# EDGAR Filing Document

**Accession Number:** 0001699350
**File Stem:** 0001628280-25-034437
**Filing Date:** 2025-7
**Character Count:** 2431783
**Document Hash:** 9d20f6536673255f5a35eecb294e0f41
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001628280-25-034437.hdr.sgml**: 20250707

**ACCESSION NUMBER**: 0001628280-25-034437

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 37

**FILED AS OF DATE**: 20250707

**DATE AS OF CHANGE**: 20250707

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SHOULDER INNOVATIONS, INC.
- **CENTRAL INDEX KEY:** 0001699350
- **STANDARD INDUSTRIAL CLASSIFICATION:** SURGICAL & MEDICAL INSTRUMENTS & APPARATUS [3841]
- **ORGANIZATION NAME:** 08 Industrial Applications and Services
- **EIN:** 270538764
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-288549
- **FILM NUMBER:** 251108931

**BUSINESS ADDRESS:**
- **STREET 1:** 13827 PORT SHELDON STREET
- **CITY:** HOLLAND
- **STATE:** MI
- **ZIP:** 49424
- **BUSINESS PHONE:** 616-566-0286

**MAIL ADDRESS:**
- **STREET 1:** 13827 PORT SHELDON STREET
- **CITY:** HOLLAND
- **STATE:** MI
- **ZIP:** 49424

**As filed with the U.S. Securities and Exchange Commission on July 7, 2025.**

 **Registration No. 333-**

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION** 

**Washington, D.C. 20549** 

**FORM S-1** 

**REGISTRATION STATEMENT** 

**UNDER** 

**THE SECURITIES ACT OF 1933** 

**Shoulder Innovations, Inc.**

**(Exact name of registrant as specified in its charter)** 

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| | | |
|:---|:---|:---|
| **Delaware** | **3841** | **27-0538764** |
| **(State or other jurisdiction of**<br>**incorporation or organization)** | **(Primary Standard Industrial**<br>**Classification Code Number)** | **(I.R.S. Employer**<br>**Identification Number)** |

---

**1535 Steele Avenue SW, Suite B**

**Grand Rapids, Michigan 49507**

**(616) 294-1026**

**(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)** 

**Robert Ball**

**Chief Executive Officer and Executive Chairman**

**Shoulder Innovations, Inc.**

**1535 Steele Avenue SW, Suite B**

**Grand Rapids, Michigan 49507**

**(616) 294-1026**

**(Name, address, including zip code, and telephone number, including area code, of agent for service)** 

***Copies to:***

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| | | |
|:---|:---|:---|
| **B. Shayne Kennedy**<br>**Ross McAloon**<br>**Latham & Watkins LLP**<br>**650 Town Center Drive 20**<sup>th</sup> **Floor**<br>**Costa Mesa, California 92626**<br>**(714) 540-1235** | **Jeffrey Points**<br>**Chief Financial Officer**<br>**Shoulder Innovations, Inc.**<br>**1535 Steele Avenue SW**<br>**Suite B**<br>**Grand Rapids, Michigan 49507**<br>**(616) 294-1026** | **Denny Won**<br>**Charles S. Kim** <br>**Kristin VanderPas**<br>**Dave Peinsipp**<br>**Cooley LLP**<br>**3 Embarcadero Center, 20th Floor**<br>**San Francisco, California 94111**<br>**(415) 693-2000** |
| **Honigman LLP**<br>**650 Trade Centre Way, Suite 200**<br>**Kalamazoo, Michigan 49002**<br>**(269) 337-7700** |  |  |

---

**Approximate date of commencement of proposed sale to the public:** As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

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| | | | |
|:---|:---|:---|:---|
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒  | Smaller reporting company | ☒ |
| | | Emerging growth company | ☒ |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.**

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**The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.**

**SUBJECT TO COMPLETION, DATED JULY 7, 2025**

**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares**

![prospectuscover.jpg](prospectuscover.jpg)

**Common Stock**

This is an initial public offering of shares of common stock of Shoulder Innovations, Inc.

We are offering &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock. Prior to this offering, there has been no public market for our common stock. We anticipate that the initial public offering price will be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share. We have applied to list our common stock on the New York Stock Exchange under the trading symbol "SI," and this offering is contingent upon obtaining approval of such listing.

We are an "emerging growth company" and a "smaller reporting company" as defined under the U.S. federal securities laws and, as such, have elected to comply with certain reduced public company reporting requirements in this prospectus and may elect to do so in future filings. See the section titled "<u>[Prospectus Summary—Implications of Being an Emerging Growth Company and a Smaller Reporting](#ic945c3fe1c3843fdade045d990b55281_410981)[Company](#ic945c3fe1c3843fdade045d990b55281_410981)</u>."

**Investing in our common stock involves a high degree of risk. See the section titled ''<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>'' beginning on page <u>[19](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>.**

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| | | |
|:---|:---|:---|
| | **Per Share** | **Total** |
| Initial public offering price | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| Underwriting discounts and commissions<sup>(1)</sup> | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| Proceeds, before expenses, to us | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |

---

___________

(1)See the section titled "<u>[Underwriting](#i59180bdb0f1c4bbb8d8197dc900517b5_652)</u>" for additional disclosure regarding the estimated underwriting discounts and commissions and estimated offering expenses.

We have granted the underwriters an option for a period of 30 days to purchase up to an additional &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock solely to cover over-allotments, if any.

At our request, the underwriters have reserved up to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; % of the shares of our common stock offered by this prospectus for sale at the initial public offering price through a directed share program to certain of our directors, officers and employees. See the section titled "Underwriting—Directed Share Program" for additional information.

The underwriters expect to deliver the shares of common stock to purchasers on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025.

**Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**

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| | | |
|:---|:---|:---|
| **Morgan Stanley** | **Goldman Sachs & Co. LLC** | **Piper Sandler** |

---

**Jefferies**

**BTIG**

The date of this prospectus is &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**TABLE OF CONTENTS**

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| | |
|:---|:---|
| | **Page** |
| <u>[Prospectus Summary](#i59180bdb0f1c4bbb8d8197dc900517b5_240)</u> | <u>[3](#i59180bdb0f1c4bbb8d8197dc900517b5_240)</u> |
| <u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u> | <u>[19](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u> |
| <u>[Special Note Regarding Forward-Looking Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_357)</u> | <u>[77](#i59180bdb0f1c4bbb8d8197dc900517b5_357)</u> |
| <u>[Use of Proceeds](#i59180bdb0f1c4bbb8d8197dc900517b5_378)</u> | <u>[79](#i59180bdb0f1c4bbb8d8197dc900517b5_378)</u> |
| <u>[Dividend Policy](#i59180bdb0f1c4bbb8d8197dc900517b5_399)</u> | <u>[80](#i59180bdb0f1c4bbb8d8197dc900517b5_399)</u> |
| <u>[Capitalization](#i59180bdb0f1c4bbb8d8197dc900517b5_420)</u> | <u>[81](#i59180bdb0f1c4bbb8d8197dc900517b5_420)</u> |
| <u>[Dilution](#i59180bdb0f1c4bbb8d8197dc900517b5_441)</u> | <u>[83](#i59180bdb0f1c4bbb8d8197dc900517b5_441)</u> |
| <u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i59180bdb0f1c4bbb8d8197dc900517b5_462)</u> | <u>[86](#i59180bdb0f1c4bbb8d8197dc900517b5_462)</u> |
| <u>[Business](#i59180bdb0f1c4bbb8d8197dc900517b5_484)</u> | <u>[105](#i59180bdb0f1c4bbb8d8197dc900517b5_484)</u> |
| <u>[Management](#i59180bdb0f1c4bbb8d8197dc900517b5_505)</u> | <u>[152](#i59180bdb0f1c4bbb8d8197dc900517b5_505)</u> |
| <u>[Executive and Director Compensation](#i59180bdb0f1c4bbb8d8197dc900517b5_526)</u> | <u>[158](#i59180bdb0f1c4bbb8d8197dc900517b5_526)</u> |

---

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| | |
|:---|:---|
| | **Page** |
| <u>[Certain Relationships and Related-Party Transactions](#i59180bdb0f1c4bbb8d8197dc900517b5_547)</u> | <u>[170](#i59180bdb0f1c4bbb8d8197dc900517b5_547)</u> |
| <u>[Principal Stockholders](#i59180bdb0f1c4bbb8d8197dc900517b5_568)</u> | <u>[175](#i59180bdb0f1c4bbb8d8197dc900517b5_568)</u> |
| <u>[Description of Capital Stock](#i59180bdb0f1c4bbb8d8197dc900517b5_589)</u> | <u>[178](#i59180bdb0f1c4bbb8d8197dc900517b5_589)</u> |
| <u>[Shares Eligible for Future Sale](#i59180bdb0f1c4bbb8d8197dc900517b5_610)</u> | <u>[184](#i59180bdb0f1c4bbb8d8197dc900517b5_610)</u> |
| <u>[Material U.S. Federal Income Tax Consequences to Non-U.S. Holders](#i59180bdb0f1c4bbb8d8197dc900517b5_631)</u> | <u>[187](#i59180bdb0f1c4bbb8d8197dc900517b5_631)</u> |
| <u>[Underwriting](#i59180bdb0f1c4bbb8d8197dc900517b5_652)</u> | <u>[191](#i59180bdb0f1c4bbb8d8197dc900517b5_652)</u> |
| <u>[Legal Matters](#i59180bdb0f1c4bbb8d8197dc900517b5_673)</u> | <u>[200](#i59180bdb0f1c4bbb8d8197dc900517b5_673)</u> |
| <u>[Experts](#i59180bdb0f1c4bbb8d8197dc900517b5_694)</u> | <u>[200](#i59180bdb0f1c4bbb8d8197dc900517b5_694)</u> |
| <u>[Where You Can Find Additional Information](#i59180bdb0f1c4bbb8d8197dc900517b5_734)</u> | <u>[200](#i59180bdb0f1c4bbb8d8197dc900517b5_734)</u> |
| <u>[Index to Financial Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_1557)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1557)[1](#i59180bdb0f1c4bbb8d8197dc900517b5_1557)</u> |

---

We have not, and the underwriters have not, authorized anyone to provide you any information or to make any representations other than those contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we have referred you. Neither we nor the underwriters take responsibility for, or provide any assurance as to the reliability of, any other information others may give you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of the shares of our common stock. Our business, financial condition, and results of operations may have changed since that date.

For investors outside the United States: We have not, and the underwriters have not, done anything that would permit this offering or the possession or distribution of this prospectus or any free writing prospectus in connection with this offering in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of common stock and the distribution of this prospectus outside the United States.

i

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**BASIS OF PRESENTATION**

As used in this prospectus, unless the context otherwise requires, references to "Shoulder Innovations," the "company," "we," "us," and "our" refer to Shoulder Innovations, Inc.

The financial statements include the accounts of Shoulder Innovations, Inc. Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Our fiscal year ends on December 31 of each year. References to 2024 and 2023 refer to the year ended December 31, 2024 and December 31, 2023, respectively.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Percentage amounts included in this prospectus have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in our financial statements included elsewhere in this prospectus. Certain other amounts that appear in this prospectus may not sum due to rounding.

**TRADEMARKS AND TRADENAMES**

"Shoulder Innovations," the Shoulder Innovations logos, and other trade names, trademarks, or service marks of Shoulder Innovations appearing in this prospectus are the property of Shoulder Innovations. Other trade names, trademarks, or service marks appearing in this prospectus are the property of their respective holders. We do not intend our use or display of other companies' trade names, trademarks, or service marks to imply a relationship with, or endorsement or sponsorship of us, by these other companies. Solely for convenience, trade names, trademarks, and service marks referred to in this prospectus appear without the®,™, and <sup>SM</sup> symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or that the applicable owner will not assert its rights, to these trade names, trademarks, and service marks.

**INDUSTRY AND OTHER MARKET DATA**

This prospectus contains estimates, projections, and other information concerning our industry and our business, as well as data regarding market research, estimates, and forecasts prepared by our management or third parties. Information that is based on estimates, forecasts, projections, market research, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances that are assumed in this information. While we believe the market and industry data included in this prospectus are reliable and are based on reasonable assumptions, these data and the industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section titled "Risk Factors." These and other factors could cause results to differ materially from those expressed in these estimates, publications, and reports made by third parties or us.

Unless otherwise expressly stated, we obtained such industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry and general publications, government data, and similar sources. Our estimated number of physician visits annually for shoulder conditions is based on data from the National Ambulatory Medical Care Survey 2015-2016 conducted by the National Center for Health Statistics of the Centers for Disease Control and Prevention and the Physical Medicine & Rehabilitation Journal, Characteristics of Non-Spine Musculoskeletal Ambulatory Care Visits in the United States, 2009-2016, May 2021. In addition, certain procedure and market data are based on independent reports from third parties, including a leading healthcare market research provider and Transparency Market Research. Our estimated the annual growth in the number of shoulder arthroplasty procedures in the United States through 2029 is based on data from a leading healthcare market research provider regarding the number of procedures performed historically and an assumed growth rate in line with the recent annual growth rate in the number of procedures in the United States. In some cases, we do not expressly refer to the sources from which this data is derived. In that regard, when we refer to one or more sources of this type of data in any paragraph, you should assume that other data of this type appearing in the same paragraph is derived from the same sources, unless otherwise expressly stated or the context otherwise requires.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

The content of these third-party sources, except to the extent specifically set forth in this prospectus, does not constitute a portion of this prospectus and is not incorporated herein.

Forecasts and other forward-looking information with respect to industry, business, market, and other data are subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus. See the section titled "Special Note Regarding Forward-Looking Statements."

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**PROSPECTUS SUMMARY**

*This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus. You should carefully consider, among other things, the sections titled* "*<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>,*" "*<u>[Special Note Regarding Forward-Looking Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_357)</u>,*" "*<u>[Business](#i59180bdb0f1c4bbb8d8197dc900517b5_484)</u>,*" *and* "*<u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i59180bdb0f1c4bbb8d8197dc900517b5_462)</u>*" *and our financial statements and the related notes included elsewhere in this prospectus.* 

**Overview**

We are a commercial-stage medical technology company exclusively focused on transforming the shoulder surgical care market. We currently offer advanced implant systems for shoulder arthroplasty. These systems are a core element of our ecosystem, which we designed to improve core components of shoulder surgical care – preoperative planning, implant design and procedural efficiency – to benefit each stakeholder in the care chain. Our ecosystem is also comprised of enabling technologies, efficient instrument systems, specialized support and surgeon-to-surgeon collaboration. Together, these elements seek to address the long-standing clinical and operational challenges in the shoulder surgical care market by delivering predictable outcomes, procedural simplicity, and efficiency across all sites of care. We believe our exclusive focus on shoulder surgical care, combined with a highly specialized commercial organization and strong clinical data, positions us well to capture significant share in this large, growing market.

Shoulder pain is highly prevalent, often chronic, and can significantly reduce quality of life. The primary conditions that can result in shoulder pain and reduced functionality include osteoarthritis, rheumatoid arthritis, rotator cuff tears and shoulder fractures. Shoulder conditions are widespread, often debilitating, are commonly experienced concurrently as interrelated musculoskeletal disorders, and are estimated to result in more than eight million physician visits annually in the United States, based on data from the National Ambulatory Medical Care Survey 2015-2016 conducted by the National Center for Health Statistics of the Centers for Disease Control and Prevention ("CDC"). Despite this prevalence, we believe there has been a historical underutilization of surgical treatments for shoulder care due to several factors including patient hesitation to pursue surgical intervention, insufficient technology to appropriately treat shoulder conditions, complex shoulder anatomy, perceived difficulty of surgical intervention and barriers to patient access of care.

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty. Shoulder arthroplasty is an established surgical procedure involving the reconstruction of the shoulder joint with prosthetic implants through one of two main approaches: anatomic total shoulder arthroplasty ("aTSA") and reverse total shoulder arthroplasty ("rTSA"). Both approaches can be performed in inpatient hospital settings and in outpatient settings, including ambulatory surgery centers ("ASCs"). A key competitive advantage of ours has been the emergence of ASCs as a cost-efficient site of care with positive outcomes relative to hospital-based care. We expect that future growth in the shoulder surgical care market will be significantly driven by ASCs as hospitals face capacity constraints and are more limited in their ability to meet increasing demand.

We believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These limitations can result in continued pain, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

We developed our ecosystem with an approach to innovation that prioritizes ease of use, flexibility, predictability of outcomes and site of care efficiency, attributes we believe are critical to win in our market. This ecosystem is comprised of our advanced implant systems, ProVoyance preoperative planning technology, efficient instrument system, specialized support and surgeon-to-surgeon collaboration. Our advanced implants are comprised of our aTSA and rTSA systems, which are designed to address the unique needs of patients and surgeons, and

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

include various, specifically designed components capable of a wide array of system configurations to facilitate different modes of operation (anatomic or reverse). Our InSet Glenoid technology serves as the foundation for our advanced implant systems and includes a novel "InSet" design that aims to reduce mechanical stress at the bone implant interface, improve fixation mechanics, enhance stability and reduce micromotion. Our implant systems leverage consistent surgical techniques and the same efficient, two tray instrumentation system.

In addition to our advanced implant systems, we offer a leading preoperative surgical planning technology: ProVoyance. We believe that surgeon-level engagement in preoperative planning provides for better care for patients, and that bespoke surgical plans can help facilitate consistent positioning of implants. ProVoyance integrates artificial intelligence ("AI") and machine learning ("ML") to transform planar CT imaging into 3D renderings of patient-specific anatomy ahead of surgery, and is cleared by the U.S. Food and Drug Administration (the "FDA") for preoperative shoulder planning. ProVoyance received 510(k) clearance in 2021 and is classified by the FDA as a Class II device. ProVoyance is listed on the FDA's AI/ML-enabled medical devices list, which is a resource maintained, published, and periodically updated by the FDA to identify AI/ML-enabled devices that have been authorized for marketing in the United States through any of the standard paths to market for medical devices, although it is not intended to be a comprehensive list of all such devices that incorporate AI/ML. We believe the differentiation and value proposition of ProVoyance is validated by high utilization rates across procedures using our advanced implant systems. For example, for the three months ended March 31, 2025, we estimate an implied utilization rate for our ProVoyance technology of approximately 90%, based on 1,303 surgical plans created using ProVoyance technology and 1,443 implant systems sold during such period. This implied utilization rate is based on real-world data from our customers during such period, as ProVoyance technology tracks and reports each surgical plan that our customers create, and the actual number of implant systems sold during the respective period.

A key component of shoulder arthroplasty procedures are instrument trays, equipped with the specific instruments, supplies, and equipment needed for the surgery. We have developed a proprietary two-tray instrument system designed to enable interoperability between our aTSA and rTSA systems and a range of humeral stem options. We believe our efficient, two tray instrument system can enable surgeons and staff to reduce operating room footprint, procedural setup time, sterilization time and expense, and procedural complexity.

To best support our surgeon customers, we have built our commercial organization around their unique needs. Our commercial organization is comprised of a dedicated commercial leadership team that drives our internal commercial efforts with an exclusive focus on shoulder care, a Customer Experience and Medical Education ("CEME") team that enhances surgeon engagement and training and a network of independent distributors. These three key components of our commercial organization work in tandem to form a commercial flywheel that is designed to build and reinforce relationships with surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention.

We leverage our team's decades of experience developing and launching novel shoulder surgical care technologies to identify the unmet needs of patients and surgeons and develop solutions to address those unmet needs. With respect to our advanced implant systems, we commenced development efforts with our InSet Glenoid in 2009 and received 510(k) clearance in 2011. We commercially launched an initial aTSA system with our InSet Glenoid in 2016. Since this initial launch in 2016, we have successfully launched a wide range of new technologies to enhance our ecosystem and provide surgeons with the tools and support needed to deliver quality outcomes for patients requiring shoulder surgical care. For example, we commenced development efforts for our InSet PLUS Augmented Glenoid in 2019 and received 510(k) clearance in 2020. We commenced development efforts for our rTSA system in 2019 and received 510(k) clearance in 2021. We commenced development efforts for our short stem, stemless and I-Series humeral stem system options for our aTSA and rTSA systems in 2017, 2019 and 2021, respectively, and received our primary 510(k) clearances in 2018 and 2022, with an additional 510(k) clearance in 2024 for use of our primary I-Series humeral stem for use with anatomic fractures. Each of these devices is classified by the FDA as a Class II device. We have a robust pipeline of new technologies in various stages of development and evaluation, including the anticipated expansion of our humeral stem line, indication expansions into fracture and revision, and implants tailored for metal-sensitive patients. For example, we commenced development of InSet 70, InSet 135 and InSet 185 stems to expand our I-Series humeral stem line in 2024, and we anticipate pursuing FDA clearance of these stems, as needed, over the next twelve months. We are also evaluating

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expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

We have contributed to numerous publications that we believe evidence and strengthen our position as a leader in shoulder surgical care. There is a significant body of clinical evidence that supports the safety, efficacy, and durability of our implants in shoulder arthroplasty, including our InSet Glenoid technology. For example, a retrospective long-term follow-up analysis of patients who received our InSet Glenoid was published in the *Journal of Shoulder and Elbow Surgery* in 2019, which demonstrated a 72-point improvement in the mean American Shoulder and Elbow Surgeons ("ASES") outcome score, statistically significant improvements in pain scores and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at a mean follow-up time of 8.7 years. We are committed to continued investment in obtaining further clinical evidence with the support of surgeons who are recognized as thought leaders in shoulder surgical care. We believe these efforts will continue to generate a substantial body of clinical evidence that will drive increased awareness and adoption of our products.

We have experienced significant growth in recent years, primarily driven by growth in our net revenue from the sale of our advanced implant systems. We generated net revenue of $31.6 million for the year ended December 31, 2024, compared to net revenue of $19.3 million for the year ended December 31, 2023, representing 64.0% year-over-year growth. We recognized a gross margin of 77.0% and net loss of $15.6 million for the year ended December 31, 2024, compared to a gross margin of 79.2% and net loss of $12.7 million for the year ended December 31, 2023. We generated net revenue of $10.1 million for the three months ended March 31, 2025, compared to net revenue of $7.2 million for the three months ended March 31, 2024, representing an increase of 41.0%. We recognized a gross margin of 76.9% and net loss of $4.7 million for the three months ended March 31, 2025, compared to a gross margin of 76.8% and net loss of $3.6 million for the three months ended March 31, 2024.

**Market Overview**

***Market Opportunity***

Shoulder pain is highly prevalent and can significantly impact and reduce quality of life as well as result in chronic pain. The primary conditions that can result in shoulder pain and reduced functionality include: osteoarthritis, rheumatoid arthritis, shoulder fractures, and rotator cuff tears. Shoulder conditions are widespread, often debilitating, are commonly experienced concurrently as interrelated musculoskeletal disorders, and are estimated to result in more than eight million physician visits annually in the United States, based on data from the CDC. These conditions can require surgical intervention.

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty, which represents a large, immediately addressable and rapidly growing market. We estimate that approximately 250,000 shoulder arthroplasty procedures will be performed in the United States in 2025, which we believe represents an approximately $1.7 billion market opportunity based on our average sales price. Based on data from a healthcare market research provider regarding the number of shoulder arthroplasty procedures performed, our internal estimates and analysis of such data, as well as our knowledge of our industry, we expect the number of annual procedures performed to grow by approximately 11% annually through 2029. While our current commercial focus is on the United States, we plan to pursue market access initiatives in other attractive, high-growth international markets. We believe a significant opportunity exists outside of the United States and, based on a market research report issued by Transparency Market Research in 2025, we estimate that the total international shoulder arthroplasty market is approximately $1.0 billion in 2025. Together, we believe these markets represent a global annual shoulder arthroplasty market of approximately $2.8 billion. These market opportunities represent the total overall revenue opportunity that we believe is available for our systems if 100% market share is achieved by us, and are not a representation that we will achieve any such market share. The market share we achieve is subject to a number of assumptions, risks and uncertainties, including the adoption of our implant systems and our ability to execute on our commercial strategy. For more information, please see the section titled "Risk Factors—Risks Related to Our Business and Industry—Our business plan relies on certain assumptions about the market for our implant systems, however, the size and expected growth of our

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addressable market has not been established with precision and may be smaller than we estimate, and even if the addressable market is as large as we have estimated, we may not be able to capture additional market share."

We also plan to continue investing in our robust product pipeline to expand our capabilities in shoulder arthroplasty and serve additional, adjacent segments of the shoulder surgical care market that we do not currently address. Our near-term development efforts include a revision solution, a fracture-specific system and a line of humeral head and glenoid technologies for patients who test positively for a metal hypersensitivity. In addition to these near-term development efforts, we are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

***Limitations of Existing Product Offerings in Shoulder Arthroplasty***

Despite their frequent use and wide adoption, we believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These shortcomings can impact both patients and surgeons and result in continued pain or discomfort, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

We believe traditional shoulder arthroplasty products present several limitations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Fixation of the Glenoid Component in aTSA

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Poor Product Design Resulting in Suboptimal Kinematics in rTSA

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Difficult to Replace and Convert

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Imprecise Implant Positioning Due to Limited Surgical Planning

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Inefficient and Burdensome Surgical Workflow Design

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-Specialized Case Support

These limitations can result in the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Failure to Reduce Pain and Improve Shoulder Function

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Frequent Post-Operative Complications

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Low Rates of Implant Survivorship

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Necessity of Revision Surgeries

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Costly and Inefficient for Healthcare Providers

**Our Solutions**

We developed our ecosystem with an approach to innovation that prioritizes ease of use, flexibility, predictability of outcomes and site of care efficiency, attributes we believe are critical to win in our market.

***Key Elements of Our Ecosystem***

Our ecosystem is comprised of the following key elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Advanced Implant Systems**: Our advanced implants include a diverse range of interchangeable InSet aTSA and rTSA systems that leverage our novel, InSet Glenoid and InSet humeral stem technologies.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **ProVoyance Preoperative Planning Technology**: This preoperative planning technology integrates AI and ML to transform planar CT imaging into 3D renderings, allowing surgeons to create bespoke surgical plans considering patient-specific anatomy ahead of surgery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Efficient Instrument System**: Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Specialized Support**: Our team of dedicated shoulder specialists enable us to deliver a highly tailored experience to surgeons operating in a complex and technically demanding procedure category.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Surgeon-to-Surgeon Collaboration**: Our CEME team fosters a collaborative network of expert surgeon educators and promotes surgeon-to-surgeon training and peer education.

The image below depicts the key elements of our ecosystem:

![business7aa.jpg](business7aa.jpg)

***Key Benefits of Our Ecosystem***

Our ecosystem offers notable benefits that differentiate it within the shoulder surgical care market. These key benefits include**:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Fixation and Stability**: Our foundational InSet Glenoid technology is biomechanically designed to specifically address what we believe is the primary problem in legacy aTSA implants: glenoid loosening.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Restores Full Functionality**: We engineered our three humeral stem options to provide consistent, optimized biomechanics in both aTSA and rTSA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Exceptional Longevity**: Our advanced implant systems are designed for longevity. In one published study, our InSet Glenoid demonstrated no surgical complications, cases of glenoid loosening or revision surgeries at a mean follow-up time of 8.7 years in a particularly challenging patient population.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Implant Selection and Positioning**: ProVoyance preoperative planning technology empowers surgeons to create bespoke surgical plans that facilitate consistent, effective positioning of our implants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Optimized Procedural Workflow and Efficiency**: Our efficient instrument system supports our implant portfolio across both aTSA and rTSA. This can provide significant workflow advantages for our customers

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by minimizing the operating room footprint, reducing procedural setup time, lowering sterilization requirements and costs and reducing the risk of errors - key advantages for the ASC setting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Access to Expert Advice**: Our commercial organization creates deep relationships with surgeons and allows us to support their practice with specialized customer service and case support before, during and after surgery. In addition to direct support, our commercial team connects surgeons to the broader shoulder surgical community in various settings with a goal to improve connectivity across the shoulder surgical community and contribute to better patient outcomes.

**Our Success Factors** 

We attribute our success to a combination of the following factors. We believe these attributes are central to our business outcomes and will be significant factors in our continued success and growth.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Disruptive Ecosystem to Address Existing Limitations Within Shoulder Surgical Care***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Strong Clinical Results and Positive Outcomes for Patients and Surgeons***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Well Positioned as Shoulder Surgical Care Market Grows in Outpatient Settings***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Proven and Experienced Management Team***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Unique Commercial Organization Dedicated to the Shoulder Surgical Care Market***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• AI-Enabled Business and Clinical Intelligence Technologies***

**Our Growth Strategies**

Our goal is to leverage our purpose-built ecosystem to become the leader for shoulder surgical care. The key elements of our growth strategy include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Increase Awareness of our Purpose-Built, Innovative Shoulder Surgical Care Ecosystem to Continue Taking Share Across Care Settings***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Expand our Commercial Flywheel of Shoulder Specialists, Surgeon-to-Surgeon Collaboration, and Network of Independent Distributors***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Capitalize on Our Unique Advantages to Capture Outsized ASC Growth***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Increase our Addressable Market Through our Commitment to Continuous Innovation and Advancing Shoulder Surgical Care***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Continue Building and Driving Marketing of our Technology Solutions***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;***• Pursue Expansion in International Markets***

**Recent Developments**

***Preliminary Estimated Selected Financial Results for the Three Months and Six Months Ended June 30, 2025***

Our financial results for the three months and six months ended June 30, 2025 are not yet complete and will not be available until after the completion of this offering. Accordingly, set forth below are certain preliminary estimated selected unaudited financial results for the three months and six months ended June 30, 2025 and the corresponding periods of the prior fiscal year. We have provided ranges, rather than specific amounts, for the three months and six months ended June 30, 2025, because our closing procedures for the quarter-end financial closing process are not yet complete, these results are preliminary and subject to change, and there is a possibility that our actual results may differ materially from these preliminary estimates. These ranges are based on the information available to us as of the date of this prospectus. These preliminary estimated results for the three months and six

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months ended June 30, 2025 are derived from our preliminary internal financial records and are subject to revisions based on our procedures and controls associated with the completion of our financial reporting, including all the customary reviews and approvals, and completion by our independent registered public accounting firm of its review of such financial statements for the quarter ended June 30, 2025. These preliminary estimated results should not be viewed as a substitute for financial statements prepared in accordance with U.S. GAAP. Our independent registered public accounting firm, Deloitte & Touche LLP, has not audited, reviewed, compiled or performed any procedures with respect to this preliminary financial information and, accordingly, Deloitte & Touche LLP does not express an opinion or any other form of assurance with respect thereto. It is possible that we or our independent registered public accounting firm may identify items that would require us to make adjustments to the preliminary estimates set forth below as we complete our financial statements and that our actual results may differ materially from these preliminary estimates. Accordingly, undue reliance should not be placed on these preliminary estimates. These preliminary estimates are not necessarily indicative of any future period and should be read together with "Risk Factors," "Special Note Regarding Forward-Looking Statements," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and related notes included elsewhere in this prospectus.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30** | **Six Months Ended June 30** | **Six Months Ended June 30** |
| | **2025 (estimated low)** | **2025 (estimated high)** | **2024 (actual)** | **2025 (estimated low)** | **2025 (estimated high)** | **2024 (actual)** |
| | **(unaudited)**<br>***(in thousands)*** | **(unaudited)**<br>***(in thousands)*** | **(unaudited)**<br>***(in thousands)*** | **(unaudited)**<br>***(in thousands)*** | **(unaudited)**<br>***(in thousands)*** | **(unaudited)**<br>***(in thousands)*** |
| **Preliminary estimated financial results:** | | | | | | |
| Net revenue | $ | $ | $8260 | $ | $ | $15444 |
| Cost of goods sold |  |  | 1906 |  |  | 3572 |
| Operating expenses: |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses<sup>(1)</sup> |  |  | 9171 |  |  | 16875 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses |  |  | 1162 |  |  | 2232 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses |  |  | 10333 |  |  | 19107 |
| Net loss |  |  | (4171) |  |  | (7772) |
| Adjusted EBITDA<sup>(2)</sup> |  |  |  |  |  |  |

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(1)Includes stock-based compensation expense of $127 thousand and $168 thousand for the three months ended March 31, 2025 and 2024, respectively.

(2)Adjusted EBITDA is a non-GAAP financial measure. See below for a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, net loss, for each of the periods presented above.

For the three months ended June 30, 2025, we expect net revenue to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $8.3 million for the three months ended June 30, 2024. The expected increase in net revenue is primarily due to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended June 30, 2025, we expect net revenue to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $15.4 million for the six months ended June 30, 2024. The expected increase in net revenue is primarily due to .

For the three months ended June 30, 2025, we expect cost of goods sold to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $1.9 million for the three months ended June 30, 2024. The expected increase in cost of goods sold is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended June 30, 2025, we expect cost of goods sold to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $3.6 million for the six months ended June 30, 2024. The expected increase in cost of goods sold is primarily due to .

For the three months ended June 30, 2025, we expect selling, general and administrative expenses to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $9.2 million for the three months ended June 30, 2024. The expected increase in selling, general and administrative expenses is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended

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June 30, 2025, we expect selling, general and administrative expenses to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $16.9 million for the six months ended June 30, 2024. The expected increase in selling, general and administrative expenses is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .

