BOARD OBSERVER AGREEMENT

DOCUMENT INFORMATION

BOARD OBSERVER AGREEMENT

THIS BOARD OBSERVER AGREEMENT (this "Agreement") is entered into as of [__/__/____] (the "Effective Date"), by and between:

THE COMPANY:

(the "Company")

AND

THE OBSERVER DESIGNATING PARTY:

(the "Designating Party")

The Company and the Designating Party are each referred to herein as a "Party" and collectively as the "Parties."

RECITALS

WHEREAS, the Company is a [________________________________] organized under the laws of the State of [________________________________];

WHEREAS, the Designating Party is:

☐ A holder of the Company's [________________________________] (the "Securities"), having acquired such Securities pursuant to that certain [________________________________] dated [__/__/____] (the "Transaction Agreement");

☐ A strategic partner of the Company pursuant to that certain [________________________________] dated [__/__/____] (the "Strategic Agreement");

☐ Other relationship: [________________________________];

WHEREAS, in connection with the foregoing, the Company has agreed to grant the Designating Party the right to designate a non-voting observer to attend meetings of the Company's Board of Directors (the "Board"), subject to the terms and conditions set forth herein;

WHEREAS, the Designating Party desires to designate [________________________________] (the "Observer") as its representative to serve as a board observer in accordance with this Agreement;

WHEREAS, the Parties acknowledge and agree that the Observer shall not be a member of the Board, shall have no voting rights on any matter submitted to the Board, shall owe no fiduciary duties to the Company or its stockholders, and shall serve solely in a non-voting, advisory observation capacity; and

WHEREAS, the Parties desire to set forth their respective rights and obligations with respect to the Observer's attendance at Board meetings and access to Company information.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) "Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with such Person. For purposes of this definition, "control" means the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract, or otherwise.

(b) "Board" means the board of directors (or equivalent governing body) of the Company.

(c) "Board Materials" means all notices, agendas, minutes, written consents, resolutions, reports, presentations, financial statements, budgets, projections, and any other documents or materials provided to members of the Board in connection with Board Meetings, subject to the exclusions set forth in Section 4.3.

(d) "Board Meeting" means any regular, special, or emergency meeting of the Board, whether conducted in person, by telephone, by video conference, or by any other means of communication.

(e) "Committee" means any standing or ad hoc committee of the Board, including without limitation any audit committee, compensation committee, nominating and governance committee, or other committee established by the Board.

(f) "Competitor" means any Person that directly or indirectly engages in, or has publicly announced plans to engage in, a business that competes with or is substantially similar to the Company's business as conducted or as proposed to be conducted.

(g) "Confidential Information" has the meaning set forth in Section 5.1.

(h) "Equity Threshold" means the Designating Party's continued ownership of at least [____]% of the Securities originally acquired by the Designating Party in the transaction giving rise to this Agreement, or such other minimum ownership threshold as may be specified in Schedule A attached hereto.

(i) "Excluded Matters" has the meaning set forth in Section 6.1.

(j) "Material Non-Public Information" or "MNPI" means information concerning the Company or its securities that has not been publicly disclosed and that a reasonable investor would consider important in making an investment decision, as such term is understood under the federal securities laws.

(k) "Observer" means the individual designated by the Designating Party pursuant to Section 2.1 to attend Board Meetings in a non-voting observer capacity.

(l) "Person" means any individual, corporation, limited liability company, partnership, joint venture, trust, association, unincorporated organization, governmental authority, or other entity.

(m) "Privileged Information" means any information, communication, or material subject to the attorney-client privilege, attorney work product doctrine, or any other applicable legal privilege or protection held by the Company, including communications between the Company and its legal counsel.

(n) "Replacement Observer" has the meaning set forth in Section 2.3.

(o) "Trade Secrets" means information, including a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use.

ARTICLE II — APPOINTMENT OF OBSERVER

Section 2.1 — Designation. Subject to the terms and conditions of this Agreement, the Company hereby grants the Designating Party the right to designate one (1) individual to serve as a non-voting Observer at Board Meetings. The initial Observer shall be:

Section 2.2 — Observer Qualifications. The Observer shall at all times be:

(a) An employee, partner, principal, officer, or director of the Designating Party or its Affiliates;

(b) Not a Competitor of the Company or an employee, officer, director, partner, or agent of any Competitor;

(c) Not subject to any legal disqualification, regulatory order, or pending criminal proceeding that would make such person's service as an Observer inappropriate or unlawful; and

(d) Reasonably acceptable to the Company, provided that the Company shall not unreasonably withhold, condition, or delay its acceptance of the designated Observer.

Section 2.3 — Replacement of Observer. The Designating Party may replace the Observer at any time by providing the Company with not less than [____] business days' prior written notice, provided that:

(a) The notice identifies the proposed replacement observer (the "Replacement Observer");

(b) The Replacement Observer satisfies the qualifications set forth in Section 2.2;

(c) The Replacement Observer executes a joinder to this Agreement in the form attached hereto as Exhibit A, agreeing to be bound by all terms and conditions applicable to the Observer hereunder; and

(d) The Company has consented to the Replacement Observer, which consent shall not be unreasonably withheld, conditioned, or delayed.

