-outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company that would grant to such holder or prospective holder registration rights with respect to such securities that are senior to, or on parity with (i.e., pari passu with), the registration rights granted to the Holders under this Agreement. Any registration rights granted in compliance with this Section 2.9 shall be subordinate and junior to the registration rights granted to the Holders hereunder.
Section 2.10 — "Market Stand-Off" Agreement
(a) Lock-Up Obligation. Each Key Holder (being Dr. Priya Ramaswamy and Dr. Julian Ochoa) and each Holder of Registrable Securities hereby agrees that, in connection with the IPO, such person shall not, without the prior written consent of the managing underwriter, during the period commencing on the effective date of the registration statement filed in connection with the IPO and ending on the date that is one hundred eighty (180) days after the effective date of such registration statement (the "Lock-Up Period"), or such longer period as may be reasonably requested by the managing underwriter (not to exceed an additional thirty (30) days to account for FINRA requirements, FINRA Rule 2711, or similar guidance regarding the publication or distribution of research reports):
(i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right, or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock (or other securities) of the Company held immediately before the effective date of the registration statement for the IPO;
(ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) above or this clause (ii) is to be settled by delivery of Common Stock or other securities, in cash, or otherwise; or
(iii) make any demand for, or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock.
The foregoing provisions of this Section 2.10 shall apply only to the IPO and shall not apply to shares of Common Stock acquired in the IPO or in the open market following the IPO.
(b) Stop-Transfer Instructions. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the securities of each Key Holder and each Holder of Registrable Securities (and any transferees and assigns thereof) with Ledgermark Transfer Services, Inc. (or any successor transfer agent) until the end of the applicable Lock-Up Period.
(c) Similar Agreements. The Company shall use commercially reasonable efforts to cause each officer, director, and stockholder holding more than one percent (>1%) of the Company's outstanding capital stock (on a fully-diluted basis) to enter into a similar market stand-off agreement binding such person to restrictions no less restrictive than those set forth in this Section 2.10 for the applicable Lock-Up Period.
Section 2.11 — Termination of Registration Rights
The registration rights granted under this Article 2 shall terminate with respect to any particular Holder upon the earliest to occur of the following:
(a) the closing of a Deemed Liquidation Event, as such term is defined in the Restated Certificate;
(b) with respect to a particular Holder, when all Registrable Securities held by such Holder (and its Affiliates, partners, and former partners) may be sold in a single transaction without limitation under Rule 144 (or any successor provision) promulgated under the Securities Act, without volume or manner-of-sale restrictions and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144; or
(c) the fifth (5th) anniversary of the effective date of the registration statement filed in connection with the Company's IPO.
ARTICLE 3: INFORMATION RIGHTS
Section 3.1 — Delivery of Financial Statements (Major Investors)
The Company shall deliver to each Major Investor the following:
(a) Annual Audited Financial Statements. As soon as practicable, and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, audited consolidated financial statements of the Company for such fiscal year, consisting of a balance sheet, an income statement, a statement of cash flows, and a statement of stockholders' equity, each prepared in accordance with GAAP, consistently applied, and accompanied by the report of an independent certified public accounting firm of national or regional standing selected by the Board of Directors (currently Graystone & Pallister CPAs, LLP). Such financial statements shall include an opinion of such accounting firm that the financial statements present fairly, in all material respects, the financial position of the Company and the results of its operations and its cash flows for the period covered thereby, in accordance with GAAP.
(b) Quarterly Unaudited Financial Statements. As soon as practicable, and in any event within forty-five (45) days after the end of each of the first three (3) fiscal quarters of each fiscal year (i.e., excluding the fourth fiscal quarter, which is covered by the annual audited financial statements), unaudited consolidated financial statements of the Company for such fiscal quarter, consisting of a balance sheet, an income statement, and a statement of cash flows, each prepared in accordance with GAAP (subject to the absence of footnotes and normal year-end audit adjustments), and certified by the Company's Chief Financial Officer (or, if no Chief Financial Officer has been appointed, by the Company's Chief Executive Officer, currently Dr. Priya Ramaswamy) as presenting fairly, in all material respects, the financial position and results of operations of the Company for such period.