For the three months ended June 30, 2025, we expect research and development expenses to be between $&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $1.2 million for the three months ended June 30, 2024. The expected increase in research and development expenses is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended June 30, 2025, we expect research and development expenses to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $2.2 million for the six months ended June 30, 2024. The expected increase in research and development expenses is primarily due to .

For the three months ended June 30, 2025, we expect net loss to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $4.2 million for the three months ended June 30, 2024. The expected increase in net loss is primarily due to &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended June 30, 2025, we expect net loss to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $7.8 million for the six months ended June 30, 2024. The expected increase in net loss is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .

For the three months ended June 30, 2025, we expect Adjusted EBITDA to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million for the three months ended June 30, 2024. The expected increase in Adjusted EBITDA is primarily due to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . For the six months ended June 30, 2025, we expect Adjusted EBITDA to be between $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million and $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, compared to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million for the six months ended June 30, 2024. The expected increase in Adjusted EBITDA is primarily due to &nbsp;&nbsp;&nbsp;&nbsp; .

We define Adjusted EBITDA as net loss before interest expense, net, income tax expense, depreciation and amortization, stock-based compensation expense and loss on extinguishment of convertible promissory notes. For more information about why we consider such measure useful and a discussion of the material risks and limitations of such measure, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures." The following table presents a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, net loss, for each of the periods presented above:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Three Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** | **Six Months Ended June 30,** |
| | **2025 (estimated low)** | **2025 (estimated high)** | **2024 (actual)** | **2025 (estimated low)** | **2025 (estimated high)** | **2024 (actual)** |
| | **(unaudited)** | **(unaudited)** | **(unaudited)** | **(unaudited)** | **(unaudited)** | **(unaudited)** |
| | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** | ***(in thousands)*** |
| Net loss | $ | $ | $ | $ | $ | $ |
| Interest expense, net |  |  |  |  |  |  |
| Income tax expense |  |  |  |  |  |  |
| Depreciation and amortization expense |  |  |  |  |  |  |
| Stock-based compensation expense |  |  |  |  |  |  |
| Loss on extinguishment of convertible promissory notes |  |  |  |  |  |  |
| Adjusted EBITDA |  |  |  |  |  |  |

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As of June 30, 2025, our cash and cash equivalents balance is expected to be $&nbsp;&nbsp;&nbsp;&nbsp; million as compared to $5.7 million as of June 30, 2024.

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**Summary of Risks Associated with Our Business** 

Our business is subject to a number of risks of which you should be aware before making a decision to invest in our common stock. These risks are more fully described in the section titled "<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>" immediately following this prospectus summary. These risks include, among others, the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are an early-stage company with a history of significant net losses, we expect to incur operating losses in the future and we may not be able to achieve or sustain profitability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to manage our growth effectively, our business could be materially and adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may require substantial additional funding, which may not be available to us on acceptable terms, or at all, and, if not available, may require us to delay, scale back, or cease our innovation efforts or operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We operate in a very competitive business environment, and if we are unable to compete successfully against our existing or potential competitors, our business, financial condition and results of operations may be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we fail to develop and retain an effective dedicated commercial leadership team, or if we are unable to successfully expand dedicated commercial leadership team, it could negatively impact our sales, and we may not generate sufficient net revenue to sustain profitability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business plan relies on certain assumptions about the market for our implant systems, however, the size and expected growth of our addressable market has not been established with precision and may be smaller than we estimate, and even if the addressable market is as large as we have estimated, we may not be able to capture additional market share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our business is dependent upon the adoption of our implant systems by hospitals, ASCs, surgeons and patients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our long-term growth depends on our ability to enhance our implant systems, expand our indications and develop and commercialize additional products in a timely manner. If we cannot innovate, we may not be able to develop or exploit new products in time to remain competitive.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We face the risk of product liability claims that could be expensive, divert management's attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Industry trends have resulted in increased downward pricing pressure on medical services and products, which may affect our ability to sell our products at prices necessary to support our current business strategy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If hospitals, ASCs and other health care facilities do not approve the use of our implant systems, our sales may not increase.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We depend on third-party contract manufacturers and suppliers, some of which are single source, to produce and package all elements comprising our shoulder implant systems, and if these suppliers and manufacturers fail to supply us, our products or their components or subcomponents in sufficient quantities or at all, or in accordance with applicable regulatory requirements and our specifications, it will have a material adverse effect on our business, financial condition, and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our results of operations will be materially harmed if we are unable to accurately forecast demand for our implant systems and manage our inventory.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may be unable to continue to successfully demonstrate to shoulder specialists or key opinion leaders the merits of our implant systems and technologies compared to those of our competitors, which may make it difficult to achieve market acceptance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The loss of any member on our executive management team or our inability to attract and retain highly skilled members of our dedicated commercial leadership and marketing teams as well as certain third-party engineers could have a material adverse effect on our business, financial condition and results of operations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• If we are unable to obtain and maintain significant patent or other intellectual property protection for our products, or if the scope of our patents and other intellectual property rights do not adequately protect our products, our competitors could develop and commercialize products similar or identical to ours and we may be unable to gain significant market share and be unable to operate our business profitably.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our devices and operations are subject to extensive government regulation and oversight in the United States, and our failure to comply with applicable requirements could harm our business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Our relationships with customers, physicians and third-party payors are subject to federal and state health care fraud and abuse laws, false claims laws, physician payment transparency laws and other health care laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws we could face substantial penalties.

**Corporate and Other Information**

We were initially formed on July 1, 2009 as Shoulder Innovations, LLC, a Delaware limited liability company. On February 10, 2017, we completed a corporate conversion where Shoulder Innovations, LLC was converted into a C-corporation under the laws of the State of Delaware and changed our name to Shoulder Innovations, Inc. Our principal executive offices are located at 1535 Steele Avenue SW, Suite B, Grand Rapids, MI 49507, and our telephone number is (616) 294-1026. Our corporate website address is www.shoulderinnovations.com. Information contained on, or accessible through, our website shall not be deemed incorporated into and is not a part of this prospectus or the registration statement of which it forms a part. We have included our website in this prospectus solely as an inactive textual reference.

**Implications of Being an Emerging Growth Company and a Smaller Reporting Company**

We are an emerging growth company as defined in the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"). We will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of this offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. An emerging growth company may take advantage of specified reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. As a result, the information that we provide to our stockholders may be different than you might receive from other public reporting companies in which you hold equity interests.

As an emerging growth company, we have elected to take advantage of certain reduced disclosure obligations in the registration statement that this prospectus is a part of, and may elect to take advantage of other reduced reporting requirements in future filings. In particular:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will present in this prospectus only two years of audited financial statements, plus any required unaudited financial statements, and related section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations";

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will avail ourselves of the exemption from the requirement to obtain an attestation and report from our independent registered public accounting firm on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002, as amended (the "Sarbanes-Oxley Act");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will avail ourselves of relief from compliance with the requirements of the Public Company Accounting Oversight Board regarding the communication of critical audit matters in the auditor's report on the financial statements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will provide less extensive disclosure about our executive compensation arrangements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we will not be required to hold stockholder non-binding advisory votes on executive compensation or golden parachute arrangements.

In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early.

We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

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**The Offering**

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| | |
|:---|:---|
| Common stock offered by us | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares. |
| Underwriters' over-allotment option of common stock offered by us | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares. |
| Common stock to be outstanding immediately after this offering | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares (or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares if the underwriters exercise their over-allotment option in full). |
| Use of proceeds | We estimate that the net proceeds from this offering will be approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million (or approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million if the underwriters exercise their over-allotment option in full), based on an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. <br>We currently intend to use the net proceeds from this offering (i) to scale up our commercial organization through the hiring of additional sales representatives and expansion of our commercial leadership team, as well as to invest in additional instrument sets, (ii) to fund the research and development of continued general innovation in our implant systems and (iii) for working capital and other general corporate purposes.<br>We will have broad discretion in the way that we use the net proceeds from this offering. See the section titled "<u>[Use of Proceeds](#i59180bdb0f1c4bbb8d8197dc900517b5_378)</u>" for additional information. |
| Directed share program | At our request, the underwriters have reserved up to % of the shares of common stock offered hereby, at the initial public offering price, to offer to certain of our directors, officers and employees. The sales will be made at our direction by Morgan Stanley & Co. LLC and its affiliates through a directed share program. The number of shares of common stock available for sale to the general public will be reduced to the extent these individuals purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares offered by this prospectus. Except for any shares acquired by our directors and officers, shares purchased pursuant to the directed share program will not be subject to lock-up agreements with the underwriters. See the section titled "Underwriting—Directed Share Program" for additional information. |
| Risk factors | Investing in our common stock involves a high degree of risk. See the section titled "<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>" for a discussion of risks you should consider carefully, together with all the other information included in this prospectus, before deciding to invest in our common stock. |
| Proposed New York Stock Exchange trading symbol | "SI" |

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The number of shares of our common stock to be outstanding after this offering is based on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, after giving effect to the conversion of all outstanding shares of our convertible preferred stock (including 29,319,143 shares of our Series E convertible preferred stock issued in June 2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock immediately prior to the completion of this offering, and excludes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options under our Stock Option Plan as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options granted subsequent to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025 under our Stock Option Plan, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of our common stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of warrants to purchase shares of our Series B convertible preferred stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of our Series D convertible preferred stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which will convert into a warrant to purchase shares of our common stock immediately prior to the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• shares of our common stock reserved for future issuance under our equity compensation plans, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under our 2025 Incentive Award Plan (the "2025 Plan"), which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part (which number includes&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock to be granted pursuant to our 2025 Plan, based upon an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under our 2025 Employee Stock Purchase Plan (the "ESPP"), which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part.

Unless otherwise indicated, all information contained in this prospectus, including the number of shares of common stock that will be outstanding after this offering, assumes or gives effect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the filing and effectiveness of our amended and restated certificate of incorporation, which will occur immediately prior to the completion of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the conversion of all outstanding shares of our convertible preferred stock (including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our Series E convertible preferred stock issued in&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock immediately prior to the completion of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the automatic conversion of a warrant to purchase shares of our Series D convertible preferred stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 into a warrant to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock immediately prior to the completion of this offering (the "Warrant Conversion");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -for-&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; reverse stock split of our common stock, which we effected on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no exercise of the outstanding options and warrants referred to above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no exercise by the underwriters of their over-allotment option; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no purchase of shares of our common stock by our directors, officers and employees through the directed share program described in the section titled "Underwriting—Directed Share Program."

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**Summary Financial Data**

The following tables summarize our financial data for the periods and as of the dates indicated. The following summary statements of operations and comprehensive loss data for the years ended December 31, 2024 and 2023 and balance sheet data as of December 31, 2024, except for pro forma and pro forma as adjusted amounts, have been derived from our audited financial statements and the related notes included elsewhere in this prospectus. The summary statement of operations and comprehensive loss data for the three months ended March 31, 2025 and 2024 and the balance sheet data as of March 31, 2025 have been derived from our unaudited interim condensed financial statements that are included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. You should read the following summary financial data together with our audited financial statements and the related notes included elsewhere in this prospectus and the section titled "<u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i59180bdb0f1c4bbb8d8197dc900517b5_462)</u>." The summary financial data included in this section are not intended to replace the financial statements and the related notes included elsewhere in this prospectus.

**Statements of Operations and Comprehensive Loss Data**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** |
| | **2025** | **2024** | **2024** | **2023** |
| | **(unaudited)** | **(unaudited)** | | |
| | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
| Net revenue | $10132 | $7184 | $31623 | $19274 |
| Cost of goods sold | 2341 | 1666 | 7282 | 4004 |
| Gross profit | 7791 | 5518 | 24341 | 15270 |
| Operating expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses<sup>(1)</sup> | 10502 | 7704 | 34505 | 23113 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | 1583 | 1070 | 4489 | 3021 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 12085 | 8774 | 38994 | 26134 |
| Operating loss | (4294) | (3256) | (14653) | (10864) |
| Other (income) expense: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 367 | 317 | 1316 | 761 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of convertible promissory notes |  |  |  | 1127 |
| &nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | 1 | 27 | (350) | (97) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense | 368 | 344 | 966 | 1791 |
| Loss before income tax expense | (4662) | (3600) | (15619) | (12655) |
| Income tax expense |  |  |  |  |
| Net loss | $(4662) | $(3600) | $(15619) | $(12655) |
| Other comprehensive (loss) income, net: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Unrealized (loss) gain on marketable securities | (116) | (42) | (159) | 356 |
| Total other comprehensive (loss) income, net | (116) | (42) | (159) | 356 |
| Comprehensive loss | $(4778) | $(3642) | $(15778) | $(12299) |
| Net loss per share attributed to common stock – basic and diluted<sup>(2)</sup> | $(2.73) | $(3.29) | $(12.69) | $(11.56) |
| Weighted-average shares of common stock outstanding – basic and diluted<sup>(2)</sup> | 1706470 | 1094314 | 1231226 | 1094314 |

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** |
| | **2025** | **2024** | **2024** | **2023** |
| | **(unaudited)** | **(unaudited)** | | |
| | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** | **(in thousands, except for share and per share data)** |
| Pro forma net loss per share of common stock, basic and diluted (unaudited)<sup>(3)</sup> | $(0.03) |  | $(0.09) |  |
| Pro forma weighted-average shares of common stock outstanding, basic and diluted (unaudited)<sup>(3)</sup> | 185734451 |  | 176421414 |  |

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(1)Includes stock-based compensation expense of $127 thousand and $168 thousand for the three months ended March 31, 2025 and 2024, respectively, and $0.8 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively.

(2)Please see Note 11 to our audited financial statements and Note 6 to our unaudited financial statements included elsewhere in this prospectus for details on the calculation of basic and diluted net loss per share attributed to common stock.

(3)Pro forma net loss per share attributed to common stock, basic and diluted, is calculated giving effect to the conversion of (i) all outstanding shares of our convertible preferred stock into shares of our common stock and (ii) all outstanding warrants into warrants to purchase shares of our common stock. Pro forma net loss per share attributed to common stock does not include the shares expected to be sold and related proceeds to be received in this offering.

**Balance Sheet Data**

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| | | | |
|:---|:---|:---|:---|
| | **As of March 31, 2025** | **As of March 31, 2025** | **As of March 31, 2025** |
| | **Actual** | **Pro Forma**<sup>(1)</sup> | **Pro Forma**<br>**As Adjusted**<sup>(2)(3)</sup> |
| | **(unaudited)** <br>**(in thousands, except for share data)** | **(unaudited)** <br>**(in thousands, except for share data)** | **(unaudited)** <br>**(in thousands, except for share data)** |
| **Balance Sheet Data:** |  |  |  |
| Cash, cash equivalents and marketable securities | $27564 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  |
| Working capital<sup>(4)</sup> | 42622 |  |  |
| Total assets | 57524 |  |  |
| Convertible preferred stock | $94147 |  |  |
| Accumulated deficit | $(61703) |  |  |
| Total stockholders' (deficit) equity | $(59314) | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  |

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(1)Pro forma amounts give effect to (i) the receipt of approximately $40.1 million in aggregate gross proceeds from the issuance and sale of our Series E convertible preferred stock in March and June 2025; (ii) the conversion of all outstanding shares of our convertible preferred stock (including 29,319,143 shares of our Series E convertible preferred stock issued in June 2025) into an aggregate of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock; (iii) the Warrant Conversion and the related reclassification of warrant liability to stockholders' equity; and (iv) the filing and effectiveness of our amended and restated certificate of incorporation, which will become effective immediately prior to the completion of this offering.

(2)Pro forma as adjusted amounts give effect to (i) the pro forma adjustments set forth in footnote (1) above and (ii) the issuance and sale of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock in this offering, at an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(3)Pro forma as adjusted balance sheet data is illustrative only and will change based on the actual initial public offering price and other terms of this offering at pricing. Each $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by approximately $&nbsp;&nbsp;&nbsp;&nbsp; million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Similarly, each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) each of our pro forma as adjusted cash, cash equivalents and marketable securities, working capital, total assets and total stockholders' equity by approximately $&nbsp;&nbsp;&nbsp;&nbsp; million, assuming that the assumed initial offering price to the public remains the same, and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

(4)We define working capital as current assets less current liabilities. See our financial statements and the related notes included elsewhere in this prospectus for further details regarding our current assets and current liabilities.

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**Key Business Metrics**

The following table sets forth the number of implant systems sold in each of the three-month periods indicated:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **Mar. 31,<br>2023** | **June 30,<br>2023** | **Sept. 30,<br>2023** | **Dec. 31,<br>2023** | **Mar. 31,<br>2024** | **June 30,<br>2024** | **Sept. 30,<br>2024** | **Dec. 31,<br>2024** | **Mar. 31, 2025** |
| Implant systems sold | 559 | 564 | 618 | 943 | 971 | 1121 | 1037 | 1220 | 1443 |

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**Non-GAAP Financial Measures**

In addition to our results and measures of performance determined in accordance with U.S. GAAP, we believe that non-GAAP financial measures can be useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions. We utilize and present Adjusted EBITDA for these purposes. We define Adjusted EBITDA as net loss before interest expense, net, income tax expense, depreciation and amortization, stock-based compensation expense and loss on extinguishment of convertible promissory notes. The following table presents Adjusted EBITDA for each of the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** |
| | **2025** | **2024** | **2024** | **2023** |
| | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Adjusted EBITDA<sup>(1)</sup> | $(3500) | $(2617) | $(11353) | $(8675) |

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(1)Adjusted EBITDA is a non-GAAP financial measure. For a reconciliation of Adjusted EBITDA to the most directly comparable U.S. GAAP financial measure, information about why we consider such measure useful and a discussion of the material risks and limitations of such measure, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures."

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**RISK FACTORS**

*Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our financial statements and the related notes included elsewhere in this prospectus and the section titled* "*<u>[Management's Discussion and Analysis of Financial Condition and Results of Operations](#i59180bdb0f1c4bbb8d8197dc900517b5_462)</u>,*" *before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could have a material adverse effect on our business, financial condition, results of operations, and prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Please also see the section titled "<u>[Special Note Regarding Forward-Looking Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_357)</u>." Additional risks and uncertainties not presently known to us or that we currently believe are not material may also impair our business, financial condition, results of operations and prospects.*

**Risks Related to Our Financial Condition and Capital Requirements** 

***We are an early-stage company with a history of significant net losses, we expect to incur operating losses in the future and we may not be able to achieve or sustain profitability.***

We have incurred annual net losses since our inception, and we expect to incur additional substantial losses in the foreseeable future. For the years ended December 31, 2023 and 2024, we had a net loss of $12.7 million and $15.6 million, respectively. For the three months ended March 31, 2025 and 2024, we had a net loss of $4.7 million and $3.6 million, respectively. As of March 31, 2025, we had an accumulated deficit of $61.7 million. To date, we have financed our operations primarily through equity and debt financings and from sales of our shoulder replacement implants. The losses and accumulated deficit have primarily been due to the substantial investments we have made to develop our implant systems, costs related to our sales and marketing efforts and general research and development expenses, including costs related to regulatory initiatives to obtain marketing approval. These investments may be more costly than we expect, and if we do not achieve the benefits anticipated from these investments, or if the realization of these benefits is delayed or not enough to offset our higher operating expenses, such investments may not result in increased revenue or growth in our business, which will lead to increased net losses. In addition, as a public company, we will incur significant legal, accounting and other expenses that we did not incur as a private company. Accordingly, we expect to continue to incur operating losses for the foreseeable future. Our failure to achieve and sustain profitability in the future will make it more difficult to finance our business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition and results of operations and cause the market price of our common stock to decline. In addition, failure of our solutions to significantly penetrate the target markets would negatively affect our business, financial condition and results of operations.

***If we fail to manage our growth effectively, our business could be materially and adversely affected.***

We have experienced recent rapid growth and anticipate further growth in the future. For example, for the year ended December 31, 2023, our net revenue was $19.3 million compared to our net revenue of $31.6 million for the year ended December 31, 2024, an increase of 64% year-over-year. For the three months ended March 31, 2025 our net revenue was $10.1 million compared to our net revenue of $7.2 million for the three months ended March 31, 2024, representing an increase of 41.0%. This growth has placed significant demands on our management, financial, operational, technological and other resources, and we expect that our future growth will continue to place significant demands on our management and other resources and will require us to continue developing and improving our operational, financial and other internal controls. In particular, continued growth increases the challenges involved in a number of areas, including managing our supplier relationships and ensuring adequate inventory is available, recruiting and retaining sufficient skilled personnel for our dedicated commercial leadership team, contracting with independent distributors to market our implant systems, providing adequate training and supervision to maintain our high-quality standards and preserving our culture and values. We may not be able to address these challenges in a cost-effective manner, or at all. To achieve our revenue goals, we must also successfully increase our supply of implants and other products, components and instruments from third party manufacturers to meet expected customer demand. In the future, we may experience difficulties with quality control, component supply and shortages of qualified personnel, among other problems. These problems could result in delays in product availability and increases in expenses. Any such delay or increased expense could adversely affect

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our business, financial condition and results of operations. In addition, rapid and significant growth will place a strain on our administrative and operational infrastructure. In order to manage our operations and growth, we will need to continue to improve our operational and management controls, hiring process, reporting and information technology systems and financial internal control procedures. If we do not effectively manage our growth, we may not be able to execute on our business plan, respond to competitive pressures, take advantage of market opportunities, satisfy customer requirements or maintain high-quality product offerings, which could have a material adverse effect on our business, financial condition and results of operations.

***We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future.***

As of March 31, 2025, we had an aggregate of approximately $15.0 million in principal outstanding under our term loan facility (the "Trinity Loan Agreement") with Trinity Capital Inc. ("Trinity Capital"). The Trinity Loan Agreement, which we entered into in August 2023, consists of term loans of up to $45.0 million and bears interest at an annual rate equal to the greater of the prime rate plus 3.50% and 11.50%. Under the Trinity Loan Agreement, the prime rate is equal to the greater of 8.0% per year and the prime rate as reported in The Wall Street Journal. We must make interest payments under the Trinity Loan Agreement, which has diverted and will continue to divert resources from other activities. For the three months ended March 31, 2025, we incurred interest expense, net of $0.4 million, which included payments made under the Trinity Loan Agreement. Our obligations under the Trinity Loan Agreement are collateralized by substantially all of our assets, including intellectual property, and we are subject to customary affirmative and negative covenants limiting our ability to, among other things, relocate or dispose of assets, undergo a change in control, merge or consolidate, enter into certain transactions with affiliates, make acquisitions, incur debt, pay dividends, grant liens, store certain amounts of inventory or equipment with third parties and make investments, in each case subject to certain exceptions. The covenants related to the Trinity Loan Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies.

While we have not previously breached and are not currently in breach of these or any other covenants contained in our Trinity Loan Agreement or other debt arrangements, there can be no guarantee that we will not breach these covenants in the future. Our ability to comply with these covenants may be affected by events beyond our control, and future breaches of any of these covenants could result in a default under the Trinity Loan Agreement. If not waived, future defaults could cause all of the outstanding indebtedness under the Trinity Loan Agreement to become immediately due and payable and terminate commitments to extend further credit and foreclose on the collateral granted to it to collateralize such indebtedness. If we do not have or are unable to generate sufficient cash available to repay our debt obligations when they become due and payable, either upon maturity or in the event of a default, our assets could be foreclosed upon and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our ability to operate and continue our business as a going concern.

If we default under the Trinity Loan Agreement, the Trinity Capital on behalf of the lenders will be able to declare all obligations immediately due and payable and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations. Further, if we are liquidated, the lender's rights to repayment would be senior to the rights of the holders of our common shares to receive any proceeds from the liquidation. The lenders could declare a default under the Trinity Loan Agreement upon the occurrence of specific events such as our failure to pay or our failure to comply with specified covenants, thereby requiring us to repay the loan immediately. Any declaration by the lenders of an event of default could significantly harm our business and prospects and could cause the price of our common shares to decline.

In order to service this indebtedness and any additional indebtedness we may incur in the future, we need to generate cash from our operating activities. Our ability to generate cash is subject, in part, to our ability to successfully execute our business strategy, as well as general economic, financial, competitive, regulatory and other factors beyond our control. We cannot assure you that our business will be able to generate sufficient cash flow from operations or that future borrowings or other financings will be available to us in an amount sufficient to enable us to service our indebtedness and fund our other liquidity needs. To the extent we are required to use cash from operations or the proceeds of any future financing to service our indebtedness instead of funding working capital,

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capital expenditures or other general corporate purposes, we will be less able to plan for, or react to, changes in our business, industry and in the economy generally. This may place us at a competitive disadvantage compared to our competitors that have less indebtedness.

Also, the anticipated benefit of any strategic alliance, joint venture or acquisition may not materialize or such strategic alliance, joint venture or acquisition may be prohibited. The Trinity Loan Agreement restricts our ability to pursue certain mergers, acquisitions, amalgamations or consolidations that we may believe to be in our best interest. Additionally, future acquisitions or dispositions could result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition. We cannot predict the number, timing or size of future joint ventures or acquisitions, or the effect that any such transactions might have on our operating results.

***We may acquire other complementary companies, products or technologies, through the licensing of products or technologies from third parties or other strategic alliances, and the failure to manage acquisitions, investments, licenses or other strategic alliances, or the failure to integrate them with our existing business could fail to result in a commercial product or net sales, divert our management's attention, result in additional dilution to our stockholders, cause us to incur significant expense and otherwise disrupt our business.***

Our success depends on our ability to continually enhance and broaden our system offerings in response to changing surgeon and patient needs, competitive technologies and market pressures. Accordingly, from time to time we may consider opportunities to acquire, make investments in or license other technologies, products and businesses that may enhance our capabilities, complement our existing products and technologies or expand the breadth of our markets or customer base. Although we currently have no agreements or commitments to complete any such transactions, we may in the future seek to acquire or invest in businesses, applications or technologies that we believe could complement or expand our portfolio, enhance our technical capabilities or otherwise offer growth opportunities. However, we cannot assure you that we would be able to successfully complete any acquisition we choose to pursue on favorable terms, if at all, or that we would be able to successfully integrate any acquired business, product or technology in a cost-effective and non-disruptive manner. Potential and completed acquisitions, strategic investments, licenses and other alliances involve numerous risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• difficulty assimilating or integrating acquired or licensed technologies, products, employees or business operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issues maintaining uniform standards, procedures, controls and policies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated costs associated with acquisitions or strategic alliances, including the assumption of unknown or contingent liabilities and the incurrence of debt or future write-offs of intangible assets or goodwill;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• diversion of management's attention from our core business and disruption of ongoing operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• adverse effects on existing business relationships with suppliers, independent distributors, health care facilities, shoulder specialists and other health care providers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• risks associated with entering new markets in which we have limited or no experience;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential losses related to investments in other companies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential loss of key employees of acquired businesses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unanticipated or undisclosed liabilities of any target; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased legal and accounting costs relating to the acquisitions or compliance with regulatory matters.

If we do acquire, make investments in or license other technologies, products and businesses, we may not ultimately obtain the expected benefits of such acquisition or investment, strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by our customers, investors and industry analysts.

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To date, the growth of our operations has been wholly organic, and we have limited experience in acquiring other businesses or technologies. We do not know if we will be able to identify acquisitions or strategic relationships we deem suitable, whether we will be able to successfully complete any such transactions on favorable terms, if at all, or whether we will be able to successfully integrate any acquired personnel, operations and technologies, or effectively manage the combined business following an acquisition. Our ability to successfully grow through strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses, technologies or products and to obtain any necessary financing. Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results. To finance any acquisitions, investments or strategic alliances, we may choose to issue shares of our common stock as consideration, which could dilute the ownership of our stockholders. If the price of our common stock is low or volatile, we may be unable to consummate any acquisitions, investments or strategic alliances using our common stock as consideration. Additional funds may not be available on terms that are favorable to us, or at all. In addition, if an acquired business fails to meet our expectations, our business, financial condition and results of operations may be negatively affected. These efforts could be expensive and time-consuming and may disrupt our ongoing business and prevent management from focusing on our operations.

***We may require substantial additional funding, which may not be available to us on acceptable terms, or at all, and, if not available, may require us to delay, scale back, or cease our innovation efforts or operations.***

Even if this offering is successful, we may require additional capital in the future to maintain and expand our operations. Our operations are capital-intensive and are expected to increase as we expand our dedicated commercial leadership team, research and development efforts and product offerings, among other growth initiatives. Changing circumstances could result in lower revenues or cause us to consume capital significantly faster than we currently anticipate, and we may need to raise capital sooner or in greater amounts than currently expected because of circumstances beyond our control. If we raise additional funds through the issuance of equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to those of our common stock, and our existing stockholders may experience dilution. Any debt financing secured by us in the future could require that a substantial portion of our operating cash flow be devoted to the payment of interest and principal on such indebtedness, which may decrease available funds for other business activities, and could involve restrictive covenants relating to our capital-raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities. Additionally, any future collaborations we enter into with third parties may provide capital in the near term but limit our potential cash flow and revenue in the future. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, intellectual property or products, or grant licenses on terms unfavorable to us. We cannot be certain that we will be able to obtain additional financing on favorable terms, if at all. If we cannot raise funds on acceptable terms, if and when needed, we may not be able to continue as a going concern or we may not be able to grow our business or respond to competitive pressures or unanticipated requirements, which could seriously harm our business.

**Risks Related to Our Business and Industry** 

***We operate in a very competitive business environment, and if we are unable to compete successfully against our existing or potential competitors, our business, financial condition and results of operations may be adversely affected.***

Our existing implant systems are, and any new products or procedures we develop and commercialize will be, subject to intense competition. There are a number of competing products that can be used in shoulder arthroplasty procedures. The industry in which we operate is competitive, subject to change and sensitive to the introduction of new products, procedures or other market activities of industry participants. Our ability to compete successfully will depend on our ability to continue to train surgeons on the use of our implant systems and other technologies for shoulder surgical care and gain their acceptance of our systems or ecosystem, develop additional products to improve shoulder surgical care and expand our offerings that reach the market in a timely manner, receive adequate coverage and reimbursement from third-party payors and provide systems, technologies and instrumentation that are easier to use, safer, less invasive and perceived more effective than the products of our competitors. In addition, our ability to increase our customer base and achieve broader market acceptance of our products will depend to a

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significant extent on our ability to expand our marketing efforts. We plan to dedicate significant resources to our marketing and surgeon-to-surgeon collaboration programs, but if our marketing efforts and expenditures do not generate a corresponding increase in net revenue, it will negatively affect our business, financial condition and results of operations. In addition, we believe that developing and maintaining broad awareness of our systems in a cost-effective manner is critical to achieving broad acceptance and expanding our business in our target markets. Promotion activities may not generate sufficient or any awareness or increase net revenue, and even if they do, any increase in net revenue may not offset the costs and expenses we incur in building our brand and conducting such promotion activities. If we fail to successfully promote, maintain and protect our brand, we may fail to attract or retain the physician acceptance necessary to realize a sufficient return on our brand building efforts, or to achieve a level of brand awareness that supports broad adoption of our systems.

We compete with large, multinational companies, as well as with smaller orthopedic companies that offer innovations and improvements on traditional shoulder implants and technologies. For example, we compete with Arthrex, Enovis, Exectech, Johnson & Johnson, Smith & Nephew, Stryker, and Zimmer Biomet. Furthermore, conditions in our market could change rapidly and significantly as a result of technological advancements, partnerships, or acquisitions by competitors. We have seen and continue to see consolidation amongst our competitors. If our competitors have greater resources and access to funding than us, they may be able to finance the development of new technologies and products before we are able to do so, which may allow them to gain market share or enter new markets before us or provide lower-priced or better-quality offerings.

At any time, these competitors and other potential market entrants may develop new products, procedures or treatment alternatives that could render our products obsolete, uncompetitive or economically unviable. In addition, one or more of such competitors may gain a market advantage by developing and patenting competitive products, procedures or treatment alternatives earlier than we can, obtaining regulatory clearances or approvals more rapidly than we can or selling competitive products at prices lower than ours. If medical research were to lead to the discovery of alternative therapies or technologies that improve or cure certain shoulder diseases, including through the use of pharmaceuticals or breakthrough bio-technological innovations or therapies, our profitability could suffer through a reduction in sales or a loss in market share to a competitor. The discovery of methods of prevention or the development of other alternatives to our systems, or novel methods of conducting shoulder arthroplasty or other procedures, could result in decreased demand for shoulder arthroplasty procedures and our systems, and, accordingly, could have a material adverse effect on our business, financial condition and results of operations. Many of our current and potential competitors have substantially greater sales and financial resources than we do. These competitors may also have more established distribution networks, a broader offering of products, entrenched relationships with surgeons and distributors or greater experience in launching, marketing, distributing and selling products or treatment alternatives.

We also compete with our competitors to engage the services of independent distributors, both those presently working with us and those with whom we hope to work with as we expand. These independent distributors may also sell shoulder care products that our competitors offer. In addition, we compete with our competitors in acquiring technologies and technology licenses complementary to our products or procedures or advantageous to our business. If we are unable to compete successfully against our existing or potential competitors, our business, financial condition and results of operations may be adversely affected, and we may not be able to grow at our expected rate, if at all.