Section 2.4 — Single Observer Limitation. Only one (1) Observer may be designated at any time. The designation of a Replacement Observer shall automatically terminate the prior Observer's rights under this Agreement.

Section 2.5 — Observer Status. The Parties acknowledge and agree that:

(a) The Observer is not and shall not be deemed a member of the Board;

(b) The Observer shall have no right to vote on any matter submitted to the Board;

(c) The Observer shall not be counted for purposes of determining a quorum of the Board;

(d) The Observer shall not have any authority to act on behalf of, or bind, the Company in any respect;

(e) The Observer shall not be deemed an officer, employee, agent, or fiduciary of the Company by reason of this Agreement; and

(f) The appointment of the Observer shall not create any employment, agency, partnership, or joint venture relationship between the Observer and the Company.

ARTICLE III — ATTENDANCE RIGHTS

Section 3.1 — Right to Attend Board Meetings. Subject to the exclusion rights set forth in Article VI, the Observer shall have the right to attend all regularly scheduled and special Board Meetings in a non-voting, observer capacity.

Section 3.2 — Committee Meetings. The Observer's right to attend Committee meetings shall be as follows:

☐ Option A — No Committee Attendance. The Observer shall have no right to attend meetings of any Committee.

☐ Option B — Specified Committee Attendance. The Observer shall have the right to attend meetings of the following Committees in a non-voting, observer capacity: [________________________________], subject to the same exclusion rights set forth in Article VI.

☐ Option C — All Committee Attendance. The Observer shall have the right to attend meetings of all Committees in a non-voting, observer capacity, subject to the same exclusion rights set forth in Article VI.

Section 3.3 — Notice of Meetings.

(a) The Company shall provide the Observer with notice of each Board Meeting (and, if applicable, each Committee meeting to which the Observer has attendance rights) at the same time and in the same manner as notice is provided to members of the Board.

(b) In the case of regular Board Meetings, notice shall be provided no less than [____] days prior to the scheduled meeting.

(c) In the case of special or emergency Board Meetings, the Company shall use commercially reasonable efforts to provide the Observer with notice as far in advance as practicable under the circumstances, but in no event less than [____] hours prior to such meeting.

(d) All notices to the Observer shall be sent to the email address set forth in Section 2.1 or to such other address as the Observer or Designating Party may designate in writing.

Section 3.4 — Manner of Attendance.

(a) The Observer may attend Board Meetings in person at the location designated for such meeting or, if the meeting is conducted by telephone, video conference, or other electronic means, by such remote means.

(b) The Observer shall have the right to participate in discussions at Board Meetings at the invitation or with the consent of the chairperson of the Board, provided that such participation shall be advisory only and shall not constitute a vote or formal action.

(c) The Observer shall not have the right to:

    (i) Call or demand any meeting of the Board;

    (ii) Propose resolutions or formal actions for Board consideration;

    (iii) Object to or delay Board proceedings; or

    (iv) Execute or withhold consent to any written consent of the Board.

Section 3.5 — Conduct at Meetings. The Observer shall conduct himself or herself in a professional and respectful manner at all Board Meetings and shall comply with all reasonable rules of conduct established by the Board or its chairperson. The chairperson of the Board shall have the authority to manage the Observer's participation in discussions and to request that the Observer refrain from comment on particular matters when, in the chairperson's reasonable judgment, such limitation is appropriate.

Section 3.6 — Failure to Attend. The Observer's failure to attend any Board Meeting shall not affect the validity of any action taken by the Board at such meeting and shall not constitute a waiver of the Observer's right to attend future meetings.

ARTICLE IV — INFORMATION RIGHTS

Section 4.1 — Board Materials. Subject to the exclusions set forth in Sections 4.3 and 6.1, the Company shall provide the Observer with copies of all Board Materials at the same time and in the same manner as such materials are provided to members of the Board.

Section 4.2 — Additional Information Rights. In addition to Board Materials, the Observer shall be entitled to receive the following information, to the extent provided to members of the Board:

(a) Financial Statements. Unaudited monthly or quarterly financial statements within [____] days following the end of each fiscal month or quarter, and audited annual financial statements within [____] days following the end of each fiscal year;

(b) Annual Budget. The Company's annual operating budget and business plan, when and as approved by the Board;

(c) Capitalization Information. An updated capitalization table of the Company, upon reasonable request and no more frequently than [____] per calendar year;

(d) Material Events. Prompt notice of any material adverse change in the business, operations, financial condition, or prospects of the Company; and

(e) Other Information. Such other information as may be reasonably requested by the Observer or the Designating Party, subject to the Company's reasonable discretion and the confidentiality and exclusion provisions of this Agreement.

Section 4.3 — Information Exclusions. Notwithstanding anything to the contrary herein, the Company shall have no obligation to provide the Observer with, and may withhold from the Observer:

(a) Any Privileged Information, including without limitation any communications between the Company and its legal counsel, attorney work product, or other materials subject to the attorney-client privilege or any other applicable legal privilege;

(b) Any Trade Secrets or proprietary technical information the disclosure of which to the Observer or the Designating Party could reasonably be expected to result in competitive harm to the Company;

(c) Any information the disclosure of which is prohibited by law, regulation, court order, or contractual obligation to a third party;

(d) Any information related to Excluded Matters as defined in Section 6.1;

(e) Any information the disclosure of which would, in the reasonable judgment of the Company's legal counsel, jeopardize the Company's attorney-client privilege or other legal protections; and

(f) Any information the disclosure of which would, in the reasonable determination of the Board, create a conflict of interest with respect to the Designating Party, the Observer, or any of their respective Affiliates.