(c) Monthly Management Reports. As soon as practicable, and in any event within thirty (30) days after the end of each calendar month, an unaudited management report in such form as may be determined by the Board of Directors from time to time, including at a minimum (i) a summary income statement, (ii) a summary balance sheet, (iii) a cash flow statement, (iv) a headcount update (including total number of full-time employees, contractors, and open positions), and (v) a narrative discussion of key business developments, milestones achieved, and material risks and challenges.
(d) Annual Budget and Business Plan. At least thirty (30) days prior to the beginning of each fiscal year, an annual budget and business plan for such fiscal year, in such detail as the Board shall approve, including projected revenue, expenses, cash flow, headcount, capital expenditures, and key business objectives and milestones. The annual budget and business plan shall be subject to approval by the Board of Directors.
Section 3.2 — Delivery of Information to All Investors
The Company shall deliver to each Investor (whether or not such Investor qualifies as a Major Investor):
(a) Copies of the Company's annual federal and state income tax returns (or a summary thereof in reasonable detail), within fifteen (15) days after the filing thereof with the applicable taxing authority.
(b) Such other information relating to the financial condition, business, prospects, or corporate affairs of the Company as any Investor may from time to time reasonably request; provided, however, that the Company shall have the reasonable right to require that any Investor requesting information pursuant to this Section 3.2(b) execute a confidentiality agreement in form and substance reasonably satisfactory to the Company prior to the delivery of any non-public information.
Section 3.3 — Inspection Rights
Each Major Investor shall have the right, at such Major Investor's sole expense, to visit and inspect the Company's properties, examine its books of account and records (including corporate, financial, and operating records), and discuss the Company's affairs, finances, and accounts with its officers, Key Employees, and independent auditors (currently Graystone & Pallister CPAs, LLP), all at such reasonable times during normal business hours and as often as may be reasonably requested, upon reasonable prior written notice to the Company (which notice shall be not less than five (5) business days unless otherwise agreed). The Company shall not be obligated to provide access to any information that it reasonably and in good faith considers to be a trade secret or similar confidential information (unless such Major Investor agrees in writing to hold such information in strict confidence and, in the Company's reasonable judgment, disclosure of such information would not adversely affect the Company's ability to assert attorney-client privilege or work-product doctrine protections with respect thereto).
Section 3.4 — Confidentiality
Each Investor agrees that any information received by such Investor pursuant to this Article 3 constitutes confidential information of the Company ("Confidential Information") and shall be kept strictly confidential by such Investor and shall not be disclosed to any third party without the prior written consent of the Company, except that each Investor may disclose such information:
(a) to such Investor's attorneys, accountants, consultants, financial advisors, and other professionals to the extent necessary to obtain their services in connection with monitoring such Investor's investment in the Company, provided that such recipients are bound by obligations of confidentiality no less restrictive than those set forth in this Section 3.4;
(b) to the extent that such information is or becomes publicly available other than as a result of a breach of this Section 3.4 by such Investor or any person to whom such Investor disclosed such information;
(c) to the extent that such information was independently developed by such Investor or its representatives without use of or reference to any Confidential Information;
(d) to the extent that such information is required to be disclosed by applicable law, regulation, judicial or administrative order, or legal process (including by deposition, interrogatory, request for documents, subpoena, civil investigative demand, or similar process); provided, however, that such Investor shall promptly notify the Company in writing of such requirement prior to making such disclosure (to the extent legally permissible) so that the Company may seek a protective order or other appropriate remedy, and such Investor shall cooperate with the Company's reasonable efforts in connection therewith; and
(e) to an Investor's limited partners, members, or other equity holders (including, in the case of Cobalt Ventures Fund III, LP, to its general partner, Cobalt Ventures GP III, LLC, and to the limited partners of Cobalt Ventures Fund III, LP), and in the case of any Investor that is a fund, to the fund's advisory committee members and prospective limited partners, in each case in connection with normal fund reporting obligations; provided that such recipients agree to maintain the confidentiality of such information on terms no less restrictive than those set forth in this Section 3.4.