***If we fail to develop and retain an effective commercial organization, or if we are unable to successfully expand our organization, it could negatively impact our sales, and we may not generate sufficient net revenue to sustain profitability.***

Our net revenue and profitability is directly dependent upon the sales and marketing efforts of our commercial organization. Our commercial organization is comprised of a team of dedicated commercial leaders, our CEME team and a network of independent distributors. In order to expand our business, we plan to expand our dedicated commercial leadership team with individuals who have strong technical backgrounds specializing in sales and marketing of products for shoulder arthroplasty procedures and within the shoulder surgical care market. As we increase our marketing efforts, we will need to retain, develop and grow the number of team members that we employ. We intend to invest in recruiting and training dedicated commercial leadership team members and clinical

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representatives as we expand our business. There is significant competition for personnel experienced in relevant medical device sales and in shoulder surgical care in particular. Once hired, the training process can be lengthy because it requires significant education for new dedicate commercial leadership team members and clinical specialists to achieve the level of clinical competency and expertise that is expected by surgeons that use our systems. In addition, team members typically require at least one year if not longer in the field to grow their network of accounts and achieve the productivity levels we expect them to reach in any individual territory. Our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled members of our commercial organization with significant technical knowledge. If we are unable to attract, motivate, develop and retain a sufficient number of such team members, or if these team members do not achieve the productivity levels we expect them to reach, our net revenue will not grow at the rate we expect and our financial performance will suffer. Also, to the extent we hire personnel from our competitors, we may have to wait until applicable non-competition provisions have expired before deploying such personnel in restricted territories or incur costs to relocate personnel outside of such territories, and we have been in the past, and may be subject to future allegations that these new hires have been improperly solicited, and that they have divulged to us proprietary or other confidential information of their former employers. Additionally, because the market for our target team members is competitive, our competitors may try to hire our team members from us. If successful, we would be required to dedicate resources to recruiting, filling and training those vacant positions. Any of these risks may adversely affect our business.

***We rely in part on independent distributors to sell our products to our customers, and if we are unable to maintain and expand our network of independent distributors, we may be unable to generate anticipated sales.***

Within our commercial organization and as part of our commercial approach, we use independent distributors to sell our implant systems to hospitals, ASCs and other end users and to assist us in promoting market acceptance of, and creating demand for, our systems. Our distributor network is currently comprised of over 25 independent groups and 140 agents across the United States. If we are unable to come to commercially reasonable terms with a distributor and/or its agents, we may not generate the expected level of sales and may need to spend more of our capital resources to hire sales personnel as employees or to engage one or more alternative distributors in a particular region or market. In addition, our independent distributors that we contract with are not all exclusive to us and there is a risk that an independent distributor will give higher priority to the products of other medical device companies, including products directly competitive with our systems or may be required by larger medical devices companies to stop offering our systems. Though we have established initiatives to further focus our independent distributor channel on our systems, these initiatives may not translate to an increase in sales or penetration or may underperform relative to our expectations. In addition, we may not have insight into competitive lines at our distributors, including other commercial arrangements between such distributors and our competitors to sell our competitor's products. As such, there can be no assurance that an agent will devote the resources necessary to provide effective sales and promotional support to our systems. In addition, if an agent terminates its relationship with us and is retained by one of our competitors, we may be unable to prevent them from helping competitors solicit business from our existing customers and surgeons, which could adversely affect our sales and growth. In addition to expanding our internal commercial team members, we expect to continue to utilize and expand our relationships with independent distributors and agents to meet our growing business needs and accomplish our business strategies.

***Our business plan relies on certain assumptions about the market for our implant systems, however, the size and expected growth of our addressable market has not been established with precision and may be smaller than we estimate, and even if the addressable market is as large as we have estimated, we may not be able to capture additional market share.***

Our estimates of our addressable market are based on publicly-available information, a number of internal and third-party estimates and assumptions, including the prevalence of aTSA and rTSA procedures and management's knowledge and experience in the shoulder surgical care market. For example, we believe that the aging of the general population and increasingly active lifestyles will continue and that these trends will increase the demand for effective devices and implant systems to be used in connection with shoulder arthroplasty procedures. Furthermore, we currently only operate in the United States, which is the largest market for shoulder arthroplasties, and any contraction in the this market or incorrect assumptions about the current and future development of the market

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would have a material impact on our results of operations and financial condition. While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and our estimates may not be correct. The projected growth of annual shoulder arthroplasty procedures, including in ASCs, and demand for our systems could materially differ from actual demand if our assumptions regarding these trends and acceptance of our systems by the medical community prove to be incorrect or do not materialize, or if non-surgical treatments or other surgical techniques gain more widespread acceptance as a viable alternative to our systems or products. In addition, even if the number of people who undergo shoulder arthroplasty procedures increases as we expect, technological or medical advances could provide alternatives to address shoulder conditions and reduce demand for shoulder arthroplasty procedures or for our particular systems. As a result, our estimates of the addressable market for our current or future products may prove to be incorrect. Even if the total addressable market for our current and future products is as large as we have estimated, we may not be able to penetrate this market to capture additional market share for the reasons discussed in this "Risk Factors" section. The estimated market opportunities included in this prospectus represent the total overall revenue opportunity that we believe is available for our systems if 100% market share is achieved by us, and are not a representation that we will achieve any such market share. If the actual number of people who suffer from shoulder conditions who would benefit from shoulder arthroplasty procedures with our systems, the price at which we can sell our current and future products or the addressable market for our systems and future products is smaller than we estimate, or if the total addressable market is as large as we have estimated but we are unable to capture additional market share, it could have a material adverse effect on our business, financial condition and results of operations.

***Our business is dependent upon the adoption of our implant systems by hospitals, ASCs, surgeons and patients.***

Our future growth and profitability depend on our ability to increase physician awareness of our implant systems or ecosystem and on the willingness of surgeons and hospitals and ASCs to adopt our implant systems. Surgeons may not adopt our technologies unless they are able to determine, based on experience, clinical data, medical society and peer-surgeon recommendations and other analyses, that our implant systems provide a safe and effective treatment for shoulder care. Even if we can raise awareness among surgeons, such surgeons, hospitals and ASCs may be slow in changing their medical treatment practices and may be hesitant to select our systems for a variety of reasons, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack of experience with us and concerns that we are relatively new to market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• long-standing relationships with companies and distributors that sell other products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack of availability of adequate third-party payor coverage or reimbursement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• competitive response and negative selling efforts from providers of alternative treatments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• perception regarding the time commitment and skill development that may be required to gain familiarity and proficiency with our systems, technologies and instrumentation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• perceived liability risk generally associated with the use of new products and treatment options in both hospitals as well as ASCs that lack ambulatory services and may expose patients to greater risk and us and care providers to increased potential liability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack or perceived lack of sufficient clinical evidence, including long-term data, supporting clinical benefits or the cost-effectiveness of our systems over existing treatments; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the failure of key opinion leaders to provide recommendations regarding our systems, or to assure surgeons, patients and healthcare payors of the benefits of our systems as an attractive alternative to other treatment options.

To effectively market and sell our systems and other future products, we will need to continue to educate the medical community about the safety, efficacy, necessity and efficiency of our systems and about the patient population that would potentially benefit from using our systems. We will also need to educate the medical community, including at hospitals and ASCs, as to the broader benefits and efficiencies of our systems and our

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ecosystem. We cannot assure you that we will achieve broad education or market acceptance. In addition, some surgeons may choose to utilize our systems on only a subset of their total patient population or may not adopt our offerings at all. If we are not able to effectively demonstrate that our offerings are beneficial for a broad range of patients, adoption will be limited and may not occur as rapidly as we anticipate or at all, which would have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that our implant systems will achieve broad market acceptance among hospitals, ASCs, surgeons or patients. Any such failure to satisfy demand or to achieve meaningful market acceptance and penetration will harm our future prospects and have a material adverse effect on our business, financial condition and results of operations.

***The seasonality of our business creates variance in our quarterly revenue, which makes it difficult to compare or forecast our financial results.***

Our revenue fluctuates on a seasonal basis, which affects the comparability of our results between periods. In particular, we have experienced and expect to continue to experience seasonality in our business. For example, the orthopedic industry traditionally experiences lower sales volumes in the months in and surrounding the third calendar quarter than throughout the rest of the year as elective procedures generally decline during the summer months due to warmer weather and its corresponding impact on individual lifestyles. Medical device companies historically experience a decline in the number of orthopedic implant surgeries in the summer months, and we may experience similar seasonality in the future. We expect these seasonal factors to become more pronounced in the future as our business grows. These seasonal variations are difficult to predict accurately, may vary amongst different markets and at times may be entirely unpredictable, which introduces additional risk into our business as we rely upon forecasts of customer demand to build inventory in advance of anticipated sales. In addition, we believe our limited history commercializing our products combined with our rapid growth has, in part, made our seasonal patterns more difficult to discern, making it more difficult to predict future seasonal patterns.

***Our long-term growth depends on our ability to enhance our implant systems, expand our indications and develop and commercialize additional products in a timely manner. If we cannot innovate, we may not be able to develop or exploit new products in time to remain competitive.***

The market for our systems is highly competitive, dynamic, and marked by rapid and substantial technological development and product innovation. New entrants or existing competitors could attempt to develop products that compete directly with ours. Our success depends on our ability to continually enhance and broaden our product offerings in response to changing surgeon and patient needs, competitive technologies and market pressures. For us to remain competitive, it is important to develop and bring to market new products. Any promotional activities for new products may not generate patient or physician awareness or increase revenue, and even if they do, any increase in revenue may not offset the costs and expenses we incur in such product development. Demand for our systems and other future products could be diminished by equivalent or superior products and technologies offered by competitors. If we are unable to innovate successfully, our products could become obsolete and our revenue would decline as our customers purchase our competitors' products. Developing products is expensive and time-consuming and could divert management's attention away from our core business. The success of any new product offering or product enhancements to our existing offerings will depend on several factors, including our ability to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assemble sufficient resources to acquire or discover additional products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• properly identify and anticipate surgeon and patient needs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• develop and introduce new products and product enhancements in a timely manner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• avoid infringing upon the intellectual property rights of third-parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• demonstrate, if required, the safety and efficacy of new products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• obtain the necessary regulatory clearances, approvals or certifications for new products or product modifications;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• be fully compliant with the FDA regulations and, to the extent we expand internationally, be fully compliant with applicable foreign regulations marketing of new devices or modified products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• produce new products in commercial quantities at an acceptable cost;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• provide adequate training to potential users of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• receive adequate coverage and reimbursement for procedures performed with our products; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• develop an effective and dedicated commercial leadership and marketing team.

If we are unable to develop or improve products, applications or features due to constraints, such as insufficient cash resources, high employee turnover, inability to hire and retain personnel with sufficient technical skills or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies. Furthermore, many of our competitors have the capability to devote a considerably greater amount of funds to their research and development programs than we do, and those that do not may be acquired by larger companies that could allocate greater resources to research and development programs. Our failure or inability to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.

Further, our newer products, such as stemless products and I-95 stems, as well as ProVoyance, may not gain a substantial degree of market acceptance among surgeons, patients or healthcare providers. Our failure to gain widespread of acceptance of our new products could negatively affect our business, financial condition and results of operations.

***We may expend our limited resources to pursue particular improvements or enhancements or new products and fail to capitalize on development opportunities that may be more profitable or for which there is a greater likelihood of success.***

Because we have limited financial and managerial resources, we may forego or delay pursuit of opportunities with developments or initiatives that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to timely capitalize on viable commercial products or profitable market opportunities. Furthermore, our spending on current and future research and development programs and products for specific indications may not yield any commercially viable products. If we do not accurately evaluate the commercial potential or target market for a particular product, we may relinquish valuable rights to that product through collaboration, licensing or other royalty arrangements in cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such product.

***We face the risk of product liability claims that could be expensive, divert management's attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance.***

Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices. This risk exists even if a device is cleared or approved for commercial sale by the FDA or approved and manufactured in facilities licensed and regulated by the FDA. Our products are designed to affect, and any future enhancements to our products will be designed to affect, important bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with our systems could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and we may face product liability suits in the future. We may be subject to product liability claims if our systems cause, or merely appear to have caused, patient injury or death. In addition, an injury that is caused by the activities of our suppliers, such as those who provide us with components and raw materials, may be the basis for a claim against us. Product liability claims may be brought against us by patients, healthcare providers or others selling or otherwise coming into contact with our systems and other future products, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm. If any of our products become the subject of a product liability claim, legal defenses are costly, regardless of the outcome. Thus, we may experience increased legal expenses as we defend any such matter, and we could incur

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liabilities associated with adverse outcomes that exceed our insurance coverage. In addition, regardless of merit or eventual outcome, product liability claims may result in:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• distraction of management's attention from our primary business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inability to commercialize our products and develop enhancements to our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• decreased demand for our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• damage to our business reputation and brand;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• product recalls or withdrawals from the market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawal of clinical trial participants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• substantial monetary awards to patients or other claimants; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of sales.

Additionally, we could experience a material design or manufacturing failure in our products, a quality system failure, other safety issues or heightened regulatory scrutiny that would warrant a recall of some of our products. While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products may delay the supply of those products to our customers and may impact our reputation. We may not be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future and these efforts may not have the intended effect of preventing product malfunctions and the accompanying product liability that may result. Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products. Product liability lawsuits and claims, safety alerts and product recalls and withdrawals, regardless of their ultimate outcome, could have a material adverse effect on our business, financial condition and results of operations.

Although we have product liability insurance that we believe is appropriate, this insurance is subject to deductibles and coverage limitations. Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be adequate to protect us against any future product liability claims. If we are unable to obtain insurance at an acceptable cost or on acceptable terms or otherwise protect against potential product liability claims, we could be exposed to significant liabilities. While we have not been materially impacted by product liability claims, lawsuits and recalls to date, we may be materially impacted by such events in the future, and any such claim, lawsuit, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business, financial condition and results of operations. Further, such product liability matters may negatively impact our ability to obtain insurance coverage or cost-effective insurance coverage in future periods.

***Industry trends have resulted in increased downward pricing pressure on medical services and products, which may affect our ability to sell our products at prices necessary to support our current business strategy.***

The trend toward health care cost containment through aggregating purchasing decisions and industry consolidation, along with the growth of managed care organizations, is placing increased emphasis on the delivery of more cost-effective medical therapies. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• There has been consolidation among health care facilities and purchasers of medical devices, particularly in the United States. One of the results of such consolidation is that group purchasing organizations ("GPOs"), integrated delivery networks and large single accounts use their market power to consolidate purchasing decisions, which intensifies competition to provide products and services to health care providers and other industry participants, resulting in greater pricing pressures and the exclusion of certain suppliers from important market segments.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Surgeons increasingly have moved from independent, outpatient practice settings toward employment by or affiliation with hospitals and other larger health care organizations, which aligns surgeons' product choices with the institutional providers' price sensitivities and adds to pricing pressures. Hospitals and health care facilities have introduced and may continue to introduce new pricing structures into their contracts to contain health care costs, including fixed price formulas and capitated and construct pricing. Such pricing structures may create incentive programs for surgeons that is less advantageous to our business model, including capitation models where surgeons are paid a fixed amount per patient, per period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Certain hospitals provide financial incentives to doctors for reducing hospital costs (known as gainsharing), rewarding physician efficiency (known as physician profiling) and encouraging partnerships with health care service and goods providers to reduce costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Existing and proposed laws, regulations and industry policies, in both domestic and international markets, regulate or seek to increase regulation of sales and marketing practices and the pricing and profitability of companies in the health care industry.

More broadly, provisions of the Affordable Care Act ("ACA") could meaningfully change the way health care is developed and delivered in the United States, and may adversely affect our business and results of operations. For further discussion of these challenges, see the section titled " —Risks Related to Regulatory Matters—Legislative or regulatory reforms may have a material adverse effect on us." We cannot predict accurately what health care programs and regulations will ultimately be implemented at the federal or state level, or the effect of any future legislation or regulation in the United States or elsewhere. However, any changes that have the effect of reducing reimbursement by government health care programs and other third-party payors for procedures using our systems or reducing medical procedure volumes could have a material and adverse effect on our business, financial condition and results of operations. Any decline in the amount that payors reimburse our customers for our systems could make it difficult for customers to continue using, or to adopt, our systems and could create additional pricing pressure for us. If we are forced to lower the price we charge for our systems, or if we add more components to our systems, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode. While we have not experienced a material impact from any such industry trends to date, there is no assurance that our net revenue will not be subject to these headwinds in the future.

In addition, the largest medical device companies with multiple product franchises have increased their effort to leverage and contract broadly with customers across franchises by providing volume discounts and multi-year arrangements that could prevent our access to these customers or make it difficult, or impossible, to compete on price.

***Our employees and independent contractors, including independent distributors and any other consultants, any future service providers and other vendors, may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements, which could have an adverse effect on our results of operations.***

We are exposed to the risk that our employees and independent contractors, including independent distributors and any other consultants, any future commercial collaborators, and other vendors may engage in misconduct or other illegal activity. Misconduct by these parties could include intentional, reckless and/or negligent conduct or other unauthorized activities that violate: federal, state or local laws and regulations, as well as the laws, regulations and rules of regulatory bodies such as the FDA; manufacturing standards; U.S. federal and state health care fraud and abuse laws and regulations, data privacy laws and other similar non-U.S. laws; or laws that require the true, complete and accurate reporting of financial information or data. For example, we are aware of limited instances in which our dedicated commercial leadership team and independent distributors have recommended using our systems for off label uses, including using certain aTSA products for rTSA procedures and vice versa. It is not always possible to identify and deter misconduct by employees and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with such laws or regulations. In addition, we are subject to the risk that a person or government could allege such fraud or other

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misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business and financial results, including, without limitation, the imposition of significant civil, criminal and administrative penalties, damages, monetary fines, disgorgements, possible exclusion from participation in Medicare, Medicaid and other U.S. health care programs, other sanctions, imprisonment, contractual damages, reputational harm, diminished profits and future earnings and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

***If rising prices or availability of raw materials continues to persist, our business and results of operations may be adversely affected.***

Volatility in raw material prices and availability can impact our business and finances due to numerous factors beyond our control, including general, domestic, and international economic conditions, labor costs, production levels, competition, consumer demand, import duties, inflation and currency exchange rates. This volatility can significantly affect the availability and cost of raw materials that our suppliers purchase and are ultimately used in our systems, and may therefore have a material adverse effect on our business, results of operations, and financial condition.

In addition, the current U.S. administration has expressed strong concerns about imports from countries that it perceives as engaging in unfair trade practices, and has imposed tariffs or other restrictions on products, components or raw materials sourced from those countries. Moreover, these new tariffs, or other changes in U.S. trade policy, have triggered and may in the future trigger retaliatory actions by affected countries. For example, there have been and continue to be further indications that there may be an increase in tariff rates on various types of goods imported from Canada and Europe that could apply to the raw materials we require in our products, including certain types of metal powders used for coating our products. In the event that any such possible tariff increases remain in place or become enacted in the future, they could significantly increase the cost of materials and components that our suppliers import and use in our systems, which in turn could increase our supply costs. At this time, there can be no assurance that we will be able to pass any portion of such increases on to customers. We currently do not hedge against our exposure to changing raw material prices and are not aware as to whether our suppliers hedge. As a result, fluctuations in raw material prices could have a material adverse effect on our business, results of operations, and financial condition. Supply shortages or changes in availability for any particular type of raw material can delay supplier volume and production capabilities or cause increases in the cost of manufacturing our products. We may be negatively affected by changes in availability and pricing of raw materials, which could negatively impact our results of operations.

**Risks Related to Administrative, Organizational and Commercial Operations and Growth** 

***If hospitals, ASCs, and other health care facilities do not approve the use of our implant systems, our sales may not increase.***

In order for surgeons to use our systems at hospitals, ASCs and other health care facilities, we are often required to obtain approval from those hospitals, ASCs and health care facilities. Typically, hospitals, ASCs and health care facilities review the comparative effectiveness and cost of products used in the facility. The makeup and evaluation processes for health care facilities vary considerably, and it can be a lengthy, costly and time-consuming effort to obtain approval by the relevant health care facilities. Additionally, hospitals, ASCs, other health care facilities, which manage purchasing for multiple facilities, may also require us to enter into a purchase agreement and satisfy numerous elements of their administrative procurement process, which can also be a lengthy, costly and time-consuming effort. If we do not obtain access to hospitals, ASCs, GPOs and other health care facilities in a timely manner, or at all, via their approvals or purchase contract processes, or otherwise, or if we are unable to obtain approvals or secure contracts in a timely manner or on terms that are economically viable to our business, or at all, our operating costs will increase, our sales may decrease and our operating results may be adversely affected. Furthermore, we may expend significant efforts on these costly and time-consuming processes but may not be able to obtain necessary approvals or secure a purchase contract from such hospitals, ASCs or health care facilities.

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***Performance issues, service interruptions or price increases by shipping carriers could adversely affect our business and harm our reputation and ability to provide our systems on a timely basis.***

Expedited, reliable shipping is essential to our operations. We rely heavily on providers of transport services for reliable and secure point-to-point transport of our systems to our customers and for tracking of these shipments, including our InSet tray systems that are delivered directly to hospitals and ASCs, employees or independent distributors. Should a carrier encounter delivery performance issues such as loss, damage or destruction of our systems, it would be costly to replace our systems in a timely manner, could cause surgeries using our systems to be delayed or canceled and such occurrences may damage our reputation and lead to decreased demand for our systems and increased cost and expense to our business. Once a product leaves our facilities, we are no longer in control of the care of such shipped products and any damage that may occur during transit may not be readily detectable by the customer, including any penetrations of sterile barriers, temperature swings that may cause package seal rupturing or exposure to fine particulates or other debris that is not easily detectable. In addition, any significant increase in shipping rates could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters, including fires and hurricanes, or other service interruptions affecting delivery services we use would adversely affect our ability to process orders for our systems on a timely basis.

***If coverage or adequate levels of reimbursement from third-party payors for procedures using our implant systems, or any future products we may seek to commercialize, are not obtained or maintained, shoulder specialists and patients may be reluctant to use our systems and our business will suffer.***

In the United States, health care providers such as hospitals and ASCs who purchase our implant systems generally rely on third-party payors, principally federally-funded Medicare, state-funded Medicaid and private health insurance plans, to pay for all or a portion of the cost of shoulder procedures and products utilized in those procedures. We may be unable to sell our implant systems, or any future products we may seek to commercialize, on a profitable basis if third-party payors deny coverage or reduce their current levels of reimbursement for procedures using our systems. Our sales depend largely on governmental health care programs and private health insurers reimbursing providers for procedures using our implant systems. Significant changes to operations at, funding of, or restructuring of such governmental authorities, including but not limited to a government shutdown, decreases in staff who are able to provide reimbursement services, reductions or other changes in funding provided to such governmental authorities, and changes in policy and enforcement priorities, may adversely affect our business. Hospitals, ASCs and other health care providers may not purchase our products if they do not receive adequate reimbursement from third-party payors for procedures using our products. Payors continue to review their coverage policies for existing and new therapies and may deny coverage for treatments that include the use of our systems or any future products we may seek to commercialize. Third-party payors, whether governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs. In addition, no uniform policy of coverage and reimbursement for procedures using our solution exists among third-party payors. Therefore, coverage and reimbursement for procedures using our products can differ from payor to payor.

In addition, some health care providers in the United States have adopted or are considering bundled payment methodologies and/or managed care systems in which providers contract to provide comprehensive health care for a fixed cost per person. Health care providers may attempt to control costs by authorizing fewer elective surgical procedures, including shoulder surgeries, or by requiring the use of the least expensive procedure available. In addition, third-party payors increasingly are requiring evidence that medical devices are cost-effective, and if we are unable to meet this requirement, the third-party payor may not cover procedures using our products, which could reduce sales of our products to health care providers who depend upon third-party payor reimbursement for payment. Changes in coverage policies or health care cost containment initiatives that limit or restrict reimbursement for procedures using our systems may have an adverse effect on our business. For example, the Centers for Medicare and Medicaid Services ("CMS") only recently approved total shoulder arthroplasty for reimbursement when performed in an ASC on January 1, 2024, and any change or reversal in this decision would adversely affect our results of operations and financial condition.

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***We depend on third-party contract manufacturers and suppliers, some of which are single source, to produce and package all elements comprising our shoulder implant systems, and if these suppliers and manufacturers fail to supply us, our products or their components or subcomponents in sufficient quantities or at all, or in accordance with applicable regulatory requirements and our specifications, it will have a material adverse effect on our business, financial condition, and results of operations.***

We utilize qualified medical device contract manufacturers and suppliers, the majority of which are single sources, to produce, package and sterilize the majority of the elements comprising our systems. For us to be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs and quality, and on a timely basis. An interruption in our commercial operations could occur if we encounter delays or difficulties in securing these components, and if we cannot then obtain an acceptable substitute. Our significant single source suppliers include Avalign Technologies, Inc. ("Avalign Technologies"), which manufactures our humeral stems, Micropulse, Inc. ("Micropulse"), which manufactures and supplies our InSet Glenoid products, Trifecta Medical Group, which manufactures our instrument cases and trays and Revelation Medical Devices ("RMD"), which manufactures the surgical instruments used during procedures involving our systems. While we estimate replacing these single source suppliers could take up to between six and twelve months, in some of these examples alternative second source suppliers may not be readily available. Furthermore, while we have two sterilization partners, we utilize a single supplier to sterilize all of our polyethylene implants. We also do not have long-term supply agreements, and we typically purchase our products on a purchase order basis, which means that aside from any binding purchase orders we have from time to time, our supplier could cease supplying to us or change the terms on which it is willing to continue supplying to us at any time. Although we have identified alternate third parties who could provide this manufacturing service and expect to reduce our reliance on single source manufacturers and third parties we use for sterilization in the foreseeable future, we cannot guarantee you that we would be able to contract with such alternate third parties within a reasonable amount of time or at all, or upon similar pricing and volume terms, nor can we be assured that any such third party would be capable of producing products in sufficient volume and quality. For example, a replacement supplier may discover challenges with our products or we may not perfectly specify our product designs for such new suppliers' manufacturing systems, which may require us to refine our products and/or incur additional research and development expense, which could delay our sales and have an adverse effect on our financial condition and results of operations. Furthermore, if we are required to change the manufacturer of a critical component of any of our systems, we will be required to verify that the new manufacturer maintains facilities, procedures and operations that comply with our quality standards and applicable regulatory requirements, which could further impede the manufacture our systems in a timely manner or at all. A change in manufacturer could trigger the requirement to submit and obtain a new 510(k) clearance from the FDA, or similar international regulatory authorization before we implement the change, which could cause substantial delays. Any event, including those listed above, other circumstances that result in a prolonged business disruption or shutdown to one or more of single source suppliers' facilities, or the facilities of our other vendors and service providers, or a deterioration in our relationship with any of our single source suppliers, or any of our other vendors or service providers, in each case, could create conditions that prevent, or significantly and adversely affect, our sales, increase our expenses, create potential liabilities or damage our reputation, any of which could have an adverse effect on our business, financial condition and results of operations. Our marketing applications and other regulatory submissions may identify the facilities used by our third-party manufacturers for the manufacture of our systems, and these facilities are subject to inspections. We do not control the manufacturing process of, and are completely dependent on, third-party manufacturers for compliance with current good manufacturing practice ("cGMP") requirements for manufacture of our systems. If these third-party manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or any comparable foreign regulatory authority, we will not be able to secure and/or maintain marketing authorization or certification of our products manufactured in their manufacturing facilities.

We seek to strategically maintain sufficient levels of inventory to help mitigate supply disruption, usually holding sufficient inventory to allow for manufacturing from approximately 90 days following the loss of a supplier, to accommodate varying demand mix and to achieve more efficient volume-based pricing on our components; however, we may not be accurate in our estimates which could result in insufficient inventory to meet demand or excess inventory and the risk of inventory obsolescence and expiration. Further, while we have entered into several

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supply agreements in an effort to reinforce our supply chain, there is no guarantee the counter-party suppliers will adhere to the terms of these agreements.

We do not have complete control over all aspects of the manufacturing process of, and are dependent on, our manufacturing partners for compliance with current cGMP regulations applicable to our systems. Third-party manufacturers may not be able, or fail, to comply with cGMP regulations. If our third-party manufacturers cannot successfully manufacture products that conform to our specifications and the strict regulatory requirements of the FDA, they will not be able to secure and/or maintain registration for their manufacturing facilities. In addition, we do not have complete control over the ability of our third-party manufacturers to maintain adequate quality control, quality assurance and qualified personnel. The failure of our manufacturing partners to maintain acceptable quality requirements could result in quality issues, including recalls. If one of our manufacturing partners fails to maintain acceptable quality requirements or perform as agreed, we may have to identify and qualify a new supplier or develop in-house manufacturing capabilities, which could require significant capital investments.

Our suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, including damages to their facilities as a result of fires, storms or hurricanes, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements. Our suppliers may also not prioritize the production of our systems compared to the suppliers' larger customers so we may experience longer delays in receiving our requested orders. Our reliance on a third-party manufacturer and third-party suppliers also subjects us to other risks that could harm our business that we would not be subject to if we manufactured ourselves, including, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may not be a major customer of many of our suppliers, and these suppliers may therefore give other customers' needs higher priority than ours, including some of our competitors who use the same manufacturing partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• third parties may threaten or enforce their intellectual property rights against our suppliers, which may cause disruptions or delays in shipment, or may force our suppliers to cease conducting business with us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may not be able to obtain an adequate supply of components in a timely manner or on commercially reasonable terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of our systems or cause delays in shipment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may have difficulty locating and qualifying alternative suppliers and our existing suppliers could be acquired by companies that have limiting or exclusive relationships with our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• switching components or suppliers may require product redesign and possibly submission to FDA, or notified bodies, which could significantly impede or delay our commercial activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• one or more of our single-source suppliers may be unwilling or unable to supply components of our systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other customers, including our competitors, may use fair or unfair negotiation tactics or pressures to impede our use of the suppliers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of a fire, natural disaster or other catastrophe, or the occurrence of geopolitical conflicts, as well as any sanctions or other actions resulting therefrom impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the occurrence of pandemics, epidemics and other public health emergencies may impact a manufacturing facility by limiting operating capacity or sideline critical employees involved in the manufacturing processes thereby affecting their ability to deliver products to us in a timely manner;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our suppliers may not maintain the confidentiality of our proprietary information or may mislabel raw materials resulting in inaccurate certifications; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• higher manufacturing and product costs than more vertically integrated companies.

Any of these factors could cause delay or suspension of commercialization and marketing, regulatory submissions or required approvals, clearances or certifications, or cause us to incur higher costs. Furthermore, if our contract manufacturers fail to deliver the required commercial quantities of finished products on a timely basis and at commercially reasonable prices and we are unable to find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volumes and quality, and on a timely basis, we would likely be unable to meet demand for our systems and we would lose potential revenue. Any difficulties in locating and hiring third-party manufacturers, or in the ability of third-party manufacturers to supply quantities of our products at the times and in the quantities we need, could have a material adverse effect on our business. It may take a significant amount of time and resources (including costs) to establish an alternative source of supply for our products and to have any such new source authorized by the FDA or other bodies. Given our reliance on certain single-source suppliers, we are especially susceptible to supply shortages because we do not have alternate suppliers currently available that we could contract with in reasonable amount of time or at all, or upon similar pricing and volume terms, nor can we be assured that any such third party would be capable of producing in sufficient volume and of sufficient quality.

Moreover, some third parties are located in markets subject to infrastructure problems and exposed to significant natural disasters, such as hurricanes and wildfires. Failure of third parties to meet their contractual, regulatory, and other obligations may have a material adverse effect on our business, financial condition, and results of operations. Any of these matters could materially and adversely affect our business, financial condition, and results of operations.

***Our results of operations will be materially harmed if we are unable to accurately forecast demand for our implant systems and manage our inventory.***

In order to market and sell effectively, we must maintain significant levels of inventory of systems and surgical instrumentation. As a result, a significant amount of our cash used in operations has been associated with maintaining these levels of inventory. To ensure adequate inventory supply, we must forecast inventory needs and manufacturing orders based on our estimates of future demand. Our ability to accurately forecast demand for our systems could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our systems or for products of our competitors, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions. Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand. Furthermore, as we continue to grow and expand, we require increasing levels of inventory which may subject us to greater financial risk in the event of a recall where such inventory is no longer commercially viable. Conversely, if we underestimate customer demand for our systems, our manufacturers and suppliers may not be able to deliver systems to meet our requirements, which could result in damage to our reputation and customer relationships. In addition, if we experience a significant increase in demand, additional supplies of raw materials or additional manufacturing capacity may not be available to or at our existing manufacturers and suppliers when required on terms that are acceptable to us, or at all, which will negatively affect our business, financial condition and results of operations.

We seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions. As a result, we are subject to the risk that a portion of our inventory will become obsolete or expire, which could have a material adverse effect on our earnings and cash flows due to the resulting costs associated with the inventory obsolescence charges and costs required to replace such inventory.

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***We may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships with third parties that may not result in the development of commercially viable products, product improvements or the generation of significant future revenues.***

In the ordinary course of our business, we may enter into collaborations, in-licensing arrangements, joint ventures, strategic alliances, partnerships or other arrangements to develop new products or product improvements and to pursue new markets. Proposing, negotiating and implementing collaborations, in-licensing arrangements, joint ventures, strategic alliances or partnerships may be a lengthy and complex process. Other companies, including those with substantially greater financial, marketing, sales, technology or other business resources, may compete with us for these opportunities or arrangements. We have entered into a second amended and restated software license agreement with Genesis Software Innovations, LLC ("Genesis Software"), pursuant to which we have exclusive rights to use certain preoperative surgery planning platform software. For a more complete description of this agreement, see the section titled "Business—Intellectual Property—Software License Agreement with Genesis Software."