Section 4.4 — Preservation of Attorney-Client Privilege. The Parties acknowledge and agree that:

(a) The Observer is not a client of the Company's legal counsel, and no attorney-client relationship exists or shall be created between the Observer and the Company's legal counsel by reason of this Agreement;

(b) The disclosure of Privileged Information to the Observer could waive or jeopardize the Company's attorney-client privilege;

(c) The Company's decision to withhold Privileged Information from the Observer is a reasonable and necessary measure to preserve the Company's legal protections; and

(d) The Observer shall immediately notify the Company if he or she inadvertently receives any Privileged Information and shall promptly return or destroy such information as directed by the Company.

Section 4.5 — Format and Delivery. Board Materials and other information may be provided in electronic format (including via email, secure data room, or board management software platform) or in such other format as the Company customarily uses for the distribution of materials to the Board.

ARTICLE V — CONFIDENTIALITY

Section 5.1 — Definition of Confidential Information. "Confidential Information" means all information, whether oral, written, electronic, or visual, that is disclosed or made available to the Observer in connection with this Agreement, including without limitation:

(a) All Board Materials, financial statements, budgets, projections, and business plans;

(b) Information regarding the Company's business strategy, operations, products, services, technology, customers, suppliers, vendors, and partners;

(c) Information regarding pending or contemplated transactions, investments, acquisitions, divestitures, financing activities, and corporate actions;

(d) Information regarding actual or threatened litigation, regulatory proceedings, and legal matters (to the extent such information is not Privileged Information withheld under Section 4.3);

(e) Information regarding employees, compensation, and personnel matters discussed at Board Meetings;

(f) Information regarding the Company's intellectual property, research and development activities, and proprietary processes;

(g) Trade Secrets of the Company;

(h) The deliberations, discussions, and proceedings of the Board; and

(i) Any information designated as "confidential," "proprietary," or with a similar legend by the Company.

Section 5.2 — Obligations of Confidentiality. The Observer and the Designating Party shall:

(a) Maintain all Confidential Information in strict confidence;

(b) Not disclose, publish, or otherwise disseminate any Confidential Information to any third party without the prior written consent of the Company, except as provided in Section 5.3;

(c) Use Confidential Information solely for the purpose of monitoring and evaluating the Designating Party's investment in or relationship with the Company, and for no other purpose;

(d) Protect Confidential Information using at least the same degree of care used to protect their own confidential information of a similar nature, but in no event less than a reasonable degree of care;

(e) Limit access to Confidential Information to those employees, agents, partners, members, and advisors of the Designating Party who (i) have a bona fide need to know such information in connection with the Designating Party's investment in or relationship with the Company, and (ii) are bound by confidentiality obligations no less restrictive than those set forth herein; and

(f) Be responsible for any breach of this Article V by any person to whom Confidential Information is disclosed pursuant to clause (e) above.

Section 5.3 — Permitted Disclosures. The obligations set forth in Section 5.2 shall not apply to information that:

(a) Is or becomes publicly available through no fault or breach by the Observer or the Designating Party;

(b) Was already known to the Observer or the Designating Party prior to disclosure by the Company, as demonstrated by contemporaneous written records;

(c) Is independently developed by the Observer or the Designating Party without reference to or use of any Confidential Information, as demonstrated by contemporaneous written records;

(d) Is received from a third party who is not known by the Observer or the Designating Party to be subject to a confidentiality obligation to the Company with respect to such information; or

(e) Is required to be disclosed by applicable law, regulation, or legal process, provided that the Observer or the Designating Party shall (i) promptly notify the Company in writing of such requirement prior to making such disclosure (to the extent legally permitted), (ii) cooperate with the Company in seeking a protective order or other appropriate remedy to limit such disclosure, and (iii) disclose only the minimum amount of Confidential Information required to satisfy such obligation.

Section 5.4 — Securities Law Compliance.

(a) The Observer and the Designating Party acknowledge that Confidential Information may constitute Material Non-Public Information under applicable federal and state securities laws.

(b) The Observer and the Designating Party shall not, and shall cause their respective Affiliates, employees, agents, partners, and advisors not to, purchase, sell, or otherwise trade in the securities of the Company, or tip any other person regarding such securities, while in possession of MNPI obtained through the Observer's service under this Agreement.

(c) The Observer and the Designating Party shall comply with all applicable insider trading laws and regulations, including Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder.

(d) The Company may, in its reasonable discretion, require the Observer and the Designating Party to comply with the Company's insider trading policy as in effect from time to time.

(e) The obligations set forth in this Section 5.4 shall survive the termination or expiration of this Agreement indefinitely.