Section 3.5 — Termination of Information Rights
The information and inspection rights granted under this Article 3 shall terminate upon the earliest to occur of the following:
(a) the closing of the IPO;
(b) a Deemed Liquidation Event, as such term is defined in the Restated Certificate; or
(c) the dissolution, liquidation, or winding up of the Company.
ARTICLE 4: RIGHTS OF PARTICIPATION (PRO RATA RIGHTS)
Section 4.1 — Right of First Offer
Subject to the terms and conditions of this Article 4 and applicable securities laws, each Major Investor shall have the right to purchase its Pro Rata Share of any New Securities that the Company may from time to time propose to sell and issue after the date of this Agreement, in order to enable such Major Investor to maintain its percentage ownership of the Company on a fully-diluted basis. Each Major Investor's "Pro Rata Share" for purposes of this right of first offer is the ratio of (x) the number of shares of Common Stock held by such Major Investor (on an as-converted basis, including shares of Common Stock issuable upon conversion of all shares of Series Seed Preferred Stock held by such Major Investor and its Affiliates) immediately prior to the issuance of New Securities, to (y) the total number of shares of Common Stock of the Company then outstanding on a fully-diluted basis (assuming conversion and/or exercise of all outstanding convertible or exercisable securities, options, and warrants) immediately prior to the issuance of such New Securities.
Section 4.2 — New Securities
"New Securities" shall mean equity securities of the Company, whether or not now authorized, as well as rights, options, or warrants to purchase such equity securities, and securities of any type whatsoever that are, or may become, convertible into or exchangeable for such equity securities. Notwithstanding the foregoing, "New Securities" shall not include the following (collectively, "Excluded Securities"):
(a) shares of Common Stock issued or issuable upon conversion of the Series Seed Preferred Stock;
(b) shares of Common Stock or Series Seed Preferred Stock issued or issuable as a dividend or distribution on the Series Seed Preferred Stock or any other class of Preferred Stock;
(c) shares of Common Stock (or options, restricted stock units, or other equity awards exercisable for or convertible into shares of Common Stock) issued or issuable to employees, officers, directors, consultants, or advisors of the Company or any subsidiary pursuant to any equity incentive plan, stock purchase plan, or equity compensation arrangement approved by the Board of Directors, including the Company's 2024 Equity Incentive Plan, as amended, covering up to 1,600,000 shares of Common Stock;
(d) shares of Common Stock or Preferred Stock issued in connection with any bona fide acquisition, merger, consolidation, strategic partnership, or similar business combination transaction approved by the Board of Directors;
(e) shares of Common Stock issued in a firm-commitment underwritten public offering (including the IPO);
(f) shares of Common Stock or Preferred Stock issued to banks, equipment lessors, or similar financial institutions, or to real property lessors, in connection with commercial lending, equipment leasing, real property leasing, or similar transactions approved by the Board of Directors;
(g) shares of Series Seed Preferred Stock issued upon conversion of the convertible promissory notes issued on September 12, 2023, pursuant to the Convertible Note Purchase Agreement dated September 12, 2023, including the conversion of notes held by Dr. Margaret Liu (having a principal amount of $1,200,000) and Clearwater Bridge Associates, LLC (having a principal amount of $900,000); and
(h) shares of Common Stock or Preferred Stock issued in connection with bona fide strategic partnerships, collaboration agreements, or joint ventures, in each case approved by the Board of Directors, where the primary purpose of such issuance is not raising capital.
Section 4.3 — Procedures
(a) Notice. In the event the Company proposes to undertake an issuance of New Securities, the Company shall give each Major Investor written notice of such proposed issuance (the "Issuance Notice") at least fifteen (15) days prior to the proposed closing date of such issuance. The Issuance Notice shall describe (i) the type and number of New Securities proposed to be issued, (ii) the price per share and other material terms and conditions of the proposed issuance (including any non-cash consideration), (iii) the i