We may not identify, secure, or complete any such transactions or arrangements in a timely manner, on a cost-effective basis, on acceptable terms or at all. We have limited institutional knowledge and experience with respect to these business development activities, and we may also not realize the anticipated benefits of any such transaction or arrangement. In particular, these collaborations may not result in the development of products that achieve commercial success or viable product improvements or result in significant revenues and could be terminated prior to developing any products. For example, while our license agreement with Genesis Software provides us with a preoperative software planning platform that is used by surgeons preparing for procedures, we do not generate any separate revenue specifically from ProVoyance.

Additionally, we may not be in a position to exercise sole decision-making authority regarding the transaction or arrangement, which could create the potential risk of creating impasses on decisions, and our future collaborators may have economic or business interests or goals that are, or that may become, inconsistent with our business interests or goals. It is possible that conflicts may arise with our collaborators, such as conflicts concerning the achievement of performance milestones, or the interpretation of significant terms under any agreement, such as those related to financial obligations or the ownership or control of intellectual property developed during the collaboration. If any conflicts arise with any future collaborators, they may act in their self-interest, which may be adverse to our best interest, and they may breach their obligations to us. For example, we have and will continue to enter into agreements with third parties that are owned or controlled by certain of our officers and directors. Robert Ball, our Chief Executive Officer and Executive Chairman, and is a co-founder and director of Genesis Innovation Group, Inc. ("Genesis Innovation") and Genesis Software. See the section titled "—Risks Related to Administrative, Organizational and Commercial Operations and Growth—Certain of our officers and directors also serve as directors of, and are affiliates of, Genesis Innovation, Genesis Software and cultivate(MD), which may give rise to a perceived or actual conflict of interest which may adversely impact your interests." In addition, we may have limited control over the amount and timing of resources that any future collaborators devote to our or their future products.

Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses and divert the attention of our management. Further, these transactions and arrangements will be contractual in nature and will generally be terminable under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium. If we enter into in-bound intellectual property license agreements, we may not be able to fully protect the licensed intellectual property rights or maintain those licenses. Future licensors could retain the right to prosecute and defend the intellectual property rights licensed to us, in which case we would depend on the ability of our licensors to obtain, maintain and enforce intellectual property protection for the licensed intellectual property. These licensors may determine not to pursue litigation against other companies or may pursue such litigation less aggressively than we would. Further, entering into such license agreements could impose various diligence, commercialization, royalty or other obligations on us. Future licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license, which could adversely affect our competitive business position and harm our business prospects.

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***AI presents risks and challenges that can impact our business including by posing security risks to our confidential information, proprietary information and personal data.***

We incorporate AI solutions into our platform, and these applications are increasingly important to our operations over time. AI presents risks such as inaccuracy, bias, toxicity, intellectual property infringement or misappropriation, data privacy and cybersecurity and data provenance. In addition, AI utilizes machine learning and predictive analytics, which in some cases present flawed, biased, and inaccurate results, and may have errors or inadequacies that are not easily detectable and may also be subject to data herding and interconnectedness (*i.e.*, multiple market participants utilizing the same data), in each case adversely impacting our business. The regulatory framework for AI is rapidly evolving as many federal, state, and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations. Additionally, existing laws and regulations could affect the operation of our AI. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact of future laws, regulations, standards, or market perception of their requirements on our business and our business and our response. It is possible that new laws and regulations will be adopted in the United States and in other jurisdictions outside the United States, or that existing laws and regulations, including competition and antitrust laws, may be interpreted in ways that would limit our ability to use AI for our business, or require us to change the way we use AI in a manner that negatively affects the performance of our technologies, services, and business and the way in which we use AI. We may need to expend resources to adjust our technologies or services in certain jurisdictions if the laws, regulations, or decisions are not consistent across jurisdictions. Further, the cost to comply with such laws, regulations, or decisions and/or guidance interpreting existing laws, could be significant and would increase our operating expenses (such as by imposing additional reporting obligations regarding our use of AI). Such an increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition, and results of operations.

These issues, combined with an uncertain regulatory environment, may further result in reputational harm, liability, or other adverse consequences to our business operations. Incorporation of generative AI tools by vendors into their offerings without disclosing this use to us would expose us to potential liability, and the providers of these generative AI tools may not meet existing or rapidly evolving regulatory or industry standards with respect to privacy and data protection and may inhibit our or our vendors' ability to maintain an adequate level of service and experience. If our vendors, or our third-party partners experience an actual or perceived breach or privacy or security incident because of the use of generative AI, we may lose valuable intellectual property and confidential information and our reputation and the public perception of the effectiveness of our security measures could be harmed. Further, bad actors around the world use increasingly sophisticated methods, including the use of AI, to engage in illegal activities involving the theft and misuse of personal information, confidential information, and intellectual property. Any of these outcomes could damage our reputation, result in the loss of valuable property and information, and adversely impact our business.

***We may not be able to establish or strengthen our brand.***

We believe that establishing and strengthening our brand, including our ecosystem, is important to achieving widespread acceptance of our implant systems, particularly because of the highly competitive nature of the market for similar products. We believe the quality, breadth and reliability of our systems is critical to building physician support for our systems, and any negative publicity regarding the quality or reliability of our systems or shoulder arthroplasty procedures generally could significantly damage our reputation. In the course of conducting our business, we must adequately address quality issues that may arise with our systems and technologies. Although we have established internal procedures designed to minimize risks that may arise from quality issues, we may not be able to eliminate or mitigate occurrences of these issues and associated liabilities. In addition, even in the absence of quality issues, we may be subject to claims and liability if the performance of our systems do not meet the expectations of physicians or patients or any improper use of our systems or technologies that results in injury or unsatisfactory results.

In addition, promoting and positioning our brand will depend largely on the success of our medical education efforts and our ability to educate shoulder specialists and patients. These brand promotion activities may not yield increased sales and, even if they do, any sales increases may not offset the expenses we incur to promote our brand.

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If we fail to successfully promote and maintain our brand, or if we incur substantial expenses in an unsuccessful attempt to promote and maintain our brand, our shoulder solutions may not be accepted by physicians or patients, which would adversely affect our business, results of operations and financial condition.

***Our inability to maintain contractual relationships with health care professionals could have a negative impact on our research and development and medical education programs.***

We maintain contractual relationships with respected physicians and medical personnel in hospitals, private practice and universities who assist in clinical studies, product research, data collection for our registries and development and in the training of shoulder specialists on the safe and effective use of our products. We continue to place emphasis on the validation of the benefits of our implant systems through clinical studies, the development of proprietary products and product improvements as well as providing high quality training and support. If we are unable to maintain these relationships, our ability to develop and market new and improved products and train on the use of those products could decrease, and future operating results could be unfavorably affected. At the same time, the medical device industry's relationship with physicians is under increasing scrutiny by the U.S. Department of Health and Human Services Office of Inspector General ("OIG"), the U.S. Department of Justice ("DOJ"), the state attorneys general and other foreign and domestic government agencies. Our failure to comply with requirements governing the industry's relationships with physicians or an investigation into our compliance by the OIG, the DOJ, state attorneys general and other government agencies, could negatively affect our business, financial condition and results of operations. See the section titled "—Risks Related to Regulatory Matters—Our relationships with customers, physicians and third-party payors are subject to federal and state health care fraud and abuse laws, false claims laws, physician payment transparency laws and other health care laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws we could face substantial penalties."

***We may be unable to continue to successfully demonstrate to shoulder specialists or key opinion leaders the merits of our implant systems and technologies compared to those of our competitors, which may make it difficult to achieve market acceptance.***

Shoulder specialists play the primary role in determining the course of treatment and, ultimately, the type of products that will be used to treat a patient. As a result, our success depends, in large part, on our ability to effectively market and demonstrate to shoulder specialists the merits of our systems and methodologies compared to those of our competitors. Acceptance of our systems and methodologies depends on educating shoulder specialists as to the distinctive characteristics, clinical benefits, safety, cost-effectiveness and efficiencies of our systems and technologies as compared to those of our competitors, and on training surgeons in the proper use of our systems and offerings. If we are not successful in convincing surgeons of the merits of our systems and methodologies or educating them on the use of our systems, they may not use our systems or may not use them effectively and we may be unable to increase our sales, sustain our growth or achieve and sustain profitability.

Also, since certain of our offerings and products are relatively new, including our Inset 95 Humeral Stem, some surgeons may be reluctant to change their surgical treatment practices for the following reasons, among others:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack of experience with our systems and technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• existing relationships with competitors and distributors that sell competitive products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• lack or perceived lack of evidence supporting additional patient benefits;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• perceived liability risks generally associated with the use of new systems and technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• less attractive availability of coverage and reimbursement by third-party payors compared to procedures using competitive products and other techniques;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• costs; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the time commitment that may be required for training.

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These reasons may affect the pace of adoption of our systems and future products that we may offer.

In addition, we believe recommendations and support of our systems and technologies by surgeons, shoulder specialists and other key opinion leaders in our industry are essential for market acceptance. If we do not receive support from such surgeons, shoulder specialists and other key opinion leaders, if long-term data does not show the benefits of using our systems or if the benefits offered by our systems are not sufficient to justify their cost, shoulder specialists, hospitals, ASCs and other health care facilities may not use our systems and we might be unable to achieve market acceptance.

Our systems are designed to satisfy long term demands for patients and, given the length of time we have been commercially active, we do not have significant long term use cases available. In the orthopedic industry, participants have been able to demonstrate favorable short-term outcomes that later went on to fail and not provide adequate long term performance. Any such failure to demonstrate long-term satisfaction for our systems in the future could have adverse affect on our brand, demand for our systems and our results of operations and financial condition.

***If surgeons fail to safely and appropriately use our implant systems, or if we are unable to train surgeons on the safe and appropriate use of our systems, we may be unable to achieve our expected sales, growth or profitability.***

An important part of our sales process includes our ability to screen for and identify surgeons who have the requisite training and experience to safely and appropriately use our implant systems and to train a sufficient number of these surgeons and provide them with adequate instruction in the use of our systems. There is a training process involved for surgeons to become proficient in the use of our systems. This training process may take longer or be more expensive than expected and may therefore affect our ability to increase sales. Convincing surgeons to dedicate the time and energy necessary for adequate training is challenging, and we may not be successful in these efforts. Recent changes to federal guidance regarding medical education programs under the federal Anti-Kickback Statute also could limit our ability to train surgeons, and such programs could be subject to challenge under the federal Anti-Kickback Statute. See the section titled "—Risks Related to Regulatory Matters—Our relationships with customers, physicians and third-party payors are subject to federal and state health care fraud and abuse laws, false claims laws, physician payment transparency laws and other health care laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws we could face substantial penalties."

Furthermore, if clinicians are not properly trained, they may misuse or ineffectively use our systems. Any such improper use may result in unsatisfactory outcomes, patient injury, negative publicity or lawsuits against us, any of which could harm our reputation and affect future sales. Accordingly, if surgeons fail to safely and appropriately use our systems, use them for off-label purposes or if we are unable to train them on the safe and appropriate use of our systems, we may be unable to achieve our desired sales, growth or profitability. Furthermore, despite the requisite training, surgeons may continue to deliberately use our systems in ways not in conformance to our instructions or methods for which our systems are designed, which could lead to unsuccessful patient outcomes which may harm our brand, demand and results of operations.

***The loss of any member on our executive management team or our inability to attract and retain highly skilled members of our dedicated commercial leadership and marketing teams as well as certain third-party engineers could have a material adverse effect on our business, financial condition and results of operations.***

Our success depends on the skills, experience and performance of the members of our executive management team including Robert Ball, our Chief Executive Officer & Executive Chairman, and Matthew Ahearn, our Chief Operating Officer, as well as David Blue, Jeffrey Points and Jon Osborne. The individual and collective efforts of these executives will be important as we continue to commercialize our existing systems, develop new products and technologies and expand our commercial activities. The loss or incapacity of existing members of our executive management team could have a material adverse effect on our business, financial condition and results of operations if we experience difficulties in hiring qualified successors. We do not maintain "key person" insurance for any of our executives or key employees.

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Our commercial, quality and research and development programs and operations depend on our ability to attract and retain highly skilled team members. We may be unable to attract or retain qualified team members. All of our employees are at-will, which means that either we or the employee may terminate his or her employment at any time. The loss of key employees, failure of any key employee to perform, our inability to attract and retain skilled employees, as needed, or our inability to effectively plan for and implement a succession plan for key employees could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, we rely on third parties, including Genesis Innovation and Genesis Software, for engineering and design services. The loss of any such contractual arrangement with Genesis Innovation or Genesis Software, including access to the professional services of such engineers, could have a material adverse effect on our business, financial condition and results of operations.

***Certain of our officers and directors also serve as directors of, and are affiliates of, Genesis Innovation, Genesis Software and cultivate(MD), which may give rise to a perceived or actual conflict of interest which may adversely impact your interests.***

We have and will continue to operate under agreements with third parties that are owned or otherwise affiliated with certain of our officers and directors. For example, Robert Ball, our Chief Executive Officer and Executive Chairman, is a co-founder and director of Genesis Innovation, Genesis Software and Genesis Investment Holdings, LLC ("Genesis Investment Holdings"). Genesis Investment Holdings is affiliated with cultivate(MD) Holdings, LLC ("cultivate(MD)"), a beneficial holder of more than 5% of our capital stock. In addition, Mr. Ball, Matthew Ahearn, our Chief Operating Officer and a member of our board of directors, and David Blue, our Chief Customer Experience Officer, are directors of cultivate(MD), which is an investor in Genesis Software. Mr. Ahearn is also a director of Genesis Investment Holdings. Pursuant to our consulting agreement with Genesis Innovation, Genesis Innovation has agreed to provide consulting services for concept development, intellectual property creation, surgeon relationship management and large-scale project management. As described under "Business—Intellectual Property—Software License Agreement with Genesis Software," we have entered into a software licensing agreement with Genesis Software. As a result of these roles and affiliations with Genesis Innovation and Genesis Software, a conflict of interest could rise in which our interests are different than those of Genesis Innovation and/or Genesis Software or in which the interests of certain of our officers and directors in relation to Genesis Innovation and Genesis Software are different than the interests in us and our stockholders. The interests of these officers and directors may not be fully aligned with yours, which could lead to actions that are not in your best interests. Furthermore, such officers and directors could be seen as benefiting directly or indirectly from transactions in which we will pay Genesis Innovation and/or Genesis Software for their services and offerings under our respective agreements with each party regardless of whether such agreements are believed to be in the best interests of our stockholders. In such cases, it may be difficult to manage the conflict of interest through the oversight of our board of directors. See also the sections titled "Certain Relationships and Related Party Transactions—Agreements with Stockholders—Consulting Arrangement with Genesis Innovation" and "Certain Relationships and Related Party Transactions—Agreements with Stockholders—Software License Agreement with Genesis Software Innovations" for more information.

This could give rise to a conflict of interest in which our interests are different than those of Genesis Innovation or Genesis Software or in which the interests of our officers and directors in relation to Genesis Innovation and Genesis Software are different than the interests of the company and its stockholders. In such cases, we may be unable to effectively manage the conflict of interest through the oversight of our board of directors.

***Any future international expansion will subject us to additional costs and risks that may have a material adverse effect on our business, financial condition and results of operations.***

Historically, all of our sales have been to customers in the United States. Our long-term strategy may include increasing our international presence, including securing regulatory approvals in targeted countries outside the United States. This strategy may include establishing and maintaining physician outreach and education capabilities outside of the United States and expanding our relationships with international payors. To the extent we enter into

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international markets in the future, there are significant costs and risks inherent in conducting business in international markets, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Difficulties in staffing and managing our international operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Reduced or varied protection for intellectual property rights in some countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Obtaining regulatory clearance where required for our products in various countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Requirements to maintain data and the processing of that data on servers located within such countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Limits on our ability to penetrate international markets if we are required to manufacture locally;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Restrictions on the site-of-service for use of our products and the economics related thereto for physicians, providers and payors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Natural disasters, political and economic instability, including wars, terrorism, political unrest, outbreak of disease, pandemics and epidemics, boycotts, curtailment of trade and other market restrictions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977 ("FCPA"), U.K. Bribery Act of 2010 and comparable laws and regulations in other countries.

We have limited experience with regulatory environments and market practices internationally, and we may not be able to penetrate or successfully operate in new markets. We may also encounter difficulty expanding into international markets because of limited brand recognition in certain parts of the world, leading to delayed acceptance of our products by surgeons and their patients, hospitals, ASCs and payors in these international markets. For example, any perceived advantages of our products in the United States may not be perceived the same internationally. If we are unable to expand internationally and manage the complexity of international operations successfully, it could have a material adverse effect on our business, financial condition and results of operations. If our efforts to introduce our products into foreign markets are not successful, we may have expended significant resources without realizing the expected benefit. Ultimately, the investment required for expansion into foreign markets could exceed the results of operations generated from this expansion.

**Risks Related to Our Intellectual Property**

***If we are unable to obtain and maintain significant patent or other intellectual property protection for our products, or if the scope of our patents and other intellectual property rights do not adequately protect our products, our competitors could develop and commercialize products similar or identical to ours and we may be unable to gain significant market share and be unable to operate our business profitably.***

We have and will rely on patents, trade secrets, copyrights, know-how, trademarks, license agreements and contractual provisions to establish our intellectual property rights and protect our products. These legal means, however, afford only limited protection and may not completely protect our rights. Any failure to obtain or maintain patent and other intellectual property protection with respect to our products could harm our business, financial condition and results of operations. We generally seek to protect our proprietary position by filing patent

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applications that are important to our business. We also seek to protect our proprietary position by acquiring or in-licensing relevant issued patents or pending patent applications or other intellectual property or proprietary rights from third parties.

We cannot assure you that our intellectual property position will not be challenged or that all patents for which we have applied will be granted. The validity and breadth of claims in patents involve complex legal and factual questions and, therefore, may be highly uncertain. Uncertainties and risks that we face include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our pending or future patent applications may not result in the issuance of patents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the scope of any existing or future patent protection may not exclude competitors or provide competitive advantages to us;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our patents may not be held valid or enforceable if subsequently challenged;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other parties may claim that our products and designs infringe the proprietary rights of others—even if we are successful in defending our patents and proprietary rights, the cost of such litigation may adversely affect our business; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other parties may develop similar products, duplicate our products, or design around our patents.

The patent prosecution process is expensive and time-consuming, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patents or patent applications at a reasonable cost or in a timely manner, or in all jurisdictions. Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, any of these parties may breach such agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek and obtain patent protection. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope. It is also possible that we will fail to identify patentable aspects of our developments before it is too late to obtain patent protection. In addition, our ability to obtain and maintain valid and enforceable patents depends in part on whether the differences between our inventions and the prior art allow our inventions to be patented over the prior art. Furthermore, the publication of discoveries in scientific literature often lags behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until eighteen (18) months after filing, or in some cases not at all. Therefore, we cannot be certain that we were the first to file for patent protection of such inventions.

In addition, the laws of foreign jurisdictions may not protect our rights to the same extent as the laws of the United States. For example, most countries outside of the United States do not allow patents for methods of treating the human body. This may preclude us from obtaining method patents outside of the United States having similar scope to those we have obtained or may obtain in the future in the United States. This includes certain key method patents covering the InSet system. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain and enforce our patent rights and, more generally, could affect the value of our patents. Additionally, we cannot predict whether the patent applications we are currently pursuing will issue as patents in any particular jurisdiction or whether the claims or any issued patents will provide sufficient protection from competitors or third parties.

Moreover, we may be subject to a third-party pre-issuance submission of prior art to the U.S. Patent and Trademark Office ("USPTO") or patent offices in foreign jurisdictions, or become involved in opposition, derivation, reexamination, *inter partes* review, post-grant review or interference proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission, proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology and compete directly with us, without payment to us.

The patent positions of companies may involve complex legal and factual questions that have been the subject of much litigation in recent years, and, therefore, the scope of any patent claims that we have or may obtain cannot

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be predicted with certainty. Accordingly, we cannot provide any assurances about which of our patent applications will issue, the breadth of any resulting patent, whether any of the issued patents will be found to be infringed, invalid, or unenforceable or will be threatened or challenged by third parties, that any of our issued patents have, or that any of our currently pending or future patent applications that mature into issued patents will include, claims with a scope sufficient to protect our products, services, or technology. Our pending and future patent applications may not result in the issuance of patents or, if issued, may not issue in a form that will be advantageous to us. The coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. We cannot offer any assurances that the breadth of our issued patents will be sufficient to stop a competitor from developing, manufacturing, and commercializing one or more products, services, or technologies in a non-infringing manner that would be competitive with one or more of our products, services, or technologies, or otherwise provide us with any competitive advantage. Furthermore, any successful challenge to these patents or any other patents owned by or licensed to us after patent issuance could deprive us of rights necessary for our commercial success. Further, there can be no assurance that we will have adequate resources to enforce our patents.

The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad, and as a result, may not provide us with adequate proprietary protection or competitive advantage against competitors with similar products. Such challenges may result in loss of exclusivity or freedom to operate or in patent claims being narrowed, invalidated or held unenforceable, in whole or in part, which could limit our ability to stop others from using or commercializing similar or identical products and techniques without payment to us, or limit the duration of the patent protection of our technology.

We cannot ensure that we do not infringe any patents or other proprietary rights held by third parties. If our products were found to infringe any proprietary right of another party, we could be required to pay significant damages or license fees to such party and/or cease production, marketing and distribution of those products. Litigation may also be necessary to defend infringement claims of third parties or to enforce patent rights we hold or to protect trade secrets or techniques we own. In addition, because patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there may be applications now pending of which we are unaware and which may result in issued patents which our current or future products infringe. Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent applications that may ultimately issue with claims that we infringe.

We also rely on trade secrets and other unpatented proprietary technology. There can be no assurances that we can meaningfully protect our rights in our trade secrets and other unpatented proprietary technology or that others will not independently develop substantially equivalent proprietary products or processes or otherwise gain access to our proprietary technology. We seek to protect our trade secrets and proprietary know-how and technology, in part, with confidentiality and invention assignment agreements with employees and consultants that include customary intellectual property assignment obligations. There can be no assurances, however, that the agreements will not be breached, adequate remedies for any breach would be available or competitors will not discover our trade secrets or independently develop comparable intellectual property. Further, litigation may be necessary to obtain ownership or to defend against claims challenging ownership. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to our management and other employees, and such claims could harm our business, financial condition and results of operations.

Some of our patents and patent applications may in the future be jointly owned with third parties. If we are unable to obtain an exclusive license to any such third party joint owners' interest in such patents or patent applications, such co-owners may be able to license their rights to other third parties, including our competitors, and our competitors could market competing products and technology. In addition, we may need the cooperation of any such joint owners of our patents in order to enforce such patents against third parties, and such cooperation may not be provided to us. Any of the foregoing could harm our business, financial condition and results of operations.

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***Obtaining and maintaining intellectual property protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental agencies, and our intellectual property protection could be reduced or eliminated for non-compliance with these requirements.***

The USPTO, the United States Copyright Office ("USCO") and various foreign governmental agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the intellectual property application process. In addition, periodic maintenance fees, renewal fees, annuity fees and various other government fees on intellectual property registrations often must be paid to the USPTO, USCO and foreign agencies over the lifetime of the intellectual property registration and/or application and any intellectual property rights we may obtain in the future. While an unintentional lapse of an intellectual property registration or application can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the registration or application, resulting in partial or complete loss of intellectual property rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a registration or application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the intellectual property registrations and applications covering our products, we may not be able to stop a competitor from developing and marketing products that are the same as or similar to our products, which would have a material adverse effect on our business.

***We rely on intellectual property licensed from others and may become dependent on patents or other intellectual property licensed from others in the future. If we lose our licenses for intellectual property that is important to our business, we may not be able to continue developing or selling our products.***

We rely on certain licenses that give us rights to third party intellectual property that is necessary or useful to our business, including pursuant to our License Agreement with Genesis Software. Our rights to use such intellectual property rights in our business are or may in the future be subject to the continuation of and our compliance with the terms of the license agreements between us and each of our licensors. In addition, the agreements under which we in-license intellectual property or technology from third parties are or may in the future be complex, and certain provisions in such agreements may be susceptible to multiple interpretations. The resolution of any contract interpretation disagreement that may arise could narrow what we believe to be the scope of our rights to the relevant intellectual property or technology or increase what we believe to be our financial or other obligations under the relevant agreement, either of which could have a material adverse effect on our business, financial condition, results of operations and prospects. Moreover, if disputes over intellectual property that we have in-licensed, or in-license in the future, prevent, or impair our ability to maintain our licensing arrangements on commercially acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. License agreements may impose various obligations on us, including the obligation to pay certain royalties. For example, we are required to pay certain royalties under our License Agreement with Genesis Software. One or more of our licensors may allege that we have breached our license agreement with them, and accordingly seek to terminate our license. As a result, we may not be able to market products that were covered by the license, which would result in the loss of significant rights, restrict our ability to commercialize certain of our products and could adversely affect our competitive business position and harm our business prospects. In addition, any claims brought against us by our licensors could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations.

***We may not identify relevant third-party patents or may incorrectly interpret the relevance, scope or expiration of a third-party patent, which might adversely affect our ability to develop and market our products.***

We cannot guarantee that any of our patent searches or analyses, including but not limited to the identification of relevant patents, analysis of the scope of relevant patent claims or determination of the expiration of relevant patents, are complete or thorough, nor can we be certain that we have identified each and every third-party patent and pending application in the United States, Europe and elsewhere that is relevant to or necessary for the commercialization of our products in any jurisdiction. Patent applications in the United States, the European Union (the "EU") and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Additionally, pending patent

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applications that have been published can, subject to certain limitations, be later amended in a manner that could cover our products or the use of our products. After issuance, the scope of patent claims remains subject to construction as determined by an interpretation of the law, the written disclosure in a patent and the patent's prosecution history. Our interpretation of the relevance or the scope of a patent or a pending application may be incorrect, which may negatively impact our ability to market our products. We may incorrectly determine that our products are not covered by a third-party patent or may incorrectly predict whether a third party's pending application will issue with claims of relevant scope. Our determination of the expiration date of any patent in the United States, the EU or elsewhere that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our products. Our failure to identify and correctly interpret relevant patents may negatively impact our ability to develop and market our products, if approved.

***We are presently party to lawsuits involving patents and other intellectual property and the possibility exists that we may in the future be party to other lawsuits or administrative proceedings involving patents or other intellectual property. If we were to lose any intellectual property lawsuits, a court could require us to pay significant damages and/or prevent us from selling our products.***

The medical device industry is highly competitive and litigious with respect to patents, trademarks, trade secrets, and other intellectual property rights. Companies in the medical device industry have used intellectual property litigation to gain a competitive advantage. Our commercial success depends in part upon our ability and that of our contract manufacturers and suppliers to manufacture, market, and sell our products, and to use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our products and any future products and technology, whether or not we are actually infringing, misappropriating or otherwise violating the rights of third parties. While we take reasonable steps to ensure that we and our suppliers do not infringe upon, misappropriate, or otherwise violate the intellectual property rights of others, there may be pertinent intellectual property rights of others which we or our suppliers are presently unaware.

We are presently a party to a lawsuit involving Catalyst OrthoScience, which we describe in greater detail in "Business—Legal Proceedings." In addition, we may in the future be party to other lawsuits or other administrative proceedings, including interference proceedings, post grant review and inter partes review before the USPTO, involving our patents or other intellectual property, regardless of merit. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a negative impact on our ability to commercialize our current and any future product candidates. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this is a high burden and requires us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. Conversely, a patent owner need only prove infringement by a preponderance of the evidence, which is a lower burden of proof. Moreover, given the vast number of patents in our field of technology, we cannot be certain that we do not infringe existing patents or that we will not infringe patents that may be granted in the future. While we may decide to initiate proceedings to challenge the validity of these or other patents in the future, we may be unsuccessful, and courts or patent offices in the United States and abroad could uphold the validity of any such patent. Furthermore, because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because pending patent claims can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use or sale of our product candidates. Regardless of when filed, we may fail to identify relevant third-party patents or patent applications, or we may incorrectly conclude that a third-party patent is invalid or not infringed by our product candidates or activities. If a patent holder believes that our product candidate or technology platform infringes its patent, the patent holder may sue us even if we have received patent protection for our technology. Moreover, we may face patent infringement claims from nonpracticing entities that have no relevant product revenue and against whom our own patent portfolio may thus have no deterrent effect. If a patent infringement suit were threatened or brought against us, we could be

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forced to stop or delay research, development, manufacturing or sales of the product or product candidate that is the subject of the actual or threatened suit.

If we are found to infringe a third party's intellectual property rights, we could be required to obtain a license from such third party to continue selling, developing and marketing our products and techniques. However, we may not be able to obtain any required license on commercially reasonable terms or at all. The acquisition or licensing of third-party intellectual property rights is a competitive area, and our competitors may pursue strategies to acquire or license third party intellectual property rights that we may consider attractive or necessary. If we are unable to successfully obtain rights to required third party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant products or redesign those products that contain the allegedly infringing intellectual property, which could harm our business, financial condition and results of operations. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages, including treble damages and attorneys' fees if we are found to have willfully infringed a patent. A finding of infringement could force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business. Intellectual property litigation may lead to unfavorable publicity that harms our reputation and causes the market price of our common shares to decline. A legal proceeding, regardless of the outcome, could drain our financial resources and divert the time and effort of our management. Protracted litigation to defend or prosecute our intellectual property rights could result in our customers or potential customers deferring or limiting their purchase or use of the affected products until resolution of the litigation.

Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time consuming, and could distract our technical and management personnel from their normal responsibilities. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims or file administrative actions against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent's claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding or administrative action could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our related pending patent applications at risk of not issuing. Our competitors may assert invalidity on various grounds, including lack of novelty, obviousness or that we were not the first applicant to file a patent application related to our product. We may elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes before litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.

Our competitors, many of which have made substantial investments in patent portfolios, trade secrets, trademarks and competing technologies, may have applied for or obtained, or may in the future apply for or obtain, patents or trademarks that may prevent, limit or otherwise interfere with our ability to make, use, sell and/or export our products or to use our technologies or product names. Moreover, individuals and groups that are non-practicing entities, commonly referred to as "patent trolls," purchase patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. From time to time, we may receive threatening letters, notices or "invitations to license," or may be the subject of claims that our products and business operations infringe or violate the intellectual property rights of others. The defense of these matters can be time consuming, costly to defend in litigation, divert management's attention and resources, damage our reputation and brand and cause us to incur significant expenses or make substantial payments. Further, the outcome of litigation is uncertain and such litigation could result in us being forced to stop making, selling or using products or technologies that allegedly infringe the asserted intellectual property; pay substantial damages or royalties to the party whose intellectual property rights we may be found to be infringing; redesign those products that contain the allegedly infringing intellectual property, which could be costly, disruptive, or infeasible; and or attempt to obtain a license to

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the relevant intellectual property from third parties, which may not be available on reasonable terms, or at all, or, from third parties. In addition, third parties may assert infringement claims against our customers. These claims may require us to initiate or defend protracted and costly litigation on behalf of our customers or indemnify our customers for any costs associated with their own initiation or defense of infringement claims, regardless of the merits of these claims. If any of these claims succeed or settle, we may be forced to pay damages or settlement payments on behalf of our customers or may be required to obtain licenses for the products they use. If we cannot obtain all necessary licenses on commercially reasonable terms, our customers may be forced to stop using our products.

Because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during litigation. There could also be public announcements of the results of hearing, motions, or other interim developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of shares of our common stock. Even if we ultimately prevail, a court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may not be an adequate remedy. Furthermore, even if resolved in our favor, the monetary cost of such litigation and the diversion of the attention of our management could outweigh any benefit we receive as a result of the proceedings. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a material adverse effect on our business. Any of the foregoing may cause us to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management from our core business, and harm our reputation.

***If we fail to execute invention assignment agreements with our employees and contractors involved in the development of intellectual property or are unable to protect the confidentiality of our trade secrets, the value of our products and our business and competitive position could be harmed.***

In addition to patent protection, we also rely on the protection of trademarks, copyrights, trade secrets, know-how and confidential and proprietary information. We generally enter into confidentiality and invention assignment agreements with our employees, consultants and third parties upon their commencement of a relationship with us. However, we may not enter into such agreements with all employees, consultants and third parties who have been involved in the development of our intellectual property. We may also be subject to claims that our current or former employees, contractors, or other third parties have an ownership interest in our current or future patents, patent applications, or other intellectual property rights, including as an inventor or co-inventor. We may be subject to ownership or inventorship disputes in the future arising, for example, from conflicting obligations of employees, consultants, or others who were or are involved in developing our products, services, or technologies. In addition, these agreements may not provide meaningful protection against the unauthorized use or disclosure of our trade secrets or other confidential information, and adequate remedies may not exist if unauthorized use or disclosure were to occur. The exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our business, financial condition and results of operations. In particular, a failure to protect our proprietary rights may allow competitors to copy our products and procedures, which could adversely affect our pricing and market share. We may need to share our proprietary information, including trade secrets, with our current and future business partners, collaborators, contractors and others located in countries at heightened risk of theft of trade secrets, including through direct intrusion by private parties or foreign actors, and those affiliated with or controlled by state actors. As a result, we may encounter significant problems in protecting and defending our intellectual property both in the United States and abroad. The failure to obtain or maintain trade secret protection could adversely affect our competitive business position. Further, other parties may independently develop substantially equivalent know-how and technology. In addition to contractual measures, we try to protect the confidential nature of our proprietary information using commonly accepted physical and technological security measures. Such measures may not, for example, in the case of misappropriation of a trade secret by an employee or third party with authorized access, provide adequate protection for our proprietary information. Our security measures may not prevent an employee or consultant from misappropriating our trade secrets and providing them to a competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect our interests fully. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be difficult, expensive and time-consuming, and the outcome is unpredictable.