Section 5.5 — Return of Confidential Information. Upon the termination or expiration of this Agreement, or upon the Company's written request at any time, the Observer and the Designating Party shall promptly:

(a) Return to the Company all tangible materials containing Confidential Information;

(b) Permanently delete or destroy all electronic copies of Confidential Information in their possession or control; and

(c) Certify in writing to the Company that all Confidential Information has been returned, deleted, or destroyed in accordance with this Section 5.5; provided, however, that the Observer and the Designating Party may retain (i) one archival copy of Confidential Information solely for legal and compliance purposes, and (ii) any Confidential Information contained in automatic backup systems, provided that such retained information remains subject to the confidentiality obligations of this Article V.

ARTICLE VI — EXCLUSION RIGHTS

Section 6.1 — Excluded Matters. Notwithstanding anything to the contrary in this Agreement, the Company shall have the right, in its sole and absolute discretion, to exclude the Observer from any Board Meeting (or any portion thereof) and to withhold from the Observer any Board Materials, in each case to the extent that such meeting or materials relate to any of the following (collectively, "Excluded Matters"):

(a) Attorney-Client Privilege. Any matter involving Privileged Information, including without limitation discussions with legal counsel, litigation strategy, regulatory proceedings, and legal risk assessments;

(b) Conflicts of Interest. Any matter in which the Designating Party, the Observer, or any of their respective Affiliates has or may have a material interest that is adverse to or in conflict with the interests of the Company, including without limitation:

    (i) Transactions between the Company and the Designating Party or its Affiliates;

    (ii) Matters involving business opportunities in which the Designating Party or its Affiliates may have a competing interest;

    (iii) Disputes or potential disputes between the Company and the Designating Party; and

    (iv) Evaluation of the Company's relationship with the Designating Party;

(c) Competitive Sensitivity. Any matter the disclosure of which to the Observer or the Designating Party could reasonably be expected to result in competitive harm to the Company, including discussions of Trade Secrets, proprietary technology, competitively sensitive business strategies, or non-public pricing information;

(d) Personnel and Compensation. Any matter involving the evaluation, compensation, hiring, termination, or discipline of the Company's officers, directors, or key employees, to the extent the Board determines in its reasonable judgment that the Observer's presence is not appropriate;

(e) National Security. Any matter that, in the reasonable judgment of the Company or its legal counsel, involves classified information, national security concerns, or information subject to restrictions under the Foreign Investment Risk Review Modernization Act (FIRRMA), the Committee on Foreign Investment in the United States (CFIUS) review process, or other applicable national security regulations;

(f) Third-Party Confidentiality. Any matter involving information that the Company has received subject to a confidentiality agreement with a third party that prohibits disclosure to the Observer or the Designating Party; and

(g) Other Matters. Any other matter that the Board reasonably determines, after consultation with the Company's legal counsel, should be excluded from the Observer's attendance or access.

Section 6.2 — Procedure for Exclusion.

(a) The Company shall use commercially reasonable efforts to notify the Observer in advance when the Observer will be excluded from all or any portion of a Board Meeting, but the Company's failure to provide advance notice shall not affect the validity of the exclusion or any action taken by the Board during the excluded portion.

(b) When the Observer is excluded from only a portion of a Board Meeting, the Observer shall be excused from the meeting for the relevant portion and may return when the excluded discussion has concluded, as determined by the chairperson of the Board.

(c) The Company shall not be required to provide the Observer or the Designating Party with an explanation or justification for any exclusion, provided that the Company shall confirm upon request that the exclusion was based on one or more of the categories set forth in Section 6.1.

Section 6.3 — No Waiver. The Company's failure to exercise its exclusion rights on any occasion shall not constitute a waiver of such rights and shall not establish any precedent or obligation to permit the Observer's attendance at future meetings involving similar matters.

ARTICLE VII — NO FIDUCIARY DUTIES; LIMITATION OF LIABILITY

Section 7.1 — No Fiduciary Duties. The Parties expressly acknowledge and agree that:

(a) The Observer is not a director, officer, employee, or fiduciary of the Company;

(b) The Observer does not owe and shall not be deemed to owe any fiduciary duties to the Company, its stockholders, its creditors, or any other Person by reason of this Agreement or the Observer's attendance at Board Meetings;

(c) The Observer shall have no duty of care, duty of loyalty, duty of candor, or any other fiduciary obligation to the Company arising out of or in connection with this Agreement;

(d) Nothing in this Agreement shall be construed to create, or shall have the effect of creating, any fiduciary relationship between the Observer (or the Designating Party) and the Company or its stockholders; and

(e) The Observer's participation in Board discussions shall not impose upon the Observer any duties or obligations beyond those expressly set forth in this Agreement.

Section 7.2 — No Liability for Board Actions. The Observer shall have no liability with respect to any action or inaction of the Board, and the Company and its stockholders shall have no claim against the Observer arising from any decision, resolution, or action taken or not taken by the Board, regardless of whether the Observer was present at the meeting at which such decision, resolution, or action occurred.

Section 7.3 — Limitation on Company Liability. In no event shall the Company be liable to the Observer or the Designating Party for any indirect, incidental, consequential, special, or punitive damages arising out of or related to this Agreement, regardless of the form of action or theory of liability, even if the Company has been advised of the possibility of such damages.