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Even though we use commonly accepted security measures, trade secret violations are often a matter of state law, and the criteria for protection of trade secrets can vary among different jurisdictions. In addition, trade secrets may be independently developed by others in a manner that could prevent legal recourse by us. While we have agreements with our employees, consultants and third parties that obligate them to assign their inventions to us, these agreements may not be self-executing, not all employees or consultants may enter into such agreements, or employees or consultants may breach or violate the terms of these agreements, and we may not have adequate remedies for any such breach or violation. If any of our intellectual property or confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or if any such information was independently developed by a competitor, it could have a material adverse effect on our competitive position, business, financial condition, results of operations and prospects.

***If our trademarks and trade names are not adequately protected, we may not be able to build name recognition in our markets of interest and our competitive position may be harmed.***

We rely on our trademarks, trade names and brand names to distinguish our systems from the products of our competitors and have registered or applied to register many of these trademarks. We cannot guarantee that our trademark applications will be approved. Third parties may also oppose our trademark applications or otherwise challenge our use of the trademarks. Our registered and unregistered trademarks, trade names, and brand names may be challenged, infringed, circumvented, declared generic or determined to be violating or infringing on other marks. We may not be able to protect our rights to these trademarks, trade names, and brand names which we rely upon to build name recognition among potential partners and customers in our markets of interest. In the event that our trademarks are successfully challenged, we could be forced to rebrand our systems, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, there can be no assurance that competitors will not infringe our trademarks or that we will have adequate resources to enforce our trademarks.

***Patent terms may not be sufficient to effectively protect our systems and business for an adequate period of time.***

Patents have a limited lifespan. In the United States, the natural expiration of a utility patent is generally 20 years after its first effective non-provisional filing date and the natural expiration of a design patent is generally 14 years after its issue date, unless the filing date occurred on or after May 13, 2015, in which case the natural expiration of a design patent is generally 15 years after its issue date. However, the actual protection afforded by a patent varies from country to country, and depends on many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions, the availability of legal remedies in a particular country and the validity and enforceability of the patent. Although various extensions may be available, the term of a patent, and the protection it affords, is limited. We may also be required to disclaim a portion of a patent term in order to overcome double patenting rejections from the patent office, thus potentially shortening our exclusivity period. Even if patents covering our proprietary technologies and their uses are obtained, once the patent has expired, we may be open to competition, which may harm our business prospects. In addition, although upon issuance in the United States a patent's term can be extended based on certain delays caused by the USPTO, this extension can be reduced or eliminated based on certain delays caused by the patent applicant during patent prosecution. A patent term extension based on regulatory delay may be available in the United States. However, only a single patent can be extended for each marketing approval, and any patent can be extended only once, for a single product. Moreover, the scope of protection during the period of the patent term extension does not extend to the full scope of the claim, but instead only to the scope of the product as approved. Laws governing analogous patent term extensions in foreign jurisdictions vary widely, as do laws governing the ability to obtain multiple patents from a single patent family. Additionally, we may not receive an extension if we fail to exercise due diligence during the testing phase or regulatory review process, apply within applicable deadlines, fail to apply prior to expiration of relevant patents or otherwise fail to satisfy applicable requirements. Given the amount of time required for the development, testing and regulatory review of new products, patents protecting such products might expire before or shortly after such products are commercialized. If we do not have sufficient patent terms to protect our products, proprietary technologies and their uses, our business would be seriously harmed. As our patents expire, the scope of our patent protection will be reduced, which may reduce or eliminate any competitive advantage afforded by our patent portfolio. As a result, our reduced patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours.

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***Changes in U.S. or foreign patent laws or their interpretation may limit our ability to obtain, maintain, defend and/or enforce our patents.***

Patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. The Leahy-Smith America Invents Act ("Leahy-Smith Act") includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and also affect patent litigation. The USPTO has developed regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first to file provisions, which became effective on March 16, 2013. The first to file provisions limit the rights of an inventor to patent an invention if not the first to file an application for patenting that invention, even if such invention was the first invention. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business.

However, the Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the enforcement and defense of our issued patents. For example, the Leahy-Smith Act provides that an administrative tribunal known as the Patent Trial and Appeals Board ("PTAB"), provides a venue for challenging the validity of patents at a cost that is much lower than district court litigation and on timelines that are much faster. Although it is not clear what, if any, long-term impact the PTAB proceedings will have on the operation of our business, the initial results of patent challenge proceedings before the PTAB since its inception in 2013 have resulted in the invalidation of many U.S. patent claims. The availability of the PTAB as a lower-cost, faster and potentially more potent tribunal for challenging patents could increase the likelihood that our own patents will be challenged, thereby increasing the uncertainties and costs of maintaining and enforcing them.

The America Invents Act also includes a number of significant changes that affect the way U.S. patent applications will be prosecuted and also may affect patent litigation. These include allowing third-party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by the USPTO administered post-grant proceedings, including post-grant review, inter partes review and derivation proceedings.

Because of a lower evidentiary standard in USPTO proceedings compared to the evidentiary standard in U.S. federal courts necessary to invalidate a patent claim, a third party could potentially provide evidence in a USPTO proceeding sufficient for the USPTO to hold a claim invalid even though the same evidence would be insufficient to invalidate the claim if first presented in a district court action. Therefore, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. In addition, future actions by the U.S. Congress, the federal courts and the USPTO could cause the laws and regulations governing patents to change in unpredictable ways. Any of the foregoing could harm our business, financial condition and results of operations.

In addition, on June 1, 2023, the European Union Patent Package, or the EU Patent Package, regulations were implemented with the goal of providing a single pan-European Unitary Patent and a new European Unified Patent Court (the "UPC"), for litigation involving European patents. As a result, all European patents, including those issued prior to ratification of the EU Patent Package, now by default automatically fall under the jurisdiction of the UPC, unless otherwise opted out. It is uncertain how the UPC will impact granted European patents in the biotechnology and pharmaceutical industries. Our European patent applications, if issued, could be challenged in the UPC. During the first seven years of the UPC's existence, the UPC legislation allows a patent owner to opt its European patents out of the jurisdiction of the UPC. We have opted out certain of our European patents and may decide to opt out our future European patents from the UPC, but doing so may preclude us from realizing the benefits of the UPC. Moreover, if we do not meet all of the formalities and requirements for opt-out under the UPC, our current or future European patents could remain under the jurisdiction of the UPC. The UPC will provide our competitors with a new forum to centrally revoke our European patents, and allow for the possibility of a competitor to obtain pan-European injunction. Such a loss of patent protection could have a material adverse impact on our business and our ability to commercialize our technology and our systems due to increased competition and, resultantly, on our business, financial condition, results of operations and prospects. The UPC and Unitary Patent are significant changes in European patent practice. As the UPC is a new court system, there is no precedent for the court, increasing the uncertainty of any litigation in the UPC.

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***We have foreign intellectual property rights and may be unable to enforce our intellectual property rights throughout the world.***

We have intellectual property rights outside the United States. Filing, prosecuting and defending patents or trademarks on our systems and any future products in all countries throughout the world would be prohibitively expensive, and the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Consequently, we may not be able to prevent third parties from practicing our inventions or utilizing our trademarks in all countries outside the United States, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we have patent protection but enforcement is not as strong as that in the United States. These products may compete with our products and any future products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing in these jurisdictions.

The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions. This could make it difficult for us to stop infringement of our foreign patents, if obtained, or the misappropriation of our other intellectual property rights. For example, some foreign countries have compulsory licensing laws under which a patent owner must grant licenses to third parties. In addition, some countries limit the enforceability of patents against third parties, including government agencies or government contractors. In these countries, patents may provide limited or no benefit. Patent protection must ultimately be sought on a country-by-country basis, which is an expensive and time-consuming process with uncertain outcomes. Accordingly, we may choose not to seek patent protection in certain countries, and we will not have the benefit of patent protection in such countries.

Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business. Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of our intellectual property.

The legal systems in certain countries may also favor state-sponsored or companies headquartered in particular jurisdictions over our first-in-time patents and other intellectual property protection. We are aware of incidents where such entities have stolen the intellectual property of domestic companies in order to create competing products and we believe we may face such circumstances ourselves in the future. For example, through its "Annual Special 301 Report on Intellectual Property," the Office of the United States Trade Representative has been reporting on the adequacy and effectiveness of intellectual property protection in a number of foreign countries that are U.S. trading partners and their protection and enforcement of intellectual property rights. Placement of a country on the Priority Watch List indicates that particular problems exist in that country with respect to intellectual property protection, enforcement, or market access for persons relying on intellectual property rights. Countries placed on the Priority Watch List are the focus of increased bilateral attention concerning the specific problem areas. It is possible that we will not be able to enforce our intellectual property rights against third parties that misappropriate our proprietary technology in those countries.

Moreover, geopolitical actions in the U.S. and in foreign countries could increase the uncertainties and costs surrounding the prosecution or maintenance of our patent applications or those of any current or future licensors and the maintenance, enforcement or defense of our issued patents or those of any current or future licensors. Government actions may also prevent maintenance of issued patents in Russia. These actions could result in abandonment or lapse of our future Russian patents or patent applications, resulting in partial or complete loss of patent rights in Russia. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may export otherwise infringing products to territories where we have patent protection, but enforcement rights are not as strong as those in the United States. These products may compete with our products and our patents or other IP rights may not be effective or sufficient to prevent them from competing.

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***We are and in the future may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors and third parties may claim an ownership interest in intellectual property we regard as our own.***

We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other confidential information of former employers or competitors. Many of our employees and consultants were previously employed at or engaged by other medical device companies, including our competitors or potential competitors. Some of these employees, consultants and contractors may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers, competitors or other third parties. Additionally, we may be subject to claims from third parties challenging our ownership interest in or inventorship of intellectual property we regard as our own, for example, based on claims that our agreements with employees or consultants obligating them to assign intellectual property to us are ineffective or in conflict with prior or competing contractual obligations to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defend against claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claims fails, in addition to paying monetary damages or a settlement payment, a court could prohibit us from using technologies, features or other intellectual property that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. An inability to incorporate technologies, features or other intellectual property that are important or essential to our products could have a material adverse effect on our business and competitive position and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product could hamper or prevent our ability to commercialize our products, which could materially and adversely affect our business, financial condition, operating results, cash flows and prospects.

***If our third-party manufacturing partners do not respect our intellectual property and trade secrets and produce competitive products using our designs or intellectual property, our business, financial condition and results of operations would be harmed.***

Although our agreements with third-party manufacturing partners generally seek to prevent them from misusing our intellectual property and trade secrets, or using our designs to manufacture products for our competitors, we may be unsuccessful in monitoring and enforcing our intellectual property rights against these manufacturing partners and may find counterfeit goods in the market being sold as our systems or future products similar to ours produced for our competitors using our intellectual property. Although we take steps to stop counterfeits, we may not be successful and network operators who purchase these counterfeit goods may experience product defects or failures, harming our reputation and brand and causing us to lose future sales. Any of the foregoing could harm our business, financial condition and results of operations.

***Our use of open source software could impose limitations on our ability to commercialize our product.***

We may use open source software in the future that contains modules licensed for use from third-party authors under open source licenses. Some of the software may be provided under license arrangements that allow use of the software for research or other non-commercial purposes. As a result, in the future, as we seek to use our platform in connection with commercially available products, we may be required to license that software under different license terms, which may not be possible on commercially reasonable terms, if at all. If we are unable to license software components on terms that permit its use for commercial purposes, we may be required to replace those software components, which could result in delays, additional cost and/or additional regulatory approvals.

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Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the software code. Some open source licenses contain requirements that we make available source code for modifications or derivative works we create based upon the type of open source software we use. If we combine our proprietary software with open source software in a certain manner, we could, under certain of the open source licenses, be required to release the source code of our proprietary software to the public. This could allow our competitors to create similar products with lower development effort and time, and ultimately could result in a loss of product sales for us. Although we monitor our use of open source software, the terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that those licenses could be construed in a manner that could impose unanticipated conditions or restrictions on our ability to commercialize our product candidates. We could be required to seek licenses from third parties in order to continue offering our product candidates, to re-engineer our product candidates or to discontinue the sale of our product candidates in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect our business, financial condition, results of operations and prospects.

***Intellectual property rights do not necessarily address all potential threats to our competitive advantage.***

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business or permit us to maintain our competitive advantage. For example:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• others may be able to make products that are similar to ours but that are not covered by the claims of the patents that we own or have exclusively licensed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we or our licensors or future collaborators might not have been the first to make the inventions covered by the issued patent or pending patent application that we own or have exclusively licensed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we or our licensors or future collaborators might not have been the first to file patent applications covering certain of our inventions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it is possible that our pending patent applications will not lead to issued patents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• issued patents that we own or have exclusively licensed may be held invalid or unenforceable, as a result of legal challenges by our competitors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may not develop additional proprietary technologies that are patentable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we cannot predict the scope of protection of any patent issuing based on our patent applications, including whether the patent applications that we own or in-license will result in issued patents with claims that cover our products or uses thereof in the United States or in other foreign countries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the claims of any patent issuing based on our patent applications may not provide protection against competitors or any competitive advantages, or may be challenged by third parties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• if enforced, a court may not hold that our patents are valid, enforceable and infringed;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may need to initiate litigation or administrative proceedings to enforce and/or defend our patent rights which will be costly whether we win or lose;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the laws of foreign countries may not protect our or our licensors', as the case may be, proprietary rights to the same extent as the laws of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the inventors of our owned or in-licensed patents or patent applications may become involved with competitors, develop products or processes which design around our patents or become hostile to us or the patents or patent applications on which they are named as inventors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• it is possible that our owned or in-licensed patents or patent applications omit individual(s) that should be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause these patents or patents issuing from these patent applications to be held invalid or unenforceable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we have engaged in scientific collaborations in the past, and will continue to do so in the future. Such collaborators may develop adjacent or competing products to ours that are outside the scope of our patents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• we may fail to adequately protect and police our trademarks and trade secrets; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the patents of others may have an adverse effect on our business, including if others obtain patents claiming subject matter similar to or improving that covered by our patents and patent applications.

Should any of these events occur, they could significantly harm our business, results of operations and prospects.

**Risks Related to Regulatory Matters**

***Our devices and operations are subject to extensive government regulation and oversight in the United States, and our failure to comply with applicable requirements could harm our business.***

Our systems are regulated as medical devices in the United States. Medical devices and their manufacturers and product developers are subject to extensive regulation in the United States, including by the FDA. The FDA regulates, among other things, with respect to medical devices: design, development, and manufacturing; testing, labeling, content, and language of instructions for use and storage; clinical trials; product safety; establishment registration and device listing; marketing, sales, and distribution; premarket clearance, classification, and approval or certification; recordkeeping procedures; advertising and promotion; recalls and field safety corrective actions; post-market surveillance, including reporting of deaths or serious injuries and malfunctions that, if they were to recur, could lead to death or serious injury; post-market studies; and product import and export.

The regulations to which we are subject are complex, burdensome to understand and apply, and have tended to become more stringent over time. Regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. The FDA enforces its regulatory requirements through, among other means, periodic unannounced inspections. We do not know whether we or any of our contract manufacturers or commercial partners will be found compliant in connection with any future FDA or foreign inspections. Failure to comply with applicable regulations could jeopardize our ability to sell our systems and result in enforcement actions such as: warning letters; fines; injunctions; civil penalties; termination of distribution; import alerts; recalls or seizures of products; delays in the introduction of products into the market; total or partial suspension of production; refusal to grant future clearances or approvals; withdrawals or suspensions of clearances or approvals, resulting in prohibitions on sales of our systems; and in the most serious cases, criminal penalties.

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***Our relationships with customers, physicians and third-party payors are subject to federal and state health care fraud and abuse laws, false claims laws, physician payment transparency laws and other health care laws and regulations. If we or our employees, independent contractors, consultants, commercial partners, or vendors violate these laws we could face substantial penalties.***

Our relationships with customers, physicians and third-party payors are subject to federal and state health care fraud and abuse laws, false claims laws, physician payment transparency laws and other health care laws and regulations. In particular, the promotion, sales and marketing of health care items and services is subject to extensive laws and regulations designed to prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive and other business arrangements. The U.S. health care laws and regulations that may affect our ability to operate include, but are not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Anti-Kickback Statute, which prohibits, among other things, any person or entity from knowingly and willfully, offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the purchasing, leasing, ordering, arranging for or recommending the purchase, lease, or order of any item or service reimbursable under Medicare, Medicaid or other federal health care programs. The term "remuneration" has been broadly interpreted to include anything of value. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that may be alleged to be intended to induce the purchases or recommendations, include any payments of more than fair market value, may be subject to scrutiny if they do not qualify for an exception or safe harbor. In addition, a person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• federal civil and criminal false claims laws, including the federal civil False Claims Act, and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment or approval from Medicare, Medicaid or other federal government programs that are false or fraudulent; knowingly making, using, or causing to be made or used, a false record or statement material to a false or fraudulent claim or obligation to pay or transmit money or property to the federal government; or knowingly making a false statement or representation of a material fact to improperly avoid, decrease or conceal an obligation to pay money to the federal government, including federal health care programs. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Health Insurance Portability and Accountability Act of 1996 ("HIPAA") which created new federal civil and criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any health care benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up by any trick, scheme or device, a material fact or making any materially false, fictitious or fraudulent statements in connection with the delivery of, or payment for, health care benefits, items or services. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• federal consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm consumers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the federal Physician Payments Sunshine Act, which requires certain manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with certain exceptions) to report annually to the government information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other health care professionals (including

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physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiologist assistants and certified nurse midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• state and foreign equivalents of each of the health care laws described above, among others, some of which may be broader in scope including, without limitation, state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims involving health care items or services reimbursed by non-governmental third party payors, including private insurers, or that apply regardless of payor (including cash payments); state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other health care providers, and marketing expenditures; state laws that prohibit fee-splitting arrangements between companies and physicians and other health care professionals; and state and local laws requiring the registration of device sales and medical representatives. Greater scrutiny of marketing practices in the medical device industry has resulted in numerous government investigations by various government authorities, and this industry-wide enforcement activity is expected to continue. The shifting regulatory environment, along with the requirement to comply with multiple jurisdictions with different and difficult compliance and reporting requirements, increases the possibility that we may run afoul of one or more laws. The costs to comply with these regulatory requirements are becoming more expensive and will also impact our profitability.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available, it is possible that some of our business activities, including our arrangements with physicians, independent distributors and customers could be subject to challenge under one or more of such laws. We have entered into advisory board and consulting agreements with physicians, including some who have ownership interests in us and/or influence the ordering of or use our systems in procedures they perform. Compensation under some of these arrangements includes the provision of stock or stock options. Efforts to ensure that our business arrangements will comply with applicable health care laws may involve substantial costs. It is possible that governmental and enforcement authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law interpreting applicable fraud and abuse or other health care laws and regulations.

If we or our employees, agents, independent contractors, consultants, commercial partners and vendors violate these laws, we may be subject to investigations, enforcement actions and/or significant penalties, including the imposition of significant civil, criminal and administrative penalties, damages, disgorgement, monetary fines, imprisonment, possible exclusion from participation in Medicare, Medicaid and other federal health care programs, contractual damages, reputational harm, diminished profits and future earnings, additional reporting requirements and/or oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, and curtailment of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

***Failure to maintain marketing authorizations for our systems, or to timely obtain necessary marketing authorizations for our future products, may have a material adverse effect on our business, financial condition, results of operations, and prospects.***

In the United States, before we can market a new medical device, or a new use of, or other significant modification to an existing, marketed medical device, we must first receive either clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act (the "FDCA"), approval of a premarket approval application ("PMA"), or grant of a *de novo* classification request from the FDA, unless an exemption applies. In the 510(k) clearance process, before a device may be marketed, the FDA must determine that a proposed device is "substantially equivalent" to a legally-marketed "predicate" device, which includes a device that has been previously cleared through the 510(k) process, a device that was legally marketed prior to May 28, 1976 (pre-amendments device), a device that was originally on the U.S. market pursuant to an approved PMA and later down-classified, or a 510(k)-exempt device. To be "substantially equivalent," the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are

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sometimes required to support substantial equivalence. In the process of obtaining PMA approval, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, pre-clinical, clinical trial, manufacturing, and labeling data. The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting, or implantable devices.

In the *de novo* classification process, a manufacturer whose novel device under the FDCA would otherwise be automatically classified as Class III and require the submission and approval of a PMA prior to marketing is able to request down-classification of the device to Class I or Class II on the basis that the device presents a low or moderate risk. If the FDA grants the *de novo* classification request, the applicant will receive authorization to market the device. This device type may be used subsequently as a predicate device for future 510(k) submissions.

The PMA approval, 510(k) clearance and *de novo* classification processes can be expensive, lengthy, and uncertain. The FDA's 510(k) clearance process usually takes from three to 12 months, but can take longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is submitted to the FDA. In addition, a PMA generally requires the performance of one or more clinical trials. Clinical data may also be required in connection with an application for 510(k) clearance or a *de novo* classification request. Despite the time, effort and cost, a device may not obtain marketing authorization by the FDA. We have obtained 510(k) clearances for our commercialized medical devices and we must obtain marketing authorization for any future devices we develop, unless they are exempt. Marketing authorizations for any of our future products, if granted, may include significant limitations on the indicated uses for the device, which may limit the potential commercial market for the device.

In the United States, any modification to a medical device for which we have obtained marketing authorization may require us to submit a new 510(k) premarket notification and obtain clearance, to submit a PMA and obtain FDA approval, or to submit a *de novo* request prior to implementing the change. For example, any modification to a 510(k)-cleared device that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, design or manufacture, generally requires a new 510(k) clearance or other marketing authorization. The FDA requires every manufacturer to make such determinations in the first instance, but the FDA may review any manufacturer's decision. The FDA may not agree with a manufacturer's decisions regarding whether new clearances or approvals are necessary. We have made modifications to 510(k)-cleared products in the past and have determined based on our review of the applicable FDA regulations and guidance that in certain instances new 510(k) clearances or PMA approvals were not required. We may make modifications or add additional features in the future to our medical devices that we believe do not require a new 510(k) clearance, *de novo* request, or approval of a PMA. If the FDA disagrees with our determination and requires us to seek new marketing authorizations for the modifications for which we have concluded that new marketing authorizations are unnecessary, we may be required to cease marketing or to recall the modified product until we obtain such marketing authorization, and we may be subject to significant regulatory fines or penalties. If the FDA requires us to go through a lengthier, more rigorous examination for future products or modifications to existing products than we had expected, product introductions or modifications could be delayed or canceled, which could adversely affect our business.

The FDA can delay, limit or deny marketing authorization of a device for many reasons, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to demonstrate to the satisfaction of the FDA that our products are substantially equivalent to a predicate device or are safe and effective for their intended uses;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the disagreement of the FDA with the design or implementation of clinical trials or the interpretation of data from preclinical studies or clinical trials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• serious and unexpected adverse device effects experienced by participants in clinical trials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the data from preclinical studies and clinical trials may be insufficient to support clearance, *de novo* classification, or approval, where required;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to demonstrate that the clinical and other benefits of the device outweigh the risks;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the manufacturing process or facilities we use may not meet applicable requirements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the potential for marketing authorization regulations of the FDA to change significantly in a manner rendering our clinical data or regulatory filings insufficient for marketing authorization.

***We are subject to ongoing regulatory review and scrutiny. Failure to comply with post-marketing regulatory requirements could subject us to enforcement actions, including substantial penalties, and might require us to recall or withdraw a product from the market.***

We are subject to ongoing and extensive regulatory requirements governing, among other things, the manufacture, marketing, advertising, medical device reporting, sale, promotion, import, export, registration, and listing of devices. For example, medical device manufacturers must submit certain reports to the FDA and keep required records as a condition of obtaining and maintaining marketing authorization. These reports include information about failures and certain adverse events potentially associated with the device after its marketing authorization. Failure to submit such reports, or failure to submit the reports in a timely manner, could result in enforcement action by the FDA. Following its review of the periodic reports, the FDA might ask for additional information or initiate further investigation.

Regulatory changes could result in restrictions on our ability to continue or expand our operations, higher than anticipated costs, or lower than anticipated sales. We have ongoing responsibilities under FDA regulations, and the FDA and state regulatory authorities have broad enforcement powers. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state regulatory authorities, which may include any of the following or other sanctions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• untitled letters or warning letters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• fines, injunctions, consent decrees, and civil penalties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recalls, termination of distribution, administrative detention, or seizure of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customer notifications or repair, replacement, or refunds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• operating restrictions or partial suspension or total shutdown of production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays in or refusal to grant our requests for future clearances, *de novo* classifications or approvals, or comparable foreign marketing authorizations of new products, new intended uses, or modifications to existing products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawals or suspensions of any granted marketing authorizations, resulting in prohibitions on sales of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• criminal prosecution.

Any of these sanctions could result in negative publicity, higher than anticipated costs or lower than anticipated sales and have a material adverse effect on our reputation, business, financial condition, results of operations, and prospects.

In addition, the FDA may change its marketing authorization policies which may affect future products. The FDA may adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay marketing authorization of any products under development or impact our ability to modify any products authorized for market on a timely basis. Such changes may also occur in foreign jurisdictions where we may market our products in the future. Such changes could impose additional requirements upon us that could delay our ability to obtain future marketing authorizations, increase the costs of compliance, or restrict our ability to maintain any marketing authorizations we have obtained.

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***Our products must be manufactured in accordance with applicable laws and regulations, and we could be forced to recall our devices or terminate production if we fail to comply with these regulations.***

In the United States, the methods used in, and the facilities used for, the manufacture of medical devices must comply with the FDA's cGMPs for medical devices, known as the Quality System Regulation ("QSR"), which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing, and shipping of medical devices. On February 23, 2024, the FDA issued a final rule to amend the QSR to align more closely with the International Organization for Standardization ("ISO") standards. Specifically, this final rule, which the FDA expects to go into effect on February 2, 2026, replaces the QSR with the Quality Management System Regulation ("QMSR"), and among other things, incorporates by reference the quality management system requirements of ISO 13485:2016. Although the FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the QSR, it is unclear the extent to which this final rule, once effective, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create market pressure that may negatively affect our business. Furthermore, we are required to verify that our suppliers maintain facilities, procedures, and operations that comply with our quality standards and applicable regulatory requirements. The FDA enforces the QSR, and is expected to enforce the QMSR, through periodic announced or unannounced inspections of medical device manufacturing facilities, which may include the facilities of subcontractors. Our products are also subject to similar state regulations governing manufacturing.

Despite our efforts to ensure compliance, our third-party manufacturers may not take the necessary steps to comply with applicable regulations, which could cause delays in the delivery of our medical devices. In addition, failure to comply with applicable FDA requirements or later discovery of previously unknown problems with our products or manufacturing processes could result in, among other things: warning letters or untitled letters; fines, injunctions, or civil penalties; suspension or withdrawal of marketing authorizations; seizures or recalls of our products; total or partial suspension of production or distribution; administrative or judicially imposed sanctions; the FDA's refusal to grant pending or future clearances or approvals for our products or similar decisions by foreign regulatory authorities or notified bodies; clinical holds; refusal to permit the import or export of our products; and criminal prosecution of us, our suppliers, or our employees. Any of these actions could significantly and negatively affect supply of our products. If any of these events occurs, our reputation could be harmed, we could be exposed to product liability claims and we could lose customers and experience reduced sales and increased costs.

***Legislative or regulatory reforms may have a material adverse effect on us.***

From time to time, legislation is drafted and introduced in Congress that could significantly change the statutory provisions governing the regulation of medical devices. In addition, the FDA may change its clearance and approval policies, adopt additional regulations, or revise existing regulations, or take other actions, which may prevent or delay marketing authorization of any future products under development or impact our ability to modify any products for which we have already obtained marketing authorizations on a timely basis. For example, on January 31, 2024, the FDA issued a final rule to amend the QSR, which establishes cGMP requirements for medical device manufacturers, to align more closely with the ISO standards. Specifically, this final rule, which the FDA expects to go into effect on February 2, 2026, replaces the QSR with the QMSR, and among other things, incorporates by reference the quality management system requirements of ISO 13485:2016. This new final rule, referred to as the QMSR, will take effect on February 2, 2026. Although the FDA has stated that the standards contained in ISO 13485:2016 are substantially similar to those set forth in the existing QSR, it is unclear the extent to which this final rule, once effective, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create market pressure that may negatively affect our business. It is unclear the extent to which any other legislative or regulatory proposal, if adopted, could impose additional or different regulatory requirements on us that could increase the costs of compliance or otherwise create competition that may negatively affect our business.

In addition, FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new statutes, regulations or revisions or reinterpretations of existing regulations may make it more difficult and costly to manufacture, market, or distribute our commercialized products, or may impose additional costs, lengthen marketing authorization review times, or make it more difficult

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to obtain marketing authorizations for any future products we develop. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may be subject to enforcement action and we may not achieve or sustain profitability.

In response to perceived increases in health care costs in recent years there have been and continue to be proposals by the federal government, state governments, regulators and third-party payors to control these costs and, more generally, to reform the U.S. health care system. Certain of these proposals could limit the prices we will be able to charge for our products or the amount of reimbursement available for our products and could limit the acceptance and availability of our products.

In March 2010, the federal government enacted the ACA. Among other provisions, the ACA established new value-based payment programs, increased funding of comparative effectiveness research, reduced hospital payments for avoidable readmissions and hospital acquired conditions, and pilot programs to evaluate alternative payment methodologies that promote care coordination (such as bundled physician and hospital payments). Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.

Other legislative changes have been proposed and adopted since the ACA was enacted. The Budget Control Act of 2011, among other things, reduced Medicare payments to providers, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032, with the exception of a temporary suspension from May 1, 2020 through March 31, 2022, unless additional Congressional action is taken.

There are additional state and federal health care reform measures under consideration that may be adopted in the future which could have a material adverse effect on our industry generally and on our customers. We cannot predict what health care programs and regulations will be ultimately implemented at the federal or state level, particularly given the recent change in administration, or the effect of any future legislation or regulation. However, any regulatory and legal changes that lower reimbursement for our products, increase taxes on our medical devices, increase cost containment pressures on us or others in the health care sector or reduce medical procedure volumes could adversely affect our business, financial condition, results of operations or cash flows.

***The misuse or off-label use of our systems may result in injuries that harm patients and lead to product liability suits, harm our reputation in the marketplace, or result in costly investigations, fines, or sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.***

Our systems that we currently commercialize, and any marketing authorization we may receive for future products, are, and will be, limited to specified indications for use. Our dedicated commercial leadership team and marketing personnel are trained to not promote our devices for uses outside of the FDA-authorized indications for use, known as "off-label uses." We cannot, however, prevent a healthcare professional from using our devices off-label, when in the healthcare professional's independent professional judgment he or she deems it appropriate. There may be increased risk of injury to patients if healthcare professionals attempt to use our devices off-label, which could harm our reputation in the marketplace among healthcare professionals and patients.

If the FDA determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance or imposition of an untitled letter, which is used for violators that do not necessitate a warning letter, injunction, seizure, civil fine, or criminal penalties. It is also possible that other federal or state enforcement authorities might take action under other regulatory authority, such as false advertising and consumer protection laws, or false claims laws, if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil, and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, and the curtailment of our operations.

In addition, healthcare professionals may misuse our products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our devices are misused

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or used with improper technique, we may become subject to costly litigation by our customers or their patients. As described above, product liability claims could divert management's attention from our core business, be expensive to defend, and result in sizeable damage awards against us that may not be covered by insurance, all of which would have a material adverse effect on our business, financial condition, results of operations, and prospects.

***Our implant systems and other future products may cause or contribute to adverse medical events or be subject to failures or malfunctions which we may be required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition, results of operations, and prospects. In addition, the discovery of serious safety issues, or a voluntarily or required recall, could have a negative impact on us.***

It is possible that there may be side effects and adverse events associated with the use of our implant systems or any future products we develop. We have experienced a modest increase in the number of direct patient complaints relative to the number of procedures performed using our systems. The FDA's medical device reporting regulations require us to assess reportability of adverse events that come to our attention and report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, it could cause or contribute to a death or serious injury. The timing of our obligation to report is triggered by the date we become aware of the adverse event as well as the nature of the event. We may fail to report adverse events of which we become aware within the prescribed timeframe. We may also fail to recognize that we have become aware of a reportable adverse event, especially if it is not reported to us as an adverse event or if it is an adverse event that is unexpected or removed in time from the use or implant of the system. The FDA may also disagree with our determinations that an event was not reportable. If we fail to comply with our reporting obligations, the FDA could take action, including warning letters, untitled letters, administrative actions, criminal prosecution, imposition of civil monetary penalties, revocation of our marketing authorizations, seizure of our implant systems, or delay in obtaining marketing authorizations for our future products.

The FDA has the authority to require the recall of commercialized products based on a finding that there is reasonable probability that the device could cause serious, adverse health consequences or death. We may also choose to voluntarily recall a product if any material deficiency is found. A government-mandated or voluntary recall by us could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing defects, labeling or design deficiencies, packaging defects, or other deficiencies or failures to comply with applicable regulations. Product defects or other errors may occur in the future.

Depending on the corrective action we take to redress a product's deficiencies or defects, the FDA may require, or we may decide, that we will need to obtain new marketing authorizations for the device before we may market or distribute the corrected device. Seeking such clearances or approvals may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We have and may in the future initiate voluntary withdrawals or corrections for our products that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, it could require us to report those actions as recalls and we may be subject to enforcement action. A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us, and negatively affect our sales. Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation, business, financial condition, results of operations, and prospects.

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***Disruptions at the FDA and other government agencies caused by, funding shortages, staffing limitations, or global health concerns could hinder their ability to hire, retain or deploy key leadership and other personnel, prevent new or modified products from being developed, review, approved or commercialized in a timely manner or at all, which could negatively impact our business.***

The ability of the FDA and foreign regulatory authorities to review and approve new products can be affected by a variety of factors, including government budget and funding levels, statutory, regulatory, and policy changes, the FDA's or foreign regulatory authorities' ability to hire and retain key personnel and accept the payment of user fees, and other events that may otherwise affect the FDA's or foreign regulatory authorities' ability to perform routine functions. Average review times at the FDA and foreign regulatory authorities have fluctuated in recent years as a result. In addition, government funding of other government agencies that fund research and development activities is subject to the political process, which is inherently fluid and unpredictable. Disruptions at the FDA and other agencies may also slow the time necessary for new drugs or modifications to approved drugs and biologics to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, in recent years, the U.S. government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical employees and stop critical activities. In addition, the current U.S. Presidential administration has issued certain policies and Executive Orders directed towards reducing the employee headcount and costs associated with U.S. administrative agencies, including the FDA, and it remains unclear the degree to which these efforts may limit or otherwise adversely affect the FDA's ability to conduct routine activities.

Separately, in response to the COVID-19 pandemic, the FDA postponed most inspections at domestic and foreign manufacturing facilities at various points. If a prolonged government shutdown occurs, or if renewed global health concerns, funding shortages or staffing limitations hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA or other such regulatory authorities to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

***We and the third parties with whom we work are subject to stringent and evolving U.S. and foreign laws, regulations, and rules, contractual obligations, industry standards, policies and other obligations related to data privacy and security. Our (or the third parties with whom we work) actual or perceived failures to comply with applicable data protection, privacy and security laws, regulations, standards and other requirements could adversely affect our business, results of operations and financial condition and lead to regulatory investigations or actions; litigation (including class action claims) and mass arbitration demands; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse business consequences.***

In the course of our operations, we may collect, use, store, disclose, transfer and otherwise process an increasing volume of personal information, including from our employees and third parties with whom we conduct business. We and our partners are or may become subject to federal, state and foreign data protection laws and regulations (*i.e*., laws and regulations that address data privacy and security). In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy laws and consumer protection laws and regulations (e.g., Section 5 of the FTC Act), that govern the collection, use, disclosure and protection of health-related and other personal information could apply to our operations or the operations of our partners. We may also be subject to U.S. federal rules, regulations and guidance concerning data security for medical devices, including guidance from the FDA.

For example, HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes specific requirements relating to the privacy, security, and transmission of individually identifiable protected health information. Furthermore, the Federal Trade Commission ("FTC") and many state Attorneys General continue to enforce federal and state consumer protection laws against companies for online collection, use, dissemination and security practices that appear to be unfair or deceptive. The FTC expects a company's data security measures to be reasonable and appropriate in light of the sensitivity and volume of consumer information it holds, the size and complexity of its business, and the cost of available tools to improve security and reduce vulnerabilities.

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The regulatory framework for data privacy and security worldwide is continuously evolving and developing and, as a result, interpretation and implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. Certain states have also adopted comparable privacy and security laws and regulations that govern the privacy, processing and protection of health-related and other personal information. Such laws and regulations will be subject to interpretation by various courts and other governmental authorities, thus creating potentially complex compliance issues for us and our future customers and strategic partners. For example, California enacted the California Consumer Privacy Act, as amended by the California Privacy Rights Act (collectively, the "CCPA"), which requires covered businesses that process the personal information of California residents to, among other things, (i) provide certain disclosures to California residents regarding the business's collection, use, and disclosure of their personal information; (ii) receive and respond to requests from California residents to access, delete, and correct their personal information, or to opt out of certain disclosures of their personal information; and (iii) enter into specific contractual provisions with service providers that process California resident personal information on the business's behalf. Washington State enacted the "My Health My Data Act," which broadly defines consumer health data, creates a private right of action to allow individuals to sue for violations of the law, imposes stringent consent requirements, and grants consumers certain rights with respect to their health data, including to request deletion of their information. Additional compliance investment and potential business process changes may be required. Similar laws have been passed in other states, and are continuing to be proposed at the state and federal level, reflecting a trend toward more stringent privacy legislation in the United States. The enactment of such laws could have potentially conflicting requirements that would make compliance challenging. In the event that we are subject to or affected by HIPAA, the CCPA or other domestic privacy and data protection laws, any liability from failure to comply with the requirements of these laws could adversely affect our financial condition.

As our operations and business grow, we may become subject to or affected by new or additional data protection laws and regulations and face increased scrutiny or attention from regulatory authorities. For example, in the EU, the European Union General Data Protection Regulation ("GDPR") imposes strict requirements for processing the personal data of individuals within the European Economic Area ("EEA"). Companies that must comply with the GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements and potential fines for noncompliance of up to €20 million or 4% of the annual global revenues of the noncompliant company, whichever is greater.

Further, Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In particular, the EEA and the United Kingdom ("UK") have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it generally believes are inadequate. Other jurisdictions may adopt or have already adopted similarly stringent data localization and cross-border data transfer laws.

Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses, the UK's International Data Transfer Agreement / Addendum, and the EU-U.S. Data Privacy Framework and the UK extension thereto (which allows for transfers to relevant U.S.-based organizations who self-certify compliance and participate in the EU-U.S. Data Privacy Framework), these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.

To the extent our business and operations expand to the EEA, the UK or other jurisdictions and there is no lawful manner for us to transfer personal data from such jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions (such as Europe) at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business. Additionally, companies that transfer personal data out of the EEA and the UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.

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In addition to government regulation, privacy advocates and industry groups have and may in the future propose self-regulatory standards from time to time. These and other industry standards may legally or contractually apply to us, or we may elect to comply with such standards. We expect that there will continue to be new proposed laws and regulations concerning data privacy and security, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. We make public statements about our use and disclosure of personal information through our privacy policies, information provided on our website and press statements. Although we endeavor to comply with our public statements and documentation, we may at times fail to do so or be alleged to have failed to do so. The publication of our privacy policies and other statements that provide promises and assurances about data privacy and security can subject us to potential government or legal action if they are found to be deceptive, unfair or misrepresentative of our actual practices. Any concerns about our data privacy and security practices, even if unfounded, could damage the reputation of our business and harm our business, financial condition and results of operations.

Although we work to comply with applicable laws, regulations and standards, our contractual obligations and other legal obligations, these requirements are evolving and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another or other legal obligations with which we must comply. This evolution creates uncertainty in our business, affects our ability to operate in certain jurisdictions or to collect, store, transfer use and share personal information, necessitates the acceptance of more onerous obligations in our contracts, results in liability or imposes additional costs on us. The cost of compliance with these laws, regulations and standards is high and is likely to increase in the future. Any failure or perceived failure by us or our employees, representatives, contractors, consultants, collaborators or other third parties to comply with such requirements or adequately address privacy and security concerns, even if unfounded, could result in additional cost and liability to us, damage our reputation and adversely affect our business and results of operations. In addition, if our practices are not consistent, or viewed as not consistent, with legal and regulatory requirements, including changes in laws, regulations and standards or new interpretations or applications of existing laws, regulations and standards, we may also become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, criminal or civil sanctions, all of which may harm our business, financial condition and results of operations.

**Risks Related to This Offering and Ownership of Our Common Stock**

***There may not be an active trading market for our common stock, which may cause shares of our common stock to trade at a discount from the initial public offering price and make it difficult to sell the shares of common stock you purchase.***

Prior to this offering, there has been no public market for our common stock. It is possible that after this offering, an active trading market will not develop or, if developed, that any market will not be sustained, which would make it difficult for you to sell your shares of common stock at an attractive price or at all. The lack of an active market may impair the value of your shares or your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable. The initial public offering price per share of common stock will be determined by agreement among us and the representatives of the underwriters and may not be indicative of the price at which shares of our common stock will trade in the public market, if any, after this offering. The market value of our common stock may decrease from the initial public offering price. Furthermore, an inactive market may also impair our ability to raise capital in the future by selling shares of our common stock.

***We are an "emerging growth company" and a "smaller reporting company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies and smaller reporting companies will make our common stock less attractive to investors.***

We are an "emerging growth company," as defined in the JOBS Act. We will remain an "emerging growth company" until the earliest to occur of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the last day of the fiscal year during which our total annual revenue equals or exceeds $1.235 billion (subject to adjustment for inflation);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the last day of the fiscal year following the fifth anniversary of this offering;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the date on which we are deemed to be a "large accelerated filer" under the Exchange Act.

As a result of our "emerging growth company" status, we may take advantage of exemptions from various reporting requirements that would otherwise be applicable to public companies including, but not limited to, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

We also are a "smaller reporting company," meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700.0 million and our annual revenue is less than $100.0 million during the most recently completed fiscal year. We may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million. If we are a smaller reporting company at the time we cease to be an emerging growth company, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our annual report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Investors may find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and the market price of our common stock may be adversely affected and more volatile.

***We will incur increased costs and become subject to additional regulations and requirements as a result of becoming a public company, which could lower our profits or make it more difficult to run our business.***

As a public company, we will incur significant legal, accounting, and other expenses that we have not incurred as a private company, including costs associated with public company reporting requirements. We have also incurred and will continue to incur costs associated with the Sarbanes-Oxley Act and related rules implemented by the SEC and the exchange on which our securities are listed. The expenses generally incurred by public companies for reporting and corporate governance purposes have been increasing. We expect these rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly, although we are currently unable to estimate these costs with any degree of certainty. These laws and regulations also could make it more difficult or costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, on our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions, other regulatory action, and potentially civil litigation.

***If we are unable to design, implement, and maintain effective internal control over financial reporting in the future, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock may decline.***

As a public company, we will be required to maintain internal control over financial reporting and to report any material weaknesses in such internal controls. In addition, beginning with our second annual report on Form 10-K, we will be required to furnish a report by management on the effectiveness of our internal control over financial reporting, pursuant to the rules and regulations of the SEC regarding compliance with Section 404 of the Sarbanes-Oxley Act. The process of designing, implementing and testing the internal control over financial reporting required to comply with this obligation is time consuming, costly and complicated. While we have not identified material weaknesses in the past, we may identify material weaknesses in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to

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accurately report our financial condition, results of operations, or cash flows. Further, if we identify one or more material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we or, if required, our auditors, are unable to assert that our internal control over financial reporting is effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decline, and we could also become subject to investigations by the stock exchange on which our common stock is listed, the SEC or other regulatory authorities, which could require additional financial and management resources. Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

***We do not intend to pay dividends in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation in the market price of our common stock.***

We have never declared or paid cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination related to dividend policy will be made at the discretion of our board of directors, subject to applicable laws, and will depend upon, among other factors, our results of operations, prospects, financial condition, contractual restrictions and capital requirements. In addition, our ability to pay cash dividends on our capital stock is limited by the terms of the Trinity Loan Agreement with Trinity Capital, and may be limited by the terms of any future debt or preferred securities we issue or any future credit facilities we enter into. Accordingly, investors must for the foreseeable future rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

***The market price of our common stock may be volatile, which could result in substantial losses for investors purchasing shares in this offering.***

Even if an active trading market develops, the market price of our common stock may be highly volatile and could be subject to wide fluctuations. The initial public offering price for our common stock will be determined through negotiations with the underwriters. This initial public offering price may differ from the market price of our common stock after the offering. As a result, you may not be able to sell your common stock at or above the initial public offering price. Some of the factors that may cause the market price of our common stock to fluctuate include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• delays or setbacks in the ongoing commercialization of our products and procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the success of existing or new competitive products or technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulatory or legal developments in the United States and other countries that we pursue expansion in;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments or disputes concerning patent applications, issued patents or other proprietary rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the recruitment or departure of key personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the commencement of litigation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• actual or anticipated changes in estimates as to financial condition and results of operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcement or expectation of additional financing efforts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• announcements by us or our competitors of significant business developments, acquisitions, new offerings, licenses, strategic partnerships, joint ventures or capital commitments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of pandemics epidemics, endemics and other public health emergencies on the performance of procedures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the impact of political instability, natural disasters, events of terrorism and or war, such as the ongoing conflict between Ukraine and Russia and in Israel, Gaza and surrounding areas, and the corresponding

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tensions created from such conflict between Russia, the United States and countries in Europe as well as other countries such as China, and broader conflicts in the Middle East;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• sales of our common stock by us, our insiders or other stockholders, or the anticipation of such sales, including if existing stockholders sell shares into the market when applicable "lock-up" periods end;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• expiration of market standoff or lock-up agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• variations between our actual operating results, or those of companies that are perceived to be similar to us, and the expectations of securities analysts, investors and the financial community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in estimates or recommendations by securities analysts, if any, that cover our stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• various macroeconomic events, including changes in inflation, interest rates and overall economic conditions and uncertainties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the structure of health care payment systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• market conditions in the medical device sector;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• changes in the anticipated future size and growth rate of our market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the seasonality of our business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an increase in the rate of returns of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• general economic, industry and market conditions, including economic recessions or slowdowns; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the other factors described in this "<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>" section.

In recent years, the stock market in general, and the market for medical device companies in particular, has experienced significant price and volume fluctuations that have often been unrelated or disproportionate to changes in the operating performance of the companies whose stock is experiencing those price and volume fluctuations. Further, the stock market in general has been highly volatile due to various macroeconomic events. Broad market and industry factors may seriously affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our stock shortly following this offering. Following periods of such volatility in the market price of a company's securities, securities class action litigation has often been brought against that company. Because of the potential volatility of our stock price, we may become the target of securities litigation in the future. Securities litigation could result in substantial costs and divert management's attention and resources from our business.

***If our operating and financial performance in any given period does not meet any guidance that we provide to the public, the market price of our common stock may decline.***

We may, but are not obligated to, provide public guidance on our expected operating and financial results for future periods. Any such guidance will be comprised of forward-looking statements subject to the risks and uncertainties described in this prospectus and in our other public filings and public statements. Our actual results may not always be in line with or exceed any guidance we have provided, especially in times of economic uncertainty. If actual circumstances differ from those in our assumptions, our operating and financial results could fall below our publicly announced guidance or the expectations of investors. If, in the future, our operating or financial results for a particular period do not meet any guidance we provide or the expectations of investment analysts or investors generally, or if we reduce our guidance for future periods, the market price of our common stock may decline. Even if we do issue public guidance, there can be no assurance that we will continue to do so in the future.

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***We will have broad discretion in the use of net proceeds to us from this offering and may not use them effectively.***

We will have broad discretion in the application of the net proceeds to us from this offering, including for any of the purposes described in "Use of Proceeds," and you will not have the opportunity as part of your investment decision to assess whether the net proceeds are being used appropriately. Because of the number and variability of factors that will determine our use of the net proceeds from this offering, their ultimate use may vary substantially from their currently intended use. If we do not use the net proceeds that we receive in this offering effectively, our business, financial condition, results of operations, and prospects could be harmed, and the market price of our common stock could decline. Pending their use, we may invest the net proceeds from this offering in short-term, investment-grade, interest-bearing securities such as money market accounts, certificates of deposit, commercial paper, and guaranteed obligations of the U.S. government that may not generate a high yield for our stockholders. These investments may not yield a favorable return to our investors.

***Investors in this offering will experience immediate and substantial dilution.***

The initial public offering price of our common stock is expected to be substantially higher than the pro forma as adjusted net tangible book value per share of our common stock. Therefore, if you purchase shares of our common stock in this offering, you will pay a price per share that substantially exceeds our pro forma as adjusted net tangible book value per share after this offering. Based on the initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, the midpoint of the price range set forth on the cover page of this prospectus, you will experience immediate dilution of $&nbsp;&nbsp;&nbsp;&nbsp; per share, representing the difference between our pro forma as adjusted net tangible book value per share after giving effect to this offering and the initial public offering price. In addition, purchasers of common stock in this offering will have contributed&nbsp;&nbsp;&nbsp;&nbsp; % of the aggregate price paid by all purchasers of our common stock but will own only approximately&nbsp;&nbsp;&nbsp;&nbsp; % of our total equity outstanding after this offering. Furthermore, if the underwriters exercise their over-allotment option, or outstanding options and warrants are exercised, you could experience further dilution. For a further description of the dilution that you will experience immediately after this offering, see the section titled "Dilution."

***Participation in this offering by our existing stockholders and/or their affiliated entities may reduce the public float for our common stock.***

To the extent certain of our existing stockholders and their affiliated entities participate in this offering, such purchases would reduce the non-affiliate public float of our shares, meaning the number of shares of our common stock that are not held by officers, directors, and controlling stockholders. A reduction in the public float could reduce the number of shares that are available to be traded at any given time, thereby adversely impacting the liquidity of our common stock and depressing the price at which you may be able to sell shares of common stock purchased in this offering. While certain of our existing stockholders and their affiliated entities have expressed interest in potentially participating in this offering, there are no assurances that they will participate in the offering to a material extent, or at all.

***Our principal stockholders and management own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.***

After this offering, our directors, officers, holders of more than 5% of our outstanding stock and their respective affiliates will beneficially own shares representing approximately&nbsp;&nbsp;&nbsp;&nbsp; % of our outstanding shares (assuming no exercise of the underwriters' over-allotment option and no purchases of shares in this offering by anyone of this group). As a result, these stockholders, if they act together, will be able to influence our management and affairs and all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change in control of our company and might affect the market price of our common stock.

***Sales of a substantial number of shares of our common stock in the public market could cause our stock price to fall.***

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, upon the expiration of the market standoff and lock-up agreements, the early release of these

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agreements or the perception in the market that the holders of a large number of shares of our common stock intend to sell shares, could reduce the market price of our common stock. After this offering, we expect that we will have &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock outstanding (assuming no exercise of the underwriters' over-allotment option). Of these shares, the&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares we are selling in this offering may be resold in the public market immediately, unless purchased by our affiliates. The remaining shares, or&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of our outstanding shares after this offering, are currently prohibited or otherwise restricted under securities laws, or lock-up agreements entered into by our directors, officers and substantially all of our stockholders with the underwriters. However, subject to applicable securities law restrictions, prohibitions and restrictions on the sale of these shares in the public market will be lifted beginning 180 days after the date of this prospectus. Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co. may release all or some portion of the shares subject to lock-up agreements at any time and for any reason.

All of the shares of common stock sold in this offering will be freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the "Securities Act"), except that any shares held by our affiliates, as that term is defined under Rule 144 of the Securities Act ("Rule 144"), including those purchased by our directors or officers pursuant to our directed share program, as described in "Underwriting—Directed Share Program," may be sold only in compliance with the limitations described in "Shares Eligible for Future Sale—Affiliate Resales of Restricted Securities."

In addition, shares issued upon the exercise of stock options outstanding under our equity incentive plans, or pursuant to future awards granted under those plans, will become available for sale in the public market to the extent permitted by the provisions of applicable vesting schedules, any applicable market standoff and lock-up agreements, and Rule 144 and Rule 701 under the Securities Act ("Rule 701"). See the section titled "Shares Eligible for Future Sale" for additional information.

In connection with this offering, we intend to file a registration statement on Form S-8 providing for the registration of all shares of our common stock that we may issue under our equity compensation plans. Once we register these shares, they can be freely sold in the public market upon issuance and once vested, subject to volume limitations applicable to affiliates and the lock-up agreements described in the section titled "Underwriting." If any of these additional shares are sold, or if it is perceived that they will be sold, in the public market, the market price of our common stock could decline.

***Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable and may lead to entrenchment of management.***

Our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect immediately prior to the consummation of this offering will contain provisions that could delay or prevent changes in control or changes in our management without the consent of our board of directors. These provisions will include the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the required approval of at least 66-2/3% of the shares entitled to vote to remove a director for cause, and the prohibition on removal of directors without cause;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquiror;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the ability of our board of directors to alter our amended and restated bylaws without obtaining stockholder approval;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the required approval of at least 66-2/3% of the shares entitled to vote to adopt, amend or repeal our amended and restated bylaws or repeal the provisions of our amended and restated certificate of incorporation regarding the election and removal of directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an exclusive forum provision providing that the Court of Chancery of the State of Delaware will be the exclusive forum for certain actions and proceedings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the requirement that a special meeting of stockholders may be called only by the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders' meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror's own slate of directors or otherwise attempting to obtain control of us.

We are also subject to the anti-takeover provisions contained in Section 203 of the General Corporation Law of the State of Delaware (the "Delaware General Corporation Law"). Under Section 203, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other exceptions, the board of directors has approved the transaction. For a description of our capital stock, see the section titled "Description of Capital Stock."

***Claims for indemnification by our directors, officers, and other employees or agents may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.***

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we will indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. In addition, as permitted by Section 145 of the Delaware General Corporation Law, our amended and restated bylaws to be effective immediately prior to the completion of this offering and our indemnification agreements that we have entered into with our directors, officers and certain other employees will provide that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will indemnify our directors and officers for serving us in those capacities or for serving other business enterprises at our request, to the fullest extent permitted by Delaware law. Delaware law provides that a corporation may indemnify such person if such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the registrant and, with respect to any criminal proceeding, had no reasonable cause to believe such person's conduct was unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may, in our discretion, indemnify employees and agents in those circumstances where indemnification is permitted by applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We are required to advance expenses, as incurred, to our directors and officers in connection with defending a proceeding, except that such directors or officers shall undertake to repay such advances if it is ultimately determined that such person is not entitled to indemnification.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We will not be obligated pursuant to our amended and restated bylaws to indemnify a person with respect to proceedings initiated by that person against us or our other indemnitees, except with respect to proceedings authorized by our board of directors or brought to enforce a right to indemnification.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The rights conferred in our amended and restated bylaws are not exclusive, and we are authorized to enter into indemnification agreements with our directors, officers, employees, and agents and to obtain insurance to indemnify such persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• We may not retroactively amend our amended and restated bylaws provisions to reduce our indemnification obligations to directors, officers, employees, and agents.

***Our current amended and restated certificate of incorporation provides, and our amended and restated certificate of incorporation will provide, that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between us and our stockholders and that the federal district courts shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees or the underwriters or any offering giving rise to such claim.***

**General Risk Factors**

***If we engage in acquisitions or strategic partnerships, it may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities, and subject us to other risks.***

From time to time, we may evaluate various acquisitions and strategic partnerships, including licensing or acquiring complementary offerings, intellectual property rights, technologies, or businesses. Any acquisition or strategic partnership may entail numerous risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• increased operating expenses and cash requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the assumption of additional indebtedness or contingent liabilities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• assimilation of operations, intellectual property, and products of an acquired company, including difficulties associated with integrating new personnel;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the diversion of our management's attention from our existing operations in pursuing such a strategic merger or acquisition;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• loss of key personnel and uncertainties in our ability to maintain key business relationships;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing products or future products and regulatory approvals; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.

In addition, if we undertake acquisitions or strategic partnerships, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses, and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition or partnership opportunities, and even if we do locate such opportunities, we may not be able to successfully bid for or obtain them due to competitive factors or lack of sufficient resources. This inability could impair our ability to grow or obtain access to technology or products that may be important to the development of our business.

***Unfavorable global and regional economic, political and health conditions could adversely affect our business, financial condition or results of operations.***

Our results of operations could be adversely affected by global or regional economic, political and health conditions. A global financial crisis or global or regional political and economic instability (including changes in inflation, interest rates and overall economic conditions and uncertainties), tariffs, wars, terrorism, civil unrest, pandemics, epidemics, endemics and other public health emergencies, and other unexpected events, such as supply chain constraints or disruptions, could cause extreme volatility, increase our costs and disrupt our business. Business disruptions could include, among others, disruptions to our commercial activities, including due to supply chain or distribution constraints or challenges, clinical enrollment, clinical site availability, patient accessibility and conduct of our clinical trials, as well as temporary closures of our facilities and the facilities of suppliers or contract manufacturers in our supply chain. For example, these macroeconomic factors could affect the ability of our current or potential future manufacturers, sole source or single source suppliers, licensors or licensees to remain in business, or otherwise manufacture or supply components, materials or services relevant to our systems. Any failure by any of them to remain in business could affect the manufacture of our systems or our ability to meet demand for our systems. In addition, if inflation or other factors were to significantly increase our business costs, we may be unable to pass through price increases to our customers. Interest rates and the ability to access credit markets could also adversely affect the ability of our customers to purchase our systems.

The imposition of tariffs and other orders or restrictions impacting trade could adversely impact our business, including by increasing or otherwise impacting the costs and expenses we incur in connection with our operations and supply chain, and by potentially increasing the price of our systems to purchasers. For example, certain of our suppliers import raw materials, including certain metals, from Canada. The actual impacts of any tariffs and other orders or restrictions are subject to a number of factors including the effective date and duration of such tariffs, orders and restrictions, the amount, scope and nature of such inputs, any countermeasures that the target countries may take and any mitigating actions that may become available.

In addition, during certain crises and events, patients may prioritize other items over certain or all of their treatments or delay their requisite shoulder care, which could have a negative impact on our commercial sales.

A severe or prolonged economic downturn, political disruption or adverse health conditions could result in a variety of risks to our business, including our ability to raise capital when needed on acceptable terms, if at all. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the political or economic climate and financial market conditions could adversely impact our business.

***We or the third parties we depend on may be adversely affected by natural disasters and other catastrophic events, and our business continuity and disaster recovery plans may not adequately protect us from a serious natural disaster or other catastrophic event. Any interruption in our operations or the operations of third parties who supply components or other materials for our products may have a material adverse effect on our business, financial condition, results of operations, and prospects.***

Severe weather, natural disasters and other catastrophic events, including pandemics or other public health crises, earthquakes, tsunamis, hurricanes, floods, fires, explosions, accidents, power outages, cyberattacks,

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telecommunications failures, mechanical failures, unscheduled downtimes, civil unrest, strikes, transportation interruptions, unpermitted discharges or releases of toxic or hazardous substances, other environmental risks, wars or other conflicts (including wars in Russia and Ukraine as well as the Middle East), sabotage, terrorist attacks, or other intentional acts of vandalism or misconduct could severely disrupt our operations, or the operations of third parties who manufacture or supply components or other materials for our products, and have a material adverse effect on our business, financial condition, results of operations, and prospects.

If a natural disaster or other catastrophic event occurs that prevents us or third-party suppliers or manufacturers from using all or a significant portion of our or their headquarters or other facilities, that damages critical infrastructure or that otherwise disrupts operations, it may be difficult or, in certain cases, impossible, for us to continue our business for a substantial period of time. For example, we are highly dependent on our corporate headquarters in Grand Rapids, Michigan which has approximately 7,000 square feet of warehouse, distribution and office space as well as a 3,000 square foot distribution facility in Modesto California that we leverage to distribute our implant systems in the Western United States. Any such natural disaster or catastrophic event that impacts either of these facilities could have a material adverse impact on our business, financial condition and results of operations. Moreover, the disaster recovery and business continuity plans we have in place currently are limited and are unlikely to prove adequate in the event of a serious disaster or similar catastrophic event. The potential impact of any disruption would depend on the nature and extent of the damage caused by a disaster. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which, particularly when taken together with our lack of earthquake insurance, could have a material adverse effect on our business, financial condition, results of operations, and prospects.

In addition, integral parties in our supply chain are similarly vulnerable to natural disasters or other sudden, unforeseen, and severe adverse events. If such an event were to affect our supply chain, it could have a material adverse effect on our business, financial condition, results of operations, and prospects.

***We are subject to risks from legal and arbitration proceedings that may prevent us from pursuing our business activities or require us to incur additional costs in defending against claims or paying damages.***

We may become subject to legal disputes and regulatory proceedings in connection with our business activities involving, among other things, product liability, product defects, intellectual property infringement, employment matters, and/or alleged violations of other applicable laws in various jurisdictions. We may not be insured against all potential damages that may arise out of any claims to which we may be party in the ordinary course of our business. A negative outcome of these proceedings may prevent us from pursuing certain activities and/or require us to incur additional costs in order to do so and pay damages. In addition, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company's securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management's attention and resources, which would harm our business, financial condition, results of operations and prospects. Additionally, the significant increase in the cost of directors' and officers' liability insurance may cause us to opt for lower overall policy limits or to forgo insurance that we may otherwise rely on to cover significant defense costs, settlements, and damages awarded to plaintiffs.

The outcome of pending or potential future legal and arbitration proceedings is difficult to predict with certainty. In the event of a negative outcome of any material legal or arbitration proceeding, whether based on a judgment or a settlement agreement, we could be obligated to make substantial payments, which could have a material adverse effect on our business, financial condition, results of operations, and prospects. In addition, the costs related to litigation and arbitration proceedings may be significant, and any legal or arbitration proceedings could have a material adverse effect on our business, financial condition, results of operations, and prospects.

***The requirements of being a public company may divert our management's attention from our growth strategies and other business concerns.***

As a public company, we will be subject to the reporting requirements of the Exchange Act and will be required to comply with the applicable requirements of the Sarbanes-Oxley Act and the Dodd- Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the New York Stock Exchange and other applicable

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securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming or costly and increase demand on our systems and resources. Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal controls over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal controls over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management's attention may be diverted from executing our growth strategies and managing other business concerns and, which could have a material adverse effect on our business, financial condition and results of operations. Although we intend to hire additional employees to comply with these requirements, we may need to hire even more employees in the future, which will increase our costs and expenses. Additionally, as a public company, it will be more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

***We will incur significant costs as a result of operating as a public company and our executive management team expects to devote substantial time to public company compliance programs.***

As a public company, we will incur significant legal, accounting and other expenses due to our compliance with regulations and disclosure obligations applicable to us, including compliance with the Sarbanes-Oxley Act, as well as rules implemented by the SEC and the New York Stock Exchange. Stockholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact, in ways we cannot currently anticipate, the manner in which we operate our business. Our executive management team and other personnel will devote a substantial amount of time to these compliance programs and monitoring of public company reporting obligations and as a result of the new corporate governance and executive compensation related rules, regulations and guidelines prompted by the Dodd-Frank Wall Street Reform and Consumer Protection Act, and further regulations and disclosure obligations expected in the future, we will likely need to devote additional time and costs to comply with such compliance programs and rules. These rules and regulations will cause us to incur significant legal and financial compliance costs and will make some activities more time-consuming and costly.

***If securities or industry analysts do not publish research or reports about our business, or if they issue an adverse or misleading opinion regarding our stock, our stock price and trading volume could decline.***

The trading market for our common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no or few securities or industry analysts commence coverage of us, the market price for our stock would be negatively impacted. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us issue an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our results of operations fail to meet the expectations of analysts, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

***Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.***

Upon the completion of this offering, we will become subject to the periodic reporting requirements of the Exchange Act. We must design our disclosure controls and procedures to reasonably assure that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures or internal controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

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These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. For example, our directors or executive officers could inadvertently fail to disclose a new relationship or arrangement, causing us to fail to make a required related party transaction disclosure. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

***Our insurance may not cover all potential losses or liabilities that may arise.***

We are not insured against all potential losses or liabilities that may arise, as insurance coverage may be unavailable, not cost-effective, or subject to significant limitations. For example, we are not insured against business interruptions suffered by third parties that we depend on, environmental liabilities or patent infringement, among other types of risks. Furthermore, no assurance can be given that an insurance carrier will not seek to cancel or deny coverage after a claim has occurred. If a loss or liability occurs that is not or not fully covered by insurance, we may be required to pay substantial amounts, which could adversely affect its cash position and results of operations.

***We are subject to U.S. anti-bribery, anti-corruption, and anti-money laundering laws, including the FCPA, as well as export control, customs laws, economic sanctions and other trade laws and regulations (collectively, the "Trade Laws"). We can face serious consequences for violations.***

As we grow our international presence and global operations, we will be increasingly exposed to trade and economic sanctions and other restrictions imposed by the governments of the United States and other applicable jurisdictions. Compliance with applicable regulatory requirements regarding the export of our products may create delays in the introduction of our products in international markets or, in some cases, prevent the export of our products to some countries altogether. Furthermore, U.S. export control laws and economic sanctions prohibit the provision of certain products and services to countries, governments, and persons targeted by U.S. sanctions.