ARTICLE VIII — INDEMNIFICATION

Section 8.1 — Company Indemnification of Observer. The Company shall indemnify, defend, and hold harmless the Observer and the Designating Party and their respective directors, officers, employees, agents, partners, members, and representatives (each, an "Observer Indemnified Party") from and against any and all losses, claims, damages, liabilities, costs, and expenses (including reasonable attorneys' fees and expenses of investigation and defense) (collectively, "Losses") arising out of or resulting from:

(a) The Observer's designation as, or service as, a non-voting observer in accordance with this Agreement;

(b) The Observer's attendance at Board Meetings or receipt of Board Materials in accordance with this Agreement; or

(c) Any third-party claim arising from the Observer's exercise of rights under this Agreement;

provided, however, that the Company shall have no obligation to indemnify any Observer Indemnified Party for Losses to the extent arising from:

    (i) The Observer's or the Designating Party's breach of this Agreement, including any breach of the confidentiality or securities law provisions hereof;

    (ii) The Observer's willful misconduct, fraud, or criminal activity; or

    (iii) Any claim brought by the Designating Party or its Affiliates against the Company.

Section 8.2 — Observer Indemnification of Company. The Observer and the Designating Party shall, jointly and severally, indemnify, defend, and hold harmless the Company and its directors, officers, employees, agents, and representatives (each, a "Company Indemnified Party") from and against any and all Losses arising out of or resulting from:

(a) Any breach by the Observer or the Designating Party of this Agreement, including any breach of the confidentiality, securities law, or non-solicitation provisions hereof;

(b) Any unauthorized disclosure or use of Confidential Information by the Observer, the Designating Party, or any person to whom Confidential Information was disclosed in accordance with Section 5.2(e);

(c) Any violation of applicable securities laws by the Observer or the Designating Party in connection with MNPI obtained through this Agreement; or

(d) Any willful misconduct, fraud, or criminal activity of the Observer in connection with this Agreement.

Section 8.3 — Indemnification Procedures.

(a) An indemnified party seeking indemnification under this Article VIII shall provide prompt written notice to the indemnifying party of any claim, demand, or proceeding for which indemnification is sought, provided that the failure to provide timely notice shall not relieve the indemnifying party of its indemnification obligations except to the extent the indemnifying party is materially prejudiced by such failure.

(b) The indemnifying party shall have the right to assume the defense of any third-party claim with counsel reasonably satisfactory to the indemnified party, provided that the indemnified party shall have the right to retain separate counsel at its own expense.

(c) No indemnifying party shall settle any third-party claim without the prior written consent of the indemnified party (not to be unreasonably withheld, conditioned, or delayed) if such settlement (i) does not include a full and unconditional release of the indemnified party, or (ii) imposes any obligation, restriction, or liability on the indemnified party other than the payment of money.

Section 8.4 — Insurance. The Parties acknowledge that:

(a) The Observer is not entitled to coverage under the Company's directors' and officers' liability insurance policy unless the Company has specifically arranged for such coverage;

(b) The Company shall:

    ☐ Option A — Use commercially reasonable efforts to include the Observer as an additional insured under the Company's directors' and officers' liability insurance policy;

    ☐ Option B — Not be obligated to provide any insurance coverage to the Observer, and the Observer and the Designating Party shall be solely responsible for obtaining any insurance coverage they deem appropriate; or

    ☐ Option C — Provide the following insurance coverage for the Observer: [________________________________].

ARTICLE IX — EXPENSES

Section 9.1 — Expense Reimbursement. The Company shall:

☐ Option A — Full Reimbursement. Reimburse the Observer for all reasonable and documented out-of-pocket expenses incurred in connection with the Observer's attendance at Board Meetings, including travel, lodging, and meal expenses, subject to the Company's expense reimbursement policies as in effect from time to time.

☐ Option B — Limited Reimbursement. Reimburse the Observer for reasonable and documented travel expenses incurred in connection with the Observer's attendance at in-person Board Meetings, up to a maximum of $[________________________________] per meeting and $[________________________________] per calendar year.

☐ Option C — No Reimbursement. Not be obligated to reimburse the Observer for any expenses incurred in connection with the Observer's attendance at Board Meetings, and all such expenses shall be borne solely by the Observer or the Designating Party.

Section 9.2 — Compensation. The Observer shall:

☐ Option A — No Compensation. Not receive any compensation, fee, retainer, or other payment from the Company for the Observer's service under this Agreement.

☐ Option B — Specified Compensation. Receive compensation from the Company as follows: [________________________________].

Section 9.3 — Expense Submission. To the extent the Company is obligated to reimburse expenses under Section 9.1, the Observer shall submit expense reports with reasonable supporting documentation within [____] days following the applicable Board Meeting, and the Company shall reimburse approved expenses within [____] days of receipt of a complete expense report.

ARTICLE X — TERM AND TERMINATION

Section 10.1 — Term. This Agreement shall commence on the Effective Date and shall continue in effect:

☐ Option A — Indefinite Term. Until terminated in accordance with this Article X.

☐ Option B — Fixed Term. For a period of [________________________________] from the Effective Date, unless earlier terminated in accordance with this Article X, with automatic renewal for successive [________________________________] periods unless either Party provides written notice of non-renewal at least [____] days prior to the expiration of the then-current term.

☐ Option C — Event-Based Term. Until the earlier of (a) the termination of this Agreement in accordance with this Article X, or (b) the occurrence of the following event: [________________________________].

Section 10.2 — Automatic Termination. This Agreement shall automatically terminate, without the requirement of any notice or further action by either Party, upon the earliest to occur of the following:

(a) The Designating Party ceases to satisfy the Equity Threshold;

(b) The Designating Party transfers, sells, or otherwise disposes of all of its Securities;

(c) The Designating Party (or its designee) is appointed to serve as a full member of the Board;

(d) The Company consummates an initial public offering of its equity securities;

(e) The Company consummates a Change of Control (as defined below);

(f) The dissolution, liquidation, or winding up of the Company;

(g) The dissolution, liquidation, or winding up of the Designating Party (if an entity); or

(h) The death or permanent incapacity of the Observer, unless the Designating Party designates a Replacement Observer within [____] business days in accordance with Section 2.3.

For purposes of this Section 10.2, "Change of Control" means (i) any merger, consolidation, or similar transaction in which the stockholders of the Company immediately prior to such transaction hold less than 50% of the voting power of the surviving entity immediately following such transaction, (ii) the sale of all or substantially all of the assets of the Company, or (iii) any transaction or series of related transactions resulting in any Person (other than the Company's current stockholders or their Affiliates) acquiring beneficial ownership of more than 50% of the outstanding voting securities of the Company.

Section 10.3 — Termination by the Company. The Company may terminate this Agreement:

(a) Immediately upon written notice if the Observer or the Designating Party commits a material breach of this Agreement (including any breach of Article V) that remains uncured for [____] business days following written notice of such breach;

(b) Immediately upon written notice if the Observer fails to satisfy the qualifications set forth in Section 2.2;

(c) Immediately upon written notice if the Observer or the Designating Party (or any of their respective Affiliates) becomes a Competitor;

(d) Immediately upon written notice if the Observer is charged with or convicted of any felony or any crime involving fraud, dishonesty, or moral turpitude;

(e) Upon [____] days' prior written notice for any reason or no reason (termination for convenience); or

(f) Immediately upon written notice if continuation of this Agreement would, in the reasonable judgment of the Company's legal counsel, violate applicable law, regulation, or court order.

Section 10.4 — Termination by the Designating Party. The Designating Party may terminate this Agreement upon [____] days' prior written notice for any reason or no reason.

Section 10.5 — Effect of Termination. Upon the termination or expiration of this Agreement:

(a) All rights of the Observer to attend Board Meetings and receive Board Materials shall immediately cease;

(b) The obligations set forth in Article V (Confidentiality), Article VII (No Fiduciary Duties; Limitation of Liability), Article VIII (Indemnification), Section 5.4 (Securities Law Compliance), Section 5.5 (Return of Confidential Information), Article XI (Non-Solicitation), and Article XII (Remedies) shall survive termination and remain in full force and effect;

(c) The Observer and the Designating Party shall comply with the return and destruction obligations set forth in Section 5.5; and

(d) Termination shall not affect any rights or obligations that accrued prior to the effective date of termination.

ARTICLE XI — NON-SOLICITATION

Section 11.1 — Non-Solicitation of Employees. During the term of this Agreement and for a period of [________________________________] following the termination or expiration of this Agreement, the Observer and the Designating Party shall not, and shall cause their respective Affiliates not to, directly or indirectly, solicit, recruit, hire, or attempt to solicit, recruit, or hire any employee, officer, or independent contractor of the Company with whom the Observer had material contact or about whom the Observer received Confidential Information in connection with this Agreement; provided, however, that this restriction shall not prohibit:

(a) General solicitations of employment (such as advertisements in newspapers, trade publications, or online job boards) not specifically directed at the Company's employees;

(b) The hiring of any person who (i) was terminated by the Company prior to the commencement of discussions with such person, or (ii) independently responds to a general solicitation permitted under clause (a) above; or

(c) The solicitation or hiring of any person who ceased to be employed by the Company more than [____] months prior to any solicitation.

Section 11.2 — Non-Solicitation of Business Relationships. During the term of this Agreement and for a period of [________________________________] following the termination or expiration of this Agreement, the Observer and the Designating Party shall not, and shall cause their respective Affiliates not to, use Confidential Information to directly or indirectly solicit, divert, or appropriate, or attempt to solicit, divert, or appropriate, any customer, client, vendor, supplier, or business partner of the Company with whom the Observer had material contact or about whom the Observer received Confidential Information in connection with this Agreement.

ARTICLE XII — REMEDIES

Section 12.1 — Equitable Relief. The Parties acknowledge and agree that:

(a) A breach or threatened breach of Article V (Confidentiality), Article VI (Exclusion Rights), or Article XI (Non-Solicitation) would cause irreparable harm to the non-breaching Party that cannot be adequately compensated by monetary damages;

(b) In the event of any such breach or threatened breach, the non-breaching Party shall be entitled to seek injunctive relief, specific performance, and other equitable remedies, in addition to all other remedies available at law or in equity; and

(c) The non-breaching Party shall not be required to prove actual damages or post any bond or other security as a condition to obtaining equitable relief (to the extent permitted by applicable law).

Section 12.2 — Cumulative Remedies. All remedies available under this Agreement are cumulative and not exclusive. The exercise of any remedy by a Party shall not preclude the exercise of any other remedy available under this Agreement, at law, or in equity.