We are also subject to anti-corruption laws, including the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. 201, the U.S. Travel Act, and other state and national anti-bribery laws in the countries in which we may conduct activities in the future. Anti-corruption laws are interpreted broadly and generally prohibit companies and their employees, agents and intermediaries from authorizing, promising, offering or providing, directly or indirectly, corrupt or improper payments or anything else of value to recipients in the public or private sector. The FCPA also requires public companies to make and keep books and records that accurately and fairly reflect the transactions of the corporation and to devise and maintain an adequate system of internal accounting controls. We can be held liable for the corrupt or illegal activities of our agents and intermediaries, even if we do not explicitly authorize or have actual knowledge of such activities.

Violations of Trade Laws can result in substantial criminal fines and civil penalties, imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud litigation, reputational harm and other consequences. Likewise, any investigation of potential violations of Trade Laws could also have an adverse impact on our reputation, our business, results of operations and financial condition.

We cannot assure you that our policies and procedures are or will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged and will not engage in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such conduct. Violations of the FCPA, Trade Laws, or other export control, anti-corruption, anti-money laundering and anti-terrorism laws or regulations may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, financial condition and results of operations.

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***We, along with our suppliers, are dependent on various information technology systems. If our information technology systems or those of third parties with whom we work or our data, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.***

We and our suppliers collect and maintain information in digital form that is necessary to conduct our business, and rely extensively on information technology systems, networks and services, including internet sites, data hosting and processing facilities and tools, physical security system and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided or used by third-parties or their vendors, and some of which may be stored outside of the United States, to the extent we expand our operations internationally. These systems include, but are not limited to, ordering and managing materials from suppliers, converting materials to finished products (suppliers), shipping products to customers, processing transactions, summarizing and reporting results of operations, complying with regulatory, legal or tax requirements, providing data security and other processes necessary to manage our business.

A significant breakdown, invasion, corruption, destruction or interruption of critical information technology systems or infrastructure, by our workforce, others with authorized access to our systems or unauthorized persons could negatively impact operations. The use of cloud-based computing creates opportunities for the unintentional dissemination or intentional destruction of confidential information stored in our or our third-party providers' systems, portable media or storage devices. Our internal computer systems and those of our contractors, consultants and collaborators have been and are vulnerable to damage from cyberattacks, "phishing" attacks, intentional or accidental actions or omissions to act that cause vulnerabilities, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.

Attacks upon information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives and expertise. Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work. Our information technology systems and those of our third-party service providers, strategic partners and other contractors or consultants are vulnerable to attack, damage and interruption from computer viruses and malware (e.g. ransomware), misconfigurations, "bugs" or other vulnerabilities, malicious code, natural disasters, terrorism, war, telecommunication and electrical failures, hacking, cyberattacks, phishing attacks and other social engineering schemes, employee theft or misuse, human error, fraud, denial or degradation of service attacks and sophisticated nation-state and nation-state-supported actors.

We have also outsourced elements of our information technology infrastructure, and as a result a number of third-party vendors may or could have access to our confidential information. If we or our third-party vendors were to experience a significant cybersecurity breach of our or their information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counter-parties and data subjects could be material. In addition, our remediation efforts may not be successful. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology and cybersecurity infrastructure, we could suffer significant business disruption, including transaction errors, supply chain or manufacturing interruptions, processing inefficiencies, data loss or the loss of or damage to intellectual property or other proprietary information. There can also be no assurance that our and our third-party service providers', strategic partners', contractors', consultants', Contract Research Organizations' and collaborators' cybersecurity risk management program and processes, including policies, controls or procedures, will be fully implemented, complied with or effective in protecting our systems, networks and confidential information. For example, a third-party software provider which we have engaged as part of our advanced implant systems was recently inspected by the FDA, which identified a single observation regarding inadequate validation of the software to address active vulnerability threats. While such a finding may not be material, if not properly remediated, it could affect our brand, business, financial condition, results of operations and prospects.

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We and certain of our service providers are from time to time subject to cyberattacks and security incidents. While we do not believe that we have experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs and our business operations, whether due to a loss, corruption or unauthorized disclosure of our trade secrets, personal information or other proprietary or sensitive information or other similar disruptions. We may also experience security breaches that may remain undetected for an extended period. If our systems are damaged or cease to function properly due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively compensate timely, we may suffer interruptions in our ability to manage operations, and would also be exposed to a risk of loss, including financial assets or litigation and potential liability, which could materially adversely affect our business, financial condition, results of operations and prospects.

We cannot assure you that any limitations of liability provisions in our contracts would be enforceable or adequate or would otherwise protect us from any liabilities or damages with respect to any particular claim relating to a security lapse or breach. While we maintain certain insurance coverage, including cyber insurance, our insurance may be insufficient or may not cover all liabilities incurred by such attacks. We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceeds available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results and reputation.

***Changes in tax laws or regulations or in their implementation or interpretation that are applied adversely to us or our customers may seriously harm our business.***

We are or may become subject to income and non-income taxes in the United States under federal, state and local jurisdictions and in certain foreign jurisdictions in which we may operate in the future. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could affect the tax treatment of any of our future domestic and foreign earnings. Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us, possibly on a retroactive basis.

***Our ability to use our net operating loss carryforwards and certain other tax attributes may be subject to limitation.***

As of December 31, 2024, we had U.S. federal net operating loss carryforwards of approximately $45.3 million, which may be available to offset future taxable income for U.S. income tax purposes. Under the Internal Revenue Code of 1986, as amended (the "Code"), our federal net operating losses generated in taxable years beginning after December 31, 2017 will not expire and may be carried forward indefinitely, but the deductibility of such federal net operating loss carryforwards in a taxable year is limited to 80% of current year taxable income (with certain adjustments). Our ability to utilize our federal net operating loss carryforwards and certain other tax attributes may be limited under Section 382 and 383 of the Code. The limitation applies if we experience an "ownership change," which is generally defined as a greater than 50 percentage point change (by value) in the ownership of our equity by certain stockholders over a rolling three-year period. The amount of the annual limitation is generally equal to the product of the applicable long-term tax exempt-rate (as published by the U.S. Internal Revenue Service (the "IRS") for the month in which the "ownership change" occurred) and the value of our outstanding stock immediately prior to the "ownership change." If we have a net unrealized built-in gain in our assets immediately prior to the "ownership change," the annual limitation may be increased as certain gains are, or are treated as, recognized during the five-year period beginning on the date of the "ownership change."

Similar provisions of state tax law may also apply to limit the use of any state net operating loss carryforwards. For example, California imposed limits on the usability of California state net operating losses to offset taxable income in tax years beginning on or after January 1, 2024 and before January 1, 2027. We do not know if this

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offering will give rise to an "ownership change," but even if we were to experience an "ownership change" due to this offering, our ability to use our net operating loss carryforwards and other tax attributes to offset our taxable income may not be significantly limited. However, we have undergone and may in the future undergo an "ownership change" due to transactions in our stock, which may be outside of our control. As a result, if we earn net taxable income, our ability to use our net operating loss carryforwards and other tax attributes to offset taxable income may be subject to limitations, which could potentially result in increased future tax liability to us. We cannot predict whether any future "ownership change" would result in a significant limitation on our ability to use our net operating loss carryforwards and other tax attributes to offset our taxable income and adversely affect our future cash flows. If not utilized, a portion of our net operating loss carryforwards may expire.

***The increasing use of social media platforms presents new risks and challenges.***

Social media is increasingly being used to communicate about our systems and technologies, and we intend to utilize appropriate social media in connection with the commercialization of our advanced implant systems. Social media practices in the medical device industry continue to evolve and regulations and regulatory guidance relating to such use are evolving and not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable to our business, resulting in potential regulatory actions against us, along with the potential for litigation. In addition, there is a risk of inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us or our systems on any social networking website. If any of these events were to occur or we otherwise fail to comply with any applicable regulations, we could incur liability, face restrictive regulatory actions, or incur other harm to our business such as reputational damage.

***We could be subject to securities class action litigation.***

In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities. This risk is especially relevant for us because biotechnology and biopharmaceutical companies have experienced significant stock price volatility in recent years. If we face such litigation, even if ultimately decided in our favor, it could result in substantial costs and a diversion of our management's attention and resources, which could harm our business.

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**SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This prospectus contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this prospectus, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management, and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by words such as "may," "will," "shall," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential," "goal," "objective," "seeks," or "continue" or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this prospectus include, but are not limited to, statements about:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the expected use of our implant systems, preoperative planning technology and instrument systems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the expected growth of our business and our organization;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding the potential market size and size of the potential patient populations for our systems and any future products, if approved for commercial use;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expected uses of the net proceeds from this offering and our existing cash, cash equivalents and marketable securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding government and third-party payor coverage and reimbursement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to retain and recruit key personnel, including the continued development of a sales and marketing infrastructure and surgeon-to-surgeon collaboration;&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain an adequate supply of finished goods and components for our implant systems from our third-party suppliers, most of whom are single-source suppliers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our plans and expected timeline related to our implant systems, the identification and development of planned, new or improved products, and our expansion into additional indications or adjacent areas in shoulder surgical care and/or new geographic markets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain, maintain and expand regulatory clearances for our implant systems and technologies and any new products we create;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to maintain existing, and establish new, collaborations, licensing or other arrangements and the financial terms of any such agreements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to obtain and maintain intellectual property protection;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• potential claims relating to our intellectual property and third-party intellectual property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our compliance with extensive requirements and government laws, rules and regulations in the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our future financial performance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our expectations regarding the time during which we will be an emerging growth company under the JOBS Act; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• developments and projections relating to our competitors or our industry.

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We caution you that the foregoing list does not contain all of the forward-looking statements made in this prospectus.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this prospectus primarily on our current expectations, estimates, forecasts, and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. Although we believe that we have a reasonable basis for each forward-looking statement contained in this prospectus, we cannot guarantee that the future results, levels of activity, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled "Risk Factors" and elsewhere in this prospectus. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this prospectus. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this prospectus relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this prospectus to reflect events or circumstances after the date of this prospectus or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this prospectus, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.

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**USE OF PROCEEDS**

We estimate that the net proceeds from this offering will be approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million (or approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million if the underwriters exercise their over-allotment option in full), based on an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Each $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of our common stock, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the net proceeds to us from this offering by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease) the net proceeds to us from this offering by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of our common stock, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to obtain capital to support our operations, to create a public market for our common stock and to facilitate our future access to the public equity markets. We currently intend to use the net proceeds from this offering as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately $ million to scale up our commercial organization through the hiring of additional sales representatives and expansion of our commercial leadership team, as well as to invest in additional instrument sets to support volume growth and geographic expansion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approximately $ million to fund the research and development of continued general innovation in our implant systems; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the remainder for working capital and other general corporate purposes.

We may also use a portion of the proceeds to acquire complementary businesses, products, services, or technologies. We periodically evaluate strategic opportunities; however, we have no current understandings or commitments to enter into any such acquisitions or make any such investments.

Based on our current operating plan, we believe that the estimated net proceeds from this offering, together with the expected cash generated from the sale of our systems, our existing cash, cash equivalents and marketable securities and amounts under our Trinity Loan Agreement, will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months.

This expected use of the net proceeds from this offering represents our intentions based on our current plans and business conditions, which could change in the future as our plans and business conditions evolve. We cannot predict with certainty all of the particular uses for the proceeds of this offering or the amounts that we will actually spend on the uses set forth above. Accordingly, our management will have broad discretion in applying the net proceeds from this offering. The timing and amount of our actual expenditures will be based on many factors, including cash flows from operations and the anticipated growth of our business. Pending their use, we intend to invest the net proceeds from this offering in a variety of capital-preservation investments, including government securities and money market funds.

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**DIVIDEND POLICY**

We have never declared or paid cash dividends on our capital stock. We currently intend to retain all available funds and any future earnings, if any, to fund the development and expansion of our business, and we do not anticipate paying any cash dividends in the foreseeable future. The terms of our Trinity Loan Agreement also limit our ability to pay dividends, and we may enter into additional credit agreements or other borrowing arrangements in the future that may restrict our ability to declare or pay cash dividends on our capital stock. Any future determinations regarding the declaration and payment of dividends, if any, will be at the discretion of our board of directors, subject to applicable law, and will depend upon then-existing conditions, including our financial condition, results of operations, contractual restrictions, general business conditions, capital requirements, and other factors our board of directors may deem relevant.

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**CAPITALIZATION**

The following table sets forth our cash, cash equivalents and marketable securities, and our capitalization as of March 31, 2025:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on an actual basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a pro forma basis, to reflect: (i) the receipt of approximately $40.1 million in aggregate gross proceeds from the issuance and sale of our Series E convertible preferred stock in March and June 2025, (ii) the conversion of all outstanding shares of our convertible preferred stock (including 29,319,143 shares of our Series E convertible preferred stock issued in June 2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock, (iii) the Warrant Conversion and the related reclassification of warrant liability to stockholders' equity, and (iv) the filing and effectiveness of our amended and restated certificate of incorporation, which will become effective immediately prior to the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• on a pro forma as adjusted basis, giving effect to the pro forma adjustments discussed above, and our receipt of estimated net proceeds from the issuance and sale of shares of common stock in this offering at an assumed initial offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

You should read this table together with the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes included elsewhere in this prospectus. The pro forma as adjusted information below is illustrative only and our capitalization following the completion of this offering will depend on the actual initial public offering price and other terms of this offering determined at pricing.

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| | | | |
|:---|:---|:---|:---|
| | **As of March 31, 2025** | **As of March 31, 2025** | **As of March 31, 2025** |
| | **Actual** | **Pro Forma** | **Pro Forma**<br>**as Adjusted**<sup>(1)</sup> |
| | **(unaudited)** | **(unaudited)** | **(unaudited)** |
| | **(in thousands, except share and per share data)** | **(in thousands, except share and per share data)** | **(in thousands, except share and per share data)** |
| Cash, cash equivalents and marketable securities | $27564 | $ | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  |
| Long-term debt | $14721 | $ | $ |
| Warrant liabilities |  |  |  |
| Convertible preferred stock, par value $0.001 per share; 238,447,976 shares authorized, 205,759,356 shares issued and outstanding, actual; no shares authorized, issued or outstanding, pro forma and pro forma as adjusted | $94147 | $— | $— |
| Stockholders' deficit: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock, par value $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share; no shares authorized, issued and outstanding, actual;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares authorized, no shares issued or outstanding, pro forma and pro forma as adjusted |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, par value $0.001 per share; 280,986,575 shares authorized, 1,961,142 shares issued and outstanding, actual;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares authorized and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares issued and outstanding, pro forma;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares authorized and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares issued and outstanding, pro forma as adjusted | 1 |  |  |
| Additional paid-in capital | 2307 |  |  |
| Accumulated deficit | (61703) |  |  |
| Total stockholders' (deficit) equity  | (59314) |  |  |
| Total capitalization | $49554 | $ | $ |

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__________________

(1)Each $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of our common stock, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease), as applicable, each of our pro forma as adjusted cash, cash equivalents and marketable securities, additional paid-in-capital, total stockholders' equity, and total capitalization by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each increase (decrease) of 1.0 million shares in the number of shares of common stock offered by us would increase (decrease), each of our pro forma as adjusted cash, cash equivalents and marketable securities, additional paid-in-capital, total stockholders' equity, and total capitalization by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of our common stock, which is the midpoint of the price range set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise their over-allotment option in full, our pro forma as adjusted cash and cash equivalents, additional paid-in capital, total stockholders' deficit, and total capitalization, and shares of common stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 would be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares, respectively.

The information in the table above excludes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options under our Stock Option Plan as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options granted subsequent to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 under our Stock Option Plan, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of common stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of warrants to purchase shares of our Series B convertible preferred stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of our Series D convertible preferred stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which will convert into a warrant to purchase common stock immediately prior to the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under our equity compensation plans, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under the 2025 Plan, which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part (which number includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock to be granted pursuant to our 2025 Plan, based upon an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under the ESPP, which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part.

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**DILUTION**

If you purchase shares of our common stock in this offering, your ownership interest will be immediately and substantially diluted to the extent of the difference between the initial public offering price per share of our common stock and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.

As of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, our historical net tangible book value (deficit) was $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of our common stock, based on &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issued and outstanding as of such date. Our historical net tangible book value (deficit) per share represents our total tangible assets less total liabilities and convertible preferred stock, divided by the aggregate number of shares of our common stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025.

Our pro forma net tangible book value as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 was $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share. Pro forma net tangible book value per share represents total tangible assets less total liabilities, after giving effect to: (i) the receipt of approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million in aggregate gross proceeds from the issuance and sale of our Series E convertible preferred stock in&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2025, (ii) the conversion of all outstanding shares of our convertible preferred stock (including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our Series E convertible preferred stock issued in&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock, and (iii) the Warrant Conversion and the related reclassification of warrant liability to stockholders' equity. Pro forma net tangible book value per share represents our pro forma net tangible book value divided by the total number of shares outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025, after giving effect to the pro forma adjustments described above.

After giving further effect to the sale by us of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of our common stock in this offering at an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 would have been $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, or $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and an immediate dilution in pro forma net tangible book value to new investors of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share.

We determine dilution by subtracting the pro forma as adjusted net tangible book value per share after this offering from the amount of cash that a new investor paid for a share of common stock. The following table illustrates this dilution on a per share basis:

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| | |
|:---|:---|
| Assumed initial public offering price per share | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  |
| &nbsp;&nbsp;&nbsp;&nbsp;Historical net tangible book value (deficit) per share as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 | $ |
| &nbsp;&nbsp;&nbsp;&nbsp;Pro forma increase in historical net tangible book value per share as of , 2025 attributable to the pro forma adjustments described above |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Pro forma net tangible book value per share as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Increase in pro forma net tangible book value per share attributable to new investors participating in this offering |  |
| Pro forma as adjusted net tangible book value per share after this offering |  |
| Dilution per share to new investors participating in this offering | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;  |

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The dilution information discussed above is illustrative only and may change based on the actual initial public offering price, the number of shares we sell, and other terms of this offering that will be determined at pricing. Each $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value per share after this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and the dilution in pro forma per share to investors participating in this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. Each 1.0 million share increase in the number of shares offered by us

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would increase our pro forma as adjusted net tangible book value per share after this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and decrease the dilution in pro forma as adjusted net tangible book value per share to investors participating in this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, and each 1.0 million share decrease in the number of shares offered by us would decrease our pro forma as adjusted net tangible book value per share after this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share and increase the dilution in pro forma as adjusted net tangible book value per share to investors participating in this offering by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, in each case assuming the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share remains the same, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

If the underwriters exercise in full their over-allotment option, the pro forma as adjusted net tangible book value (deficit) per share of our common stock after this offering would be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, and the dilution in pro forma as adjusted net tangible book value (deficit) per share to investors participating in this offering would be $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share of our common stock, assuming the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

The following table summarizes, as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, on a pro forma as adjusted basis as described above, the number of shares of our common stock, the total consideration and the average price per share (i) paid to us by existing stockholders and (ii) to be paid by new investors acquiring our common stock in this offering at an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, the midpoint of the price range set forth on the cover page of this prospectus, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. As the table below shows, investors participating in this offering will pay an average price per share substantially higher than our existing stockholders paid.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Shares Purchased** | **Shares Purchased** | **Total Consideration**  | **Average**<br>**Price Per**<br>**Share**  |
| | **Number**  | **Percent**  | **Percent**  | **Average**<br>**Price Per**<br>**Share**  |
| Existing stockholders before this offering<sup>(1)</sup> |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| New investors participating in this offering |  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| &nbsp;&nbsp;&nbsp;&nbsp;Total |  | 100.0% | $100.0% |  |

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__________________

(1)The presentation in this table regarding ownership by existing stockholders does not give effect to any purchases that existing stockholders may make through our directed share program or otherwise purchase in this offering.

Each $1.00 increase (decrease) in the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, assuming that the number of shares of common stock offered by us, as set forth on the cover page of this prospectus, remains the same, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each 1.0 million share increase (decrease) in the number of shares offered by us would increase (decrease) the total consideration paid by new investors and total consideration paid by all stockholders by $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;million, assuming the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share of common stock remains the same, before deducting estimated underwriting discounts and commissions.

Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters' over-allotment option and excludes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options under our Stock Option Plan as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of outstanding stock options granted subsequent to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 under our Stock Option Plan, with a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of common stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;, 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp; per share;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of warrants to purchase shares of our Series B convertible preferred stock outstanding as of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp; per share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock issuable upon the exercise of a warrant to purchase shares of our Series D convertible preferred stock outstanding as of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025, with an exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which will convert into a warrant to purchase common stock immediately prior to the completion of this offering; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under our equity compensation plans, consisting of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock to be reserved for future issuance under the 2025 Plan, which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part (which number includes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock to be granted pursuant to our 2025 Plan, based upon an assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the price range set forth on the cover page of this prospectus); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock reserved for future issuance under the ESPP, which will become effective upon the effectiveness of the registration statement of which this prospectus forms a part.

We may choose to raise additional capital through the sale of equity or convertible debt securities due to market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. To the extent that any outstanding warrants or options are exercised, new options or other equity awards are issued under our equity incentive plans, or we issue additional shares or convertible securities in the future, there will be further dilution to new investors participating in this offering.

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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*The following discussion should be read in conjunction with the section titled "<u>[Summary Financial Data](#i59180bdb0f1c4bbb8d8197dc900517b5_298)</u>" and our financial statements and the related notes included elsewhere in this prospectus. In addition to historical information, this discussion contains forward-looking statements that involve risks, uncertainties and assumptions that could cause actual results to differ materially from management's expectations. See the section titled "<u>[Special Note Regarding Forward-Looking Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_357)</u>." Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section titled "<u>[Risk Factors](#i59180bdb0f1c4bbb8d8197dc900517b5_323)</u>." Our historical results are not necessarily indicative of the results that may be expected for any period in the future. We are not undertaking any obligation to update any forward-looking statements or other statements we may make in the following discussion or elsewhere in this prospectus even though these statements may be affected by events or circumstances occurring after the forward-looking statements or other statements were made.* 

**Overview**

We are a commercial-stage medical technology company exclusively focused on transforming the shoulder surgical care market. We currently offer advanced implant systems for shoulder arthroplasty. These systems are a core element of our ecosystem, which we designed to improve core components of shoulder surgical care – preoperative planning, implant design and procedural efficiency – to benefit each stakeholder in the care chain. Our ecosystem is also comprised of enabling technologies, efficient instrument systems, specialized support and surgeon-to-surgeon collaboration. Together, these elements seek to address the long-standing clinical and operational challenges in the shoulder surgical care market by delivering predictable outcomes, procedural simplicity, and efficiency across all sites of care. We believe our exclusive focus on shoulder surgical care, combined with a highly specialized commercial organization and strong clinical data, positions us well to capture significant share in this large, growing market.

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty, and we developed our ecosystem with an approach to innovation that prioritizes ease of use, flexibility, predictability of outcomes and site of care efficiency, attributes we believe are critical to win in this market. While our primary commercial focus to date has been within the United States, we believe the international shoulder surgical care market represents a compelling opportunity for long-term growth. We plan to strategically pursue entry into certain international markets over time.

We view ourselves as specialists serving specialists, having purposefully built our commercial organization around the unique needs of shoulder surgeons. Our commercial organization is comprised of three key components: (i) a dedicated commercial leadership team, (ii) a Customer Experience and Medical Education team and (iii) a network of independent distributors. These key components work in tandem to form a commercial flywheel that is designed to build and reinforce relationships with surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention. Our commercial organization is strategically focused on surgeons in hospital and ASC settings, with a particular focus on the high-volume surgeons who perform the vast majority of shoulder arthroplasty procedures each year.

We utilize third-party manufacturing and supply providers to manufacture our implants. We believe this outsourcing strategy provides the expertise and capacity required to effectively and efficiently scale production based on demand, and helps to ensure low-cost production and a capital efficient business model.

We have experienced significant growth in recent years, primarily driven by growth in our net revenue from the sale of our advanced implant systems sold. We generated net revenue of $31.6 million, with a gross margin of 77.0% and net loss of $15.6 million for the year ended December 31, 2024, compared to net revenue of $19.3 million, with a gross margin of 79.2% and net loss of $12.7 million for the year ended December 31, 2023. The Adjusted EBITDA loss increased from $8.7 million for the year ended December 31, 2023 to $11.4 million for the year ended December 31, 2024. We generated net revenue of $10.1 million, with a gross margin of 76.9% and net loss of $4.7 million for the three months ended March 31, 2025, compared to net revenue of $7.2 million, with a gross margin of 76.8% and net loss of $3.6 million for the three months ended March 31, 2024. The Adjusted

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EBITDA loss increased to $3.5 million for the three months ended March 31, 2025 from $2.6 million for the three months ended March 31, 2024. Adjusted EBITDA is not a financial measure under GAAP. See the subsection titled "—Non-GAAP Financial Measures" below for an explanation of how we compute this non-GAAP financial measure and for the reconciliation to the most directly comparable GAAP financial measure.

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $27.6 million. As of March 31, 2025, we had $15.0 million of principal outstanding under our Trinity Loan Agreement and an accumulated deficit of $61.7 million. To date, our primary sources of capital have been from net revenue received from the sale of our implant systems, proceeds from private placements of our convertible preferred stock and debt financing arrangements. Since inception, we have raised a total of $114.6 million in net proceeds from private placements of our convertible preferred stock.

**Key Business Metrics**

We regularly review a number of operating and financial metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate our business plan and make strategic decisions. We believe that the number of implant systems sold is a useful indicator of our ability to drive demand for our implant systems, generate net revenue and expand our business. The following table sets forth the number of implant systems sold in each of the three-month periods indicated:

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **Mar. 31,**<br>**2023** | **June 30,**<br>**2023** | **Sept. 30,**<br>**2023** | **Dec. 31,**<br>**2023** | **Mar. 31,**<br>**2024** | **June 30,**<br>**2024** | **Sept. 30,**<br>**2024** | **Dec. 31,**<br>**2024** | **Mar. 31,**<br>**2025** |
| Implant systems sold | 559 | 564 | 618 | 943 | 971 | 1121 | 1037 | 1220 | 1443 |

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While we believe that the number of implant systems sold is a useful indicator and is helpful in tracking the progress of our current business, we anticipate this metric may be substituted for additional or different metrics as our business continues to grows and scale.

**Key Factors Affecting Our Results of Operations**

We believe the following important factors have impacted and will continue to impact our results of operations for the foreseeable future. While these factors may present significant opportunities for us, they also pose risks and challenges that we must address, as well as those described in the section titled "Risk Factors."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Market awareness and adoption.*** The growth of our business depends on our ability to generate broader awareness of our ecosystem in an effort to drive adoption by new surgeons and to increase utilization by existing surgeons. To drive adoption, our commercial organization is strategically focused on surgeons in hospital and ASC settings, and leverages our internal business intelligence platform to appropriately target surgeons in the shoulder surgical care market. The organization uses key touchpoints, surgeon support and surgeon education initiatives to deliver high quality services and information to surgeons. We are also focused on supporting surgeons that already use our implant systems in order to further increase utilization. We intend to continue scaling our commercial organization to further drive awareness, adoption and demand. Over time, we expect to further expand and utilize our external network of independent distributors. In the future, we may increase our international presence and any such expansion may adversely affect our gross margin and results of operations. Our financial performance will be significantly impacted by the extent to which we can increase awareness of our ecosystem, as well as the timing and rate of adoption of our implant systems by key stakeholders in the shoulder surgical care market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Increasing importance of outpatient and ASC settings.*** While our ecosystem provides advantages across all shoulder surgical care settings, we believe we are particularly well positioned to address the increasing importance of outpatient and ASC settings. The number of procedures performed in outpatient and ASC settings has increased over time due to both the transition of such procedures from the hospital setting, as well as from a general increase in the number of total procedures performed, due in part to the access and availability of these settings. We generally derive a similar amount of net revenue from procedures whether

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they are performed in a hospital or an ASC. As a result, we believe outpatient and ASC settings represent an important and growing opportunity to drive demand and net revenue. Approximately 30% of procedures performed with our implant systems during the month ended December 31, 2024 were performed in ASCs, as compared to approximately 10% during the month ended December 31, 2023. While we currently generate the majority of our net revenue from procedures performed in hospitals, we expect to continue to focus our efforts on serving the outpatient and ASC settings in order to capture further market growth and penetration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Continued investments in product development, innovation and growth.*** We expect to continue to focus on long-term revenue growth through investments in our ecosystem and expansion of our operations. In research and development, we continually invest in improving our technologies, developing new products and further expanding our cleared indications. For example, we began using ProVoyance in 2021 and are actively developing a fracture-specific system, a revision solution and implants tailored for patients with metal-hypersensitivity. We also believe our ecosystem can be further expanded to address adjacent markets, such as sports medicine and trauma. We anticipate we will continue to invest significantly in product development, including with respect to our supporting technologies, in order to further bolster our ecosystem. While research and development are time consuming and costly and therefore negatively impact our results of operations in the near term, we believe expanding into new areas, implementing product improvements and continuing to demonstrate the efficacy, safety and cost effectiveness of our products through clinical data and surgeon education are all critical to increasing the adoption of our implant systems and to the success of our business over the long term. As we expand our operations in line with our anticipated growth, we will be required to maintain sufficient levels of inventory and instrumentation to meet our estimated demand, which we expect will increase expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Reimbursement and coverage.*** Healthcare providers generally rely on third-party payors, including federal Medicare, state Medicaid and private health insurance plans, to cover and reimburse all or part of the cost of our implant systems. As a result, demand for our implant systems depends in large part on the availability of reimbursement from such payors and the rates that such payors reimburse for procedures using our implant systems, which can vary due to geographic location, nature of facility in which the procedure is performed and other factors. While we benefit from established reimbursement practice and codes applicable to partial and total shoulder arthroplasty, we also work with payors to ensure positive coverage decisions and payments rates in outpatient settings. Effective as of January 1, 2024, CMS added total shoulder arthroplasty to the ASC covered procedures list, which allows procedures that use our implant systems to be performed at ASCs and be reimbursed by Medicare. We believe this decision helped to improve demand from ASCs and supported improved payment rates in outpatient settings for the year ended December 31, 2024, which had a positive impact on net revenue during the period. We expect this trend to continue and further support our growth in outpatient settings, such as ASCs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ***Seasonality.*** We have experienced and expect to continue to experience seasonality in our business. While we have experienced significant growth across quarters, we expect that future demand for our advanced implant systems will typically be lower in the months in and surrounding the third calendar quarter, as is common across our industry, as a result of summer seasonality associated with warmer weather and its corresponding impact on individual lifestyles.

**Non-GAAP Financial Measures**

In addition to our results and measures of performance determined in accordance with U.S. GAAP, we believe that non-GAAP financial measures can be useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions. We use utilize and present Adjusted EBITDA and Adjusted EBITDA margin for these purposes. We define Adjusted EBITDA as net loss before interest expense, net, income tax expense, depreciation and amortization, stock-based compensation expense and loss on extinguishment of convertible promissory notes. Loss on extinguishment of convertible promissory notes relates to the extinguishment of derivative liability in the year ended December 31, 2023 as a result of the conversion of our then-outstanding convertible promissory notes. Adjusted EBITDA margin is calculated as Adjusted EBITDA as a percentage of net revenue.

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We believe that Adjusted EBITDA, together with a reconciliation to net loss, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, results of operations, or outlook. However, Adjusted EBITDA has limitations as an analytical tool, and you should not consider this measure in isolation or as a substitute for analysis of our financial results as reported under U.S. GAAP. Some of these potential limitations include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• other companies, including companies in our industry which have similar business arrangements, may report Adjusted EBITDA, or similarly titled measures but calculate them differently, which reduces their usefulness as comparative measures;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• although depreciation and amortization expenses are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditures for such replacements or for new capital expenditure requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA also does not reflect changes in, or cash requirements for, our working capital needs or the potentially dilutive impact of stock-based compensation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on existing or future debt that we may incur.

Because of these and other limitations, you should consider Adjusted EBITDA only as supplemental to other GAAP-based financial measures.