ARTICLE XIII — ANTITRUST COMPLIANCE

Section 13.1 — Antitrust Representations. The Designating Party represents and warrants that:

(a) The Designating Party and the Observer are aware of the restrictions imposed by Section 8 of the Clayton Act (15 U.S.C. § 19) regarding interlocking directorates and the potential application of antitrust laws to board observer arrangements;

(b) To the knowledge of the Designating Party, the Observer's designation does not violate any applicable antitrust or competition law;

(c) Neither the Designating Party nor the Observer will use Confidential Information for any anticompetitive purpose, including price-fixing, market allocation, bid-rigging, or any other conduct prohibited by applicable antitrust laws; and

(d) The Designating Party shall promptly notify the Company if any circumstance arises that could reasonably be expected to raise antitrust concerns in connection with the Observer's service under this Agreement.

Section 13.2 — Competitive Conduct Restrictions. The Observer shall not:

(a) Communicate or relay Confidential Information to any Competitor;

(b) Use Confidential Information to influence competitive decision-making by the Designating Party or its Affiliates; or

(c) Facilitate the exchange of competitively sensitive information between the Company and any Competitor.

ARTICLE XIV — REPRESENTATIONS AND WARRANTIES

Section 14.1 — Mutual Representations. Each Party represents and warrants to the other that:

(a) If such Party is an entity, it is duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization;

(b) Such Party has full power and authority to execute, deliver, and perform its obligations under this Agreement;

(c) This Agreement has been duly authorized, executed, and delivered by such Party and constitutes a valid and binding obligation of such Party, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium, and other laws affecting creditors' rights generally and general principles of equity;

(d) The execution, delivery, and performance of this Agreement does not conflict with, violate, or result in a breach of any law, regulation, order, or agreement to which such Party is subject; and

(e) No consent, approval, or authorization of, or filing with, any governmental authority or other third party is required in connection with the execution, delivery, or performance of this Agreement, except as has been obtained or made.

Section 14.2 — Additional Representations of Designating Party. The Designating Party further represents and warrants that:

(a) The Observer has been duly authorized to serve as the Designating Party's representative under this Agreement;

(b) The Observer satisfies the qualifications set forth in Section 2.2;

(c) The Observer is not, and during the term of this Agreement will not become, an employee, officer, director, partner, agent, or consultant of any Competitor of the Company, without the prior written consent of the Company;

(d) The Designating Party has informed the Observer of the Observer's obligations under this Agreement, including the confidentiality, securities law, and non-solicitation obligations; and

(e) To the extent applicable, the Designating Party is not a "foreign person" as defined under FIRRMA and the regulations promulgated thereunder, or if the Designating Party is a foreign person, the Designating Party has disclosed such status to the Company and the Parties have addressed any applicable CFIUS compliance requirements.

ARTICLE XV — GENERAL PROVISIONS

Section 15.1 — Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of [________________________________], without regard to its conflict of laws principles.

Section 15.2 — Dispute Resolution.

☐ Option A — Litigation. Any dispute arising out of or related to this Agreement shall be submitted to the exclusive jurisdiction of the state and federal courts located in [________________________________] County, State of [________________________________], and each Party hereby irrevocably consents to the personal jurisdiction and venue of such courts.

☐ Option B — Arbitration. Any dispute arising out of or related to this Agreement shall be resolved by binding arbitration administered by [________________________________] in accordance with its [________________________________] Rules then in effect. The arbitration shall be conducted in [________________________________] by [____] arbitrator(s). The arbitrator's decision shall be final and binding, and judgment on the award may be entered in any court of competent jurisdiction.

Section 15.3 — Notices. All notices, requests, demands, consents, and other communications under this Agreement shall be in writing and shall be deemed given when:

(a) Delivered personally;

(b) Sent by confirmed email (with a copy sent by another method specified herein within two (2) business days);

(c) One (1) business day after deposit with a nationally recognized overnight courier service, prepaid; or

(d) Three (3) business days after being mailed by certified or registered mail, return receipt requested, postage prepaid;

in each case addressed to the applicable Party at the address set forth in the preamble to this Agreement, or to such other address as such Party may designate by written notice.

Section 15.4 — Entire Agreement. This Agreement (including all Exhibits and Schedules attached hereto) constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations, and representations, whether written or oral, relating to such subject matter; provided, however, that this Agreement shall not supersede or limit any rights or obligations of the Parties under the Transaction Agreement, the Strategic Agreement, or any other agreement between the Parties except to the extent expressly provided herein.

Section 15.5 — Amendment and Waiver. This Agreement may not be amended, modified, or supplemented except by a written instrument executed by both Parties. No waiver of any provision of this Agreement shall be effective unless in writing and signed by the waiving Party. The failure of either Party to enforce any provision of this Agreement shall not be construed as a waiver of such provision or the right to enforce it at a later time.

Section 15.6 — Severability. If any provision of this Agreement is held to be invalid, illegal, or unenforceable under applicable law, such provision shall be modified to the minimum extent necessary to make it valid, legal, and enforceable, and the remaining provisions of this Agreement shall continue in full force and effect.

Section 15.7 — Assignment. Neither Party may assign or transfer this Agreement or any rights or obligations hereunder without the prior written consent of the other Party, except that the Company may assign this Agreement in connection with a merger, acquisition, or sale of all or substantially all of its assets without the consent of the Designating Party. Any purported assignment in violation of this Section shall be void and of no effect.

Section 15.8 — No Third-Party Beneficiaries. This Agreement is for the sole benefit of the Parties and their permitted successors and assigns. Nothing in this Agreement shall confer upon any third party any right, benefit, or remedy of any nature whatsoever, except that the Observer shall be a third-party beneficiary of the Company's indemnification obligations under Section 8.1.

Section 15.9 — Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. Execution by electronic signature or facsimile shall have the same force and effect as an original signature.

Section 15.10 — Further Assurances. Each Party shall execute and deliver such additional documents, instruments, and agreements, and take such additional actions, as may be reasonably necessary to effectuate the purposes of this Agreement.

Section 15.11 — Headings. The headings in this Agreement are for convenience of reference only and shall not affect the interpretation of this Agreement.

Section 15.12 — Construction. This Agreement shall be construed without regard to any presumption or rule requiring construction against the Party causing the Agreement to be drafted. The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation."

SIGNATURE BLOCKS

IN WITNESS WHEREOF, the Parties have executed this Board Observer Agreement as of the date first written above.

THE COMPANY:

[________________________________]

THE DESIGNATING PARTY:

[________________________________]

ACKNOWLEDGMENT AND AGREEMENT OF OBSERVER:

The undersigned hereby acknowledges receipt of a copy of the foregoing Board Observer Agreement, and hereby agrees to be bound by all terms and conditions applicable to the Observer thereunder, including without limitation the confidentiality obligations of Article V, the securities law compliance obligations of Section 5.4, the non-solicitation obligations of Article XI, and the antitrust compliance obligations of Article XIII.

OBSERVER:

EXHIBIT A — FORM OF JOINDER AGREEMENT

JOINDER TO BOARD OBSERVER AGREEMENT

This Joinder Agreement (this "Joinder") is executed as of [__/__/____] by the undersigned (the "Replacement Observer") and delivered to [________________________________] (the "Company") pursuant to Section 2.3 of that certain Board Observer Agreement, dated [__/__/____] (the "Agreement"), by and between the Company and [________________________________] (the "Designating Party").

By executing this Joinder, the Replacement Observer hereby:

1. Acknowledges that he or she has received and reviewed a copy of the Agreement;

2. Agrees to be bound by all terms and conditions of the Agreement applicable to the "Observer" as if the Replacement Observer were an original party thereto;

3. Represents and warrants that the Replacement Observer satisfies the qualifications set forth in Section 2.2 of the Agreement;

4. Represents and warrants that the information set forth below is true and correct; and

5. Acknowledges and agrees that the Replacement Observer's rights under the Agreement are subject to all limitations, exclusions, and conditions set forth therein.

REPLACEMENT OBSERVER:

ACKNOWLEDGED AND ACCEPTED BY THE COMPANY:

SCHEDULE A — EQUITY THRESHOLD AND ADDITIONAL TERMS

SOURCES AND REFERENCES

The following sources informed the preparation of this template and may assist practitioners in customizing the agreement:

• NVCA Model Investor Rights Agreement (Oct. 2025 Update): National Venture Capital Association model documents containing standard observer rights provisions. Available at https://nvca.org/model-legal-documents/.

• Skadden, Arps, Slate, Meagher & Flom LLP, "The Board Observer: Considerations and Limitations" (2025): Harvard Law School Forum on Corporate Governance analysis of board observer fiduciary duties, attorney-client privilege, securities law, and antitrust considerations. Available at https://corpgov.law.harvard.edu/2025/07/02/the-board-observer-considerations-and-limitations/.

• Morrison & Foerster LLP, "Common Provisions in Venture Capital Term Sheets: Information and Observer Rights": Detailed guidance on observer rights provisions in VC financings. Available at https://scaleup.mofo.com/guidance/ask-a-mofo-common-provisions-in-venture-capital-term-sheets-information-and-observer-rights.

• Foley & Lardner LLP, "Breaking Down the October 2, 2025 NVCA Updates" (2025): Analysis of the 2025 NVCA model document updates including FIRRMA compliance and observer rights changes. Available at https://www.foley.com/insights/publications/2025/10/breaking-down-the-nvca-what-founders-and-vcs-need-to-know/.

• Del. Code Ann. tit. 8, § 141: Delaware General Corporation Law governing powers and duties of boards of directors.

• Securities Exchange Act of 1934, § 10(b); 17 C.F.R. § 240.10b-5: Federal insider trading prohibitions applicable to persons possessing material non-public information.

• Clayton Act, 15 U.S.C. § 19: Federal antitrust provisions regarding interlocking directorates, increasingly scrutinized in connection with board observer arrangements.

• Foreign Investment Risk Review Modernization Act (FIRRMA), 50 U.S.C. § 4565: National security review requirements for foreign investment, including board observer designations by foreign persons.

This Board Observer Agreement template is provided by ezel.ai for informational purposes only. It does not constitute legal advice and should not be relied upon as such. Users should consult with a qualified attorney before executing any board observer arrangement. Board observer rights involve complex intersections of corporate governance, securities law, antitrust law, and potentially national security law, and the terms of any agreement should be tailored to the specific circumstances of the parties and the underlying transaction.