The following table presents a reconciliation of Adjusted EBITDA to the most comparable GAAP financial measure, net loss, for each of the periods indicated:

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** |
| | **2025** | **2024** | **2024** | **2023** |
| | **(unaudited)** | **(unaudited)** | | |
| | **(in thousands)** | **(in thousands)** | **(in thousands)** | **(in thousands)** |
| Net loss | $(4662) | $(3600) | $(15619) | $(12655) |
| Interest expense, net | 367 | 317 | 1316 | 761 |
| Income tax expense |  |  |  |  |
| Depreciation and amortization expense | 668 | 498 | 2196 | 1641 |
| Stock-based compensation expense | 127 | 168 | 754 | 451 |
| Loss on extinguishment of convertible promissory notes |  |  |  | 1127 |
| Adjusted EBITDA | $(3500) | $(2617) | $(11353) | $(8675) |
| Net revenue | $10132 | $7184 | $31623 | $19274 |
| Net loss margin | (46.0)% | (50.1)% | (49.4)% | (65.7)% |
| Adjusted EBITDA margin | (34.5)% | (36.4)% | (35.9)% | (45.0)% |

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**Components of Our Results of Operations**

***Net Revenue***

We currently derive our net revenue from the sale of our anatomic and reverse total shoulder arthroplasty implant systems, which generally consist of our InSet Glenoid and humeral stem products. We sell our implants to hospitals, outpatient centers and ASCs in the United States through dedicated commercial leadership team and a network of external independent distributors. Net revenue is recognized when the performance obligation to deliver these implant systems to our customers is satisfied and transfer control of the implants to our customers, which is generally when we have received a purchase order and appropriate notification that the procedure has been used or implanted. Revenue is recognized in the amount of the consideration received net of any sales taxes that we expect to collect from customers. We also record shipping and handling costs as revenue. Our average sales price for our

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implant systems was $7,271 and $7,181 for the years ended December 31, 2024 and 2023, respectively. Our average sales price for our implant systems was $7,022 and $7,398 for the three months ended March 31, 2025 and 2024, respectively. No single customer accounted for more than 10% of our net revenue during the years ended December 31, 2024 and 2023 and the three months ended March 31, 2025 and 2024. We expect our net revenue to increase for the foreseeable future as we expand our commercial organization, add new customers, expand our sales territories, introduce new products, as existing customers perform more procedures using our systems and as we generally expand awareness of our systems with new and existing customers. While industry trends have resulted in increased downward pricing pressure on medical services and products, we have not experienced a material impact on our net revenue to date; however, we cannot assure you that our net revenue will not be impacted in the future by these industry trends. Our net revenue may fluctuate from quarter to quarter due to a variety of factors, such as the size and success of our dedicated commercial leadership team, the number of hospitals and physicians who are aware of and use our systems and seasonality.

***Cost of Goods Sold, Gross Profit and Gross Margin***

*Cost of Goods Sold*

Cost of goods sold consists primarily of the cost of components, packaging and sterilization, and obsolete inventory adjustments. Our systems are manufactured to our specifications primarily by third-party suppliers in the United States and are generally ordered on a purchase order basis. Cost of goods sold is recognized at the time the related revenue is recognized. Prior to use in surgery, the cost of our products is recorded as inventories, net of obsolescence reserve in our balance sheets. We expect cost of goods sold to increase as our net revenue increases and more of our implant systems are sold.

*Gross Profit and Gross Margin*

Gross profit is calculated as net revenue less cost of goods sold. We calculate gross margin as gross profit divided by net revenue. Our gross margin has been and will continue to be affected by a variety of factors, including average selling prices, sales mix for our implant systems, costs associated with third party manufacturing, seasonality of our business and costs of other services. We expect our gross margin to remain consistent for the foreseeable future as our net revenue grows and our related costs of goods sold increases.

***Operating Expenses***

Our operating expenses consist of (i) selling, general and administrative expenses and (ii) research and development expenses.

*Selling, General and Administrative Expenses*

Selling, general and administrative expenses consist primarily of personnel costs, including commissions, salaries, bonuses, benefits and stock-based compensation related to personnel performing selling, marketing and general and administrative functions, including the costs associated with marketing initiatives and medical education programs. All of our stock-based compensation charges are included in selling, general and administrative expenses. In addition, selling, general and administrative expenses include depreciation expense for instruments, royalty payments made to product design surgeons, royalty payments made pursuant to our License Agreement (as defined below), travel expenses, professional services fees (including consulting, legal, finance, audit and tax fees), insurance costs, allocated facility expenses and other general corporate expenses.

We expect our selling, general and administrative expenses to continue to increase for the foreseeable future as we continue to grow our business and increase our utilization of internal and external resources within our commercial organization. As we continue to invest in growth, we will be required to maintain significant levels of instrumentation, which we expect to increase our selling, general and administrative expenses. Furthermore, the royalty payments made pursuant to our License Agreement will increase as our net revenue increases. We also expect our administrative expenses to increase as we increase our headcount and expand our organization to support our operations as a public company. Additionally, we anticipate increased expenses related to audit, legal, regulatory and tax-related services associated with being a public company, compliance with exchange listing and SEC

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requirements, director and officer insurance premiums and investor relations costs. We also expect to see an increase in our stock-based compensation expense with the establishment of a new publicly-traded company equity plan and to the extent of grants in the form of restricted stock units or options.

*Research and Development Expenses*

Research and development expense consist of costs incurred in performing or for the outsourcing of various research and development activities, including consulting fees and other expenses paid related to such activities, costs associated with our registry, any future clinical trial costs and costs related to prototypes and related supplies related to our research and development efforts. We maintain a procedurally focused approach to product development and have projects underway to add new systems and implants across multiple shoulder indications and to add additional functionality or versatility to our existing systems. We expect our research and development expenses to increase as we pursue development of new products and product enhancements.

***Other (Income) Expense***

Our other (income) expense consists of (i) interest expense, net, (ii) loss on extinguishment of convertible promissory notes and (iii) other income (expense), net.

*Interest Expense, Net*

Interest expense, net consists of interest expense related to our Trinity Loan Agreement and non-cash interest related to the amortization of debt discount, issuance costs and deferred interest associated with our indebtedness, as well as interest income earned on our cash and cash equivalents.

*Loss on Extinguishment of Convertible Promissory Notes*

We recorded a loss on extinguishment of convertible promissory notes of $1.1 million for the year ended December 31, 2023 in connection with the conversion of our convertible promissory notes into shares of our Series D convertible preferred stock in February 2023.

*Other (Income) Expense, Net*

Other (income) expense, net consists primarily of adjustment in the fair market value of marketable securities and change in fair value of warrant liabilities.

Change in fair value of warrant liabilities consists of gains and losses resulting from the remeasurement of the fair value of our warrant liabilities at each balance sheet date. We will continue to record adjustments to the estimated fair value of these warrants until they are exercised or at such time the warrants receive equity treatment.

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**Results of Operations**

***Comparison of the Three Months Ended March 31, 2025 and 2024***

The following table sets forth the components of our statements of operations for the periods presented below:

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| | | | |
|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Change** |
| | **2025** | **2024** | $**%** |
| | **(unaudited)** | **(unaudited)** | |
| | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Net revenue | $10132 | $7184 | 41.0% |
| Cost of goods sold | 2341 | 1666 | 40.5% |
| Gross profit | 7791 | 5518 | 41.2% |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses<sup>(1)</sup> | 10502 | 7704 | 36.3% |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | 1583 | 1070 | 48.0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 12085 | 8774 | 37.7% |
| Operating loss | (4294) | (3256) | (31.9)% |
| Other (income) expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 367 | 317 | 15.8% |
| &nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | 1 | 27 | (96.3)% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense | 368 | 344 | 7.0% |
| Loss before income tax expense | (4662) | (3600) | (29.5)% |
| Income tax expense |  |  |  |
| Net loss | $(4662) | $(3600) | (29.5)% |

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__________________

(1)Includes stock-based compensation expense of $127 thousand and $168 thousand for the three months ended March 31, 2025 and 2024, respectively.

\*Not meaningful

*Net Revenue.* Net revenue increased $2.9 million, or 41.0%, to $10.1 million for the three months ended March 31, 2025, compared to $7.2 million for the three months ended March 31, 2024. This increase in net revenue was due to an increase in demand and in the number of our systems sold, as well as an increase in the number of our customers.

*Cost of Goods Sold and Gross Margin.* Cost of goods sold increased $0.7 million, or 40.5%, to $2.3 million for the three months ended March 31, 2025, compared to $1.7 million for the three months ended March 31, 2024. This increase in cost of goods sold was primarily due to the increase in the number of our systems sold. Gross margin for the three months ended March 31, 2025 increased to 76.9%, compared to 76.8% for the three months ended March 31, 2024.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $2.8 million, or 36.3%, to $10.5 million for the three months ended March 31, 2025, compared to $7.7 million for the three months ended March 31, 2024. This increase in selling, general and administrative expenses was primarily due to a $1.0 million increase in legal costs related to litigation, a $0.9 million increase in commissions due to higher sales of our systems, a $0.7 million increase in personnel-related expenses as a result of increased headcount of our commercial organization and $0.2 million increase in depreciation of surgical instruments.

*Research and Development Expenses.* Research and development expenses increased $0.5 million, or 48.0%, to $1.6 million for the three months ended March 31, 2025, compared to $1.1 million for the three months ended March 31, 2024. The increase in research and development expenses was due to our investment in new product development efforts, including an increase in external consulting fees of $0.3 million related to such efforts.

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*Interest Expense, Net.* Interest expense, net increased $0.1 million, or 15.8%, to $0.4 million for the three months ended March 31, 2025, compared to $0.3 million for the three months ended March 31, 2024. This increase in interest expense, net was due to lower interest earned on marketable securities.

*Other (Income) Expense, Net.* Other (income) expense, net did not change materially for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

***Comparison of Years Ended December 31, 2024 and 2023***

The following table sets forth the components of our statements of operations for the periods presented below:

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| | | | |
|:---|:---|:---|:---|
| | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** | **Change** |
| | **2024** | **2023** | $**%** |
| | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Net revenue | $31623 | $19274 | 64% |
| Cost of goods sold | 7282 | 4004 | 82% |
| Gross profit | 24341 | 15270 | 59% |
| Operating expenses: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses<sup>(1)</sup> | 34505 | 23113 | 49% |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | 4489 | 3021 | 49% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 38994 | 26134 | 49% |
| Operating loss | (14653) | (10864) | 35% |
| Other (income) expense: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 1316 | 761 | 73% |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of convertible promissory notes |  | 1127 | \* |
| &nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | (350) | (97) | \* |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense | 966 | 1791 | (46)% |
| Loss before income tax expense | (15619) | (12655) | 23% |
| Income tax expense |  |  |  |
| Net loss | $(15619) | $(12655) | 23% |

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__________________

(1)Includes stock-based compensation expense of $0.8 million and $0.5 million for the years ended December 31, 2024 and 2023, respectively.

\*Not meaningful

*Net Revenue.* Net revenue increased $12.3 million, or 64%, to $31.6 million for the year ended December 31, 2024, compared to $19.3 million for the year ended December 31, 2023. This increase in net revenue was due to an increase in demand and in the number of our systems sold, as well as an increase in the number of our customers.

*Cost of Goods Sold and Gross Margin.* Cost of goods sold increased $3.3 million, or 82%, to $7.3 million for the year ended December 31, 2024, compared to $4.0 million for the year ended December 31, 2023. This increase in cost of goods sold was primarily due to the increase in the number of our systems sold. Gross margin for the year ended December 31, 2024 decreased to 77.0%, compared to 79.2% for the year ended December 31, 2023, primarily due to inventory adjustments.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $11.4 million, or 49%, to $34.5 million for the year ended December 31, 2024, compared to $23.1 million for the year ended December 31, 2023. This increase in selling, general and administrative expenses was primarily due to a $3.9 million increase in personnel-related expenses as a result of increased headcount of our commercial organization, a $3.5 million increase in commissions due to higher sales of our systems, a $1.4 million increase in legal costs related to litigation and a $0.3 million increase in depreciation of surgical instruments.

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*Research and Development Expenses.* Research and development expenses increased $1.5 million, or 49%, to $4.5 million for the year ended December 31, 2024, compared to $3.0 million for the year ended December 31, 2023. The increase in research and development expenses was due to our investment in new product development efforts, including an increase in external consulting fees of $0.5 million related to such efforts.

*Interest Expense, Net.* Interest expense, net increased $0.6 million, or 73%, to $1.3 million for the year ended December 31, 2024, compared to $0.8 million for the year ended December 31, 2023. This increase in interest expense was due to the increased interest incurred under our Trinity Loan Agreement.

*Loss on Extinguishment of Convertible Promissory Notes.* In connection with issuance and sale of shares of our Series D convertible preferred stock in February 2023, our outstanding convertible promissory notes were converted into shares of our Series D convertible preferred stock. This conversion resulted in a loss of $1.1 million for the year ended December 31, 2023.

*Other (Income) Expense, Net.* Other (income) expense, net decreased $(0.3) million, to $(0.4) million for the year ended December 31, 2024, compared to $(0.1) million for the year ended December 31, 2023, due to adjustment in the fair market value of our marketable securities and an increase in the fair value of our warrant liabilities.

**Quarterly Results of Operations Data**

The following tables set forth selected quarterly statements of operations data for each of the four fiscal quarters in each of the years ended December 31, 2024 and 2023 and the fiscal quarter ended March 31, 2025. The information for each of these quarters has been prepared in accordance with GAAP, on the same basis as our audited annual financial statements included elsewhere in this prospectus and includes, in the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the results of operations for these periods. This data should be read in conjunction with our financial statements and the related

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notes included elsewhere in this prospectus. These historical quarterly operating results are not necessarily indicative of our operating results for the full year or any future period.

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| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** | **Three Months Ended** |
| | **Mar. 31, 2023** | **June 30, 2023** | **Sept. 30, 2023** | **Dec. 31, 2023** | **Mar. 31, 2024** | **June 30, 2024** | **Sept. 30, 2024** | **Dec. 31, 2024** | **Mar. 31 2025** |
| | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** | **(unaudited)**<br>**($ in thousands)** |
| Net revenue | $3865 | $4150 | $4418 | $6841 | $7184 | $8260 | $7454 | $8725 | $10132 |
| Cost of goods sold | 777 | 902 | 920 | 1405 | 1666 | 1906 | 1753 | 1957 | 2341 |
| Gross profit | 3088 | 3248 | 3498 | 5436 | 5518 | 6354 | 5701 | 6768 | 7791 |
| Operating expenses: |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Selling, general and administrative expenses<sup>(1)</sup> | 4650 | 5183 | 6229 | 7051 | 7704 | 9171 | 8493 | 9137 | 10502 |
| &nbsp;&nbsp;&nbsp;&nbsp;Research and development expenses | 614 | 757 | 856 | 794 | 1070 | 1162 | 1090 | 1167 | 1583 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses | 5264 | 5940 | 7085 | 7845 | 8774 | 10333 | 9583 | 10304 | 12085 |
| Operating loss | (2176) | (2692) | (3587) | (2409) | (3256) | (3979) | (3882) | (3536) | (4294) |
| Other (income) expense |  |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Interest expense, net | 213 | (94) | 77 | 565 | 318 | 292 | 315 | 391 | 367 |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of convertible promissory notes | 1127 |  |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Other (income) expense, net | 198 | 61 | 88 | (444) | 27 | (100) | (142) | (135) | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other expense | 1538 | (33) | 165 | 121 | 345 | 192 | 173 | 256 | 368 |
| Loss before income tax expense | (3714) | (2659) | (3752) | (2530) | (3601) | (4171) | (4055) | (3792) | (4662) |
| Income tax expense |  |  |  |  |  |  |  |  |  |
| Net loss | $(3714) | $(2659) | $(3752) | $(2530) | $(3601) | $(4171) | $(4055) | $(3792) | $(4662) |

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__________________

(1)Includes stock-based compensation expense of $61 thousand, $99 thousand, $143 thousand, $148 thousand, $168 thousand, $170 thousand, $237 thousand, $179 thousand and $127 thousand for the quarters ended March 31, 2023, June 30, 2023, September 30, 2023, December 31, 2023, March 31, 2024, June 30, 2024, September 30, 2024, December 31, 2024 and March 31, 2025, respectively.

**Selected Quarterly Trends**

***Net Revenue***

Our quarterly net revenue increased throughout the periods presented, primarily due to an increase in demand and in the number of our systems sold.

***Cost of Goods Sold and Gross Margin***

Cost of goods sold increased throughout the periods presented, primarily due to the increase in the number of our systems sold. Our gross margin fluctuated during the periods presented due primarily to inventory adjustments and sales mix.

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***Operating Expenses Trends***

Our selling, general and administrative expenses and research and development expenses each increased throughout the periods presented, primarily due to personnel-related expenses as a result of higher headcount, increased commission payments due to higher sales of our systems, increased legal costs related to litigation, higher depreciation of surgical instruments and increased research and development costs due to our investment in new product development efforts.

**Liquidity and Capital Resources**

To date, our primary sources of capital have been from net revenue received from the sale of our implant systems, proceeds from private placements of our convertible preferred stock and debt financing arrangements. Since inception, we have raised a total of $114.6 million in net proceeds from private placements of our convertible preferred stock. As of March 31, 2025, we had $15.0 million of principal outstanding under our Trinity Loan Agreement.

We have generated losses from our operations since our inception as reflected in our accumulated deficit of $61.7 million and $57.0 million as of March 31, 2025 and December 31, 2024, respectively, including our net loss of $4.7 million and $15.6 million for the three months ended March 31, 2025 and year ended December 2024, respectively. Our losses primarily resulted from the costs incurred in the development, sales, and marketing of our systems and providing support for our operations. We expect to continue to incur losses for the foreseeable future and to expend significant amounts of cash for the foreseeable future as we continue to scale our business, increase selling, general and administrative expenses to support the expansion of our commercial organization and efforts, increase general and administrative expenses to support being a publicly-traded company and invest in research and development activities.

***Indebtedness***

As of March 31, 2025, we had cash, cash equivalents and marketable securities of $27.6 million and $15.0 million of principal outstanding under our Trinity Loan Agreement.

On August 7, 2023, we entered into the Trinity Loan Agreement with Trinity Capital, as administrative agent and collateral agent (in such capacities, the "Agent") and as a lender, and the other lenders from time to time party thereto, providing for term loans of up to an aggregate principal amount of $45.0 million, available in three tranches: (i) a $15.0 million tranche that was fully funded on the August 7, 2023, (ii) a $15.0 million tranche that expired on December 31, 2024 and (iii) a $15.0 million tranche available through December 31, 2025. The availability of the second tranche was subject to, among other things, our achievement of at least $30.0 million of annualized trailing 6-month revenue by December 31, 2024. The availability of the third tranche is subject to, among other things, our achievement of at least $45.0 million of annualized tailing six-month revenue by December 31, 2025. In connection with the Trinity Loan Agreement, we issued a warrant to purchase 2,494,457 shares of our Series D convertible preferred stock to Trinity Capital. The warrant has an exercise price of $0.5412 per share and expires ten years from the date of its issuance. As of March 31, 2025, the aggregate outstanding principal balance under the Trinity Loan Agreement was $15.0 million.

The term loans under the Trinity Loan Agreement bear interest at an annual rate equal to the greater of the prime rate plus 3.50% and 11.50%. Under the terms of the Trinity Loan Agreement, the prime rate is equal to the greater of 8.0% per year and the prime rate as reported in The Wall Street Journal. We are required to make monthly payments of interest only through September 2027, subject to a 12-month extension that may be granted upon our achievement of positive cash flow, calculated on a trailing 12-month basis ending December 31, 2026, of an amount greater than $5.0 million. Following the interest-only period, we are required to make payments of interest and principal in monthly installments through maturity of the term loans on September 1, 2028 ("Maturity Date"). The Trinity Loan Agreement provides that we can at any time prepay the term loans, in whole or in part, subject to a prepayment premium equal to: (i) 2.50% of the then-outstanding principal amount of the term loans, if such prepayment occurs on or prior to the first anniversary of the Trinity Loan Agreement; (ii) 1.50% of the then-outstanding principal amount of the advance, if such prepayment occurs after the first anniversary of the Trinity Loan Agreement and on or prior to the second anniversary of the Trinity Loan Agreement; and (iii) 1.00% of the

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then-outstanding principal amount of the advance, if such prepayment occurs after the second anniversary of the Trinity Loan Agreement and prior to the Maturity Date. We are required to make an end of term payment equal to 3.00% of the aggregate principal amount of the term loans funded on the earlier of (i) the Maturity Date, (ii) the date that we prepay all of the outstanding principal in full or (iii) the date of acceleration of the balance of the outstanding term loans by the Agent. The term loans are secured by substantially all our assets, including intellectual property.

The Trinity Loan Agreement also includes customary affirmative and negative covenants and events of default. Upon the occurrence and continuance of an event of default the Agent may demand immediate repayment of all principal and unpaid interest under the Trinity Loan Agreement, and exercise remedies against us and the collateral securing the Trinity Loan Agreement. Events of default under the Trinity Loan Agreement include, among other things: (i) insolvency, bankruptcy or similar proceedings subject to a certain grace period in respect of any involuntary insolvency, bankruptcy or similar proceedings; (ii) failure to pay any debts due under the Trinity Loan Agreement or other loan documents on a timely basis; (iii) failure to observe any covenant or secured obligation under the Trinity Loan Agreement, subject to a certain cure period; (iv) occurrence of a material adverse change; (v) material misrepresentations; (vi) occurrence of any default under any material agreement (or termination thereof) or any other agreement resulting in a right by the applicable third party to accelerate debt in excess of $500,000; (vii) entry of certain final, non-appealable judgments against us in excess of $500,000 not paid or bonded within 10 days of such entry; (viii) a change of control unless as a condition to the closing of such change of control all outstanding term loans will be paid in full; and (ix) certain changes in the composition of board of directors.

As of March 31, 2025, we were in compliance with all covenants contained in the Trinity Loan Agreement.

***Future Funding Requirements***

Based on our current operating plan, we believe that the estimated net proceeds from this offering, together with the expected cash generated from the sale of our systems, our existing cash, cash equivalents and marketable securities and amounts under our Trinity Loan Agreement, will be sufficient to fund our planned operating expenses and capital expenditure requirements for at least the next 12 months. We have based this estimate on assumptions that may prove to be wrong, and we could deplete our capital resources sooner than we expect. We may experience lower than expected cash generated from operating activities or greater than expected capital expenditures, cost of goods sold, or operating expenses, and may need to raise additional capital to fund operations, increase our commercial organization and efforts, further research and development activities, or acquire, invest in, or in-license other businesses, assets, or technologies.

Our future capital needs will depend upon many factors, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the market awareness and adoption of our systems, including our InSet Glenoid and InSet humeral stem products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the scope, timing and costs of supporting the growth and expansion of our commercial organization and efforts;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cost and pace of our research and development activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs associated with any product recall that may occur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs associated with the manufacture and supply of our products at increased production levels;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs associated with securing additional suppliers and service providers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the scope, rate of progress and costs of our current or future clinical and registries as well as costs associated with complying with regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cost and timing of additional regulatory clearances or approvals;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the costs of attaining, defending, and enforcing our intellectual property rights;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• whether we acquire third-party products or technologies;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the terms and timing of any other distribution, collaborative, licensing, and other arrangements that we may establish;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the emergence of competing technologies or other adverse market developments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our ability to raise additional funds to finance our operations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• debt service requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the rate at which we expand internationally; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the cost associated with being a public company.

We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We may seek to raise any necessary additional capital through public or private equity offerings or debt financings, credit or loan facilities or a combination of one or more of these or other funding sources. Additional funds may not be available to us on acceptable terms or at all. If we fail to obtain necessary capital when needed on acceptable terms, or at all, we could be forced to delay, limit, reduce or terminate our product development programs, commercialization efforts or other operations. If we raise additional funds by issuing equity securities or convertible debt, our stockholders will suffer dilution and the terms of any financing may adversely affect the rights of our stockholders. In addition, as a condition to providing additional funds to us, future investors may demand, and may be granted, rights superior to those of existing stockholders. If we raise additional capital through collaborations agreements, licensing arrangements or marketing and distribution arrangements, we may have to relinquish valuable rights, future revenue streams, research programs or product or grant licenses that may not be favorable to us. Debt financing, if available, is likely to involve restrictive covenants limiting our flexibility in conducting future business activities, and, in the event of insolvency, debt holders would be repaid before holders of our equity securities received any distribution of our corporate assets.

***Cash Flows***

The following table shows a summary of our cash flows for each of the periods presented:

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|:---|:---|:---|:---|:---|:---|:---|
| | **Three Months Ended**<br>**March 31,** | **Three Months Ended**<br>**March 31,** | **Change** | **Year Ended**<br>**December 31,** | **Year Ended**<br>**December 31,** | **Change** |
| | **2025** | **2024** | $**%** | **2024** | **2023** | $**%** |
| | **(unaudited)** | **(unaudited)** | | | | |
| | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** | **($ in thousands)** |
| Net cash (used in) provided by: |  |  |  |  |  |  |
| Operating activities | $(6477) | $(3475) | (86.4)% | $(14143) | $(13144) | (7.6)% |
| Investing activities | (13070) | (1015) | \* | 13964 | (28973) | 148.20% |
| Financing activities | 19794 |  | \* | 66 | 44728 | (99.9)% |
| Net (decrease) increase in cash and cash equivalents | $247 | $(4490) | 105.5% | $(113) | $2611 | \* |

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\*Not meaningful

*Operating Activities*

For the three months ended March 31, 2025, net cash used in operating activities was $(6.5) million, consisting primarily of a net loss of $4.7 million and net cash used by changes in our operating assets and liabilities of $(2.5) million, partially offset by non-cash charges of $0.7 million. The non-cash charges primarily consisted of depreciation and amortization expense of $0.7 million and stock-based compensation expense of $0.1 million,

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partially offset by realized gain on marketable securities of $(0.2) million. Net cash used by changes in our operating assets and liabilities primarily consisted of a decrease of $2.1 million to accounts payable and an increase of $1.5 million in trade accounts receivable, partially offset by a decrease of $0.9 million in inventory due to lower inventory purchases than inventory sold.

For the three months ended March 31, 2024, net cash used in operating activities was $(3.5) million, consisting primarily of a net loss of $3.6 million and net cash used by changes in our operating assets and liabilities of $(0.8) million, partially offset by non-cash charges of $0.9 million. The non-cash charges primarily consisted of depreciation and amortization expense of $0.5 million, stock-based compensation expense of $0.2 million and realized loss on marketable securities of $0.1 million. Net cash used by changes in our operating assets and liabilities primarily consisted of a decrease of $0.6 million in other current liabilities and an increase of $0.5 million in inventory to support demand for our implant systems, partially offset by a decrease of $0.4 million in trade accounts receivable.

For the year ended December 31, 2024, net cash used in operating activities was $(14.1) million, consisting primarily of a net loss of $15.6 million and net cash used by changes in our operating assets and liabilities of $(1.1) million, partially offset by non-cash charges of $2.5 million. The non-cash charges primarily consisted of depreciation and amortization expense of $2.2 million, stock-based compensation expense of $0.8 million, and realized gain on marketable securities of $(0.5) million. Net cash used by changes in our operating assets and liabilities primarily consisted of an increase of $4.0 million in inventory to support demand for our implant systems and $0.6 million in trade accounts receivable, partially offset by a decrease of $3.1 million in accounts payable.

For the year ended December 31, 2023, net cash used in operating activities was $(13.1) million, consisting primarily of a net loss of $12.7 million and net cash used by changes in our operating assets and liabilities of $(4.8) million, partially offset by non-cash charges of $4.4 million. The non-cash charges primarily consisted of depreciation and amortization expense of $1.6 million, stock-based compensation expense of $0.5 million, and loss on extinguishment of convertible promissory notes of $1.1 million. Net cash used by changes in our operating assets and liabilities primarily consisted of an increase of $2.7 million in trade accounts receivable and $2.4 million in inventory, partially offset by a decrease of $1.4 million in other current liabilities.

*Investing Activities*

For the three months ended March 31, 2025, net cash used in investing activities was $(13.1) million, consisting primarily of purchases of $(20.1) million in marketable securities and $(0.8) million in fixed assets proceeds, partially offset by proceeds of $7.8 million from sales of our marketable securities.

For the three months ended March 31, 2024, net cash used in investing activities was $(1.0) million, consisting primarily of the purchases of $(2.8) million in marketable securities and $(1.3) million in fixed assets proceeds, partially offset by cash proceeds of $3.1 million from sales of our marketable securities.

For the year ended December 31, 2024, net cash provided in investing activities was $14.0 million, consisting primarily of proceeds of $23.2 million from sales of our marketable securities, partially offset by purchases of $(5.3) million in marketable securities and $(4.0) million in fixed assets.

For the year ended December 31, 2023, net cash used in investing activities was $(29.0) million, consisting primarily of the purchase of $(29.3) million in marketable securities and $(2.7) million in fixed assets, partially offset by cash of $3.0 million from sales of our marketable securities.

*Financing Activities*

For the three months ended March 31, 2025, net cash provided by financing activities was $19.8 million, consisting of proceeds of $19.6 million from the issuance and sale of shares of our Series E convertible preferred stock and proceeds from the exercise of warrants for our Series Seed preferred stock.

For the three months ended March 31, 2024, there was no net cash provided by financing activities.

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For the year ended December 31, 2024, net cash provided by financing activities was $0.1 million, consisting of proceeds from the exercise of our outstanding common stock options.

For the year ended December 31, 2023, net cash provided by financing activities was $44.7 million, consisting primarily of proceeds of $34.9 million from the issuance and sale of shares of our Series D convertible preferred stock and $15.0 million in proceeds related to our Trinity Loan Agreement, partially offset by payments of $5.0 million related to the repayment of our prior loan and security agreement.

**Contractual Obligations and Commitments**

Our contractual commitments will have an impact on our future liquidity. These commitments include future payments on our Trinity Loan Agreement, future payments on facility leases and certain royalty obligations. Where applicable, we calculate our obligation based on termination fees that can be paid to exit the contract.

***Debt***

The principal outstanding under our Trinity Loan Agreement was $15.0 million as of March 31, 2025, however, we are required to make monthly payments of interest only through September 2027. Following the interest-only period, we are required to make payments of interest and principal in monthly installments through maturity of the term loans on September 1, 2028.

***Leases***

We have entered into an operating lease for office space in Michigan. The lease has a five-year term, which commenced in July 2021 and is renewable for one additional five-year term upon expiration. As of March 31, 2025, the operating lease obligations under this operating lease were $60 thousand.

***Royalties***

We have entered into a License Agreement with Genesis Software, pursuant to which we are required to pay Genesis Software certain payments, including royalty payments, until such time we have paid Genesis Software an aggregate of $7.0 million under the License Agreement. As of March 31, 2025, we have paid an aggregate of $4.1 million of the total $7.0 million, including royalties of $0.4 million and $0.3 million in the three months ended March 31, 2025 and 2024, respectively.

**Off-Balance Sheet Arrangements**

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements or any relationships with unconsolidated entities or financial partnerships, such as structured finance, special purpose entities, or variable interest entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

**Critical Accounting Policies and Estimates**

Management's discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

While our significant accounting policies are more fully described in Note 1 of our financial statements included elsewhere in this prospectus, we believe the following discussion addresses our most critical accounting policies and estimates, which are those that are most important to our financial condition and results of operations and require our most difficult, subjective and complex judgments.

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***Revenue Recognition***

Revenue is recognized as the performance obligations to deliver products are satisfied and are recorded based on the amount of consideration we expect to receive in exchange for satisfying the performance obligations. Our sales are recognized primarily when we transfer control to the customer, which is generally when we have received a purchase order and appropriate notification the product has been used or implanted. Products are primarily transferred to customers at a point in time.

Revenue represents the amount of consideration we expect to receive from customers in exchange for transferring products. Net revenue excludes sales taxes we collect from customers. Other costs to obtain and fulfill contracts are generally expensed as incurred due to the short-term nature of most of our sales. We extend terms of payment to our customers based on commercially reasonable terms for the markets of our customers, while also considering their credit quality. Shipping and handling costs charged to customers are included in net sales.

Our payment terms with customers are customary and vary by customer but typically range from 30 to 60 days. We have evaluated the terms of our arrangements and determined that they do not contain significant financing components.

***Inventories***

Inventories consist of finished goods purchased from third-party suppliers. Inventories are stated at the lower of average cost or net realizable value. We have applied these inventory cost valuation methods consistently from year to year. Two suppliers provide substantially all of our finished goods.

We record inventory reserves for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon the age of specific inventory on hand and assumptions about future demand and market conditions. Our inventory has an initial five year usable life and we maintain the ability to extend the usable life of inventory for an additional five years. As a result, our analysis focuses on to what extent inventory on hand is in excess of market demand, which requires assessment of various factors that require the use of judgement including forecasted sales. If actual conditions differ from our assumptions, adjustments to the reserve may be required. Inventories presented in the balance sheets are net of reserves for estimated obsolescence or unmarketable inventory which were $253,000 and $287,000 as of March 31, 2025 and December 31, 2024, respectively.

***Stock-Based Compensation***

We measure all stock options based on their fair value on the date of the grant. Those awards typically have a graded vesting schedule and compensation expense for awards with only service conditions are recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the respective award. We have not issued any stock-based awards with performance-based or market-based vesting conditions.

We use the Black-Scholes option pricing model, which incorporates assumptions and estimates, to measure the fair value of its option awards on the date of grant of each stock option award. We determined the assumptions for the Black-Scholes option pricing model as discussed below. Each of these inputs described below is subjective and generally requires significant judgment to determine. Forfeitures were accounted for as they occurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Fair Value of Our Common Stock*. Prior to this offering, our common stock was not publicly traded and therefore we estimated the fair value of our common stock, as discussed in the subsection titled "—Common Stock Valuation" below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Expected Term*. The expected term represents the period that the stock-based awards are expected to be outstanding. As we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term, the expected term of stock options granted has been determined using the simplified method, which is the average of the midpoints between the vesting date and the contractual term for all vesting tranches.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Risk-Free Interest Rate*. The risk-free interest rate is based on the rate of the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Expected Volatility*. Because we do not have a trading history of our common stock, the expected volatility was derived from the average historical stock volatilities of several public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock-based award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Expected Dividend Yield*. The expected dividend yield is zero as we have not paid and do not anticipate paying any dividends for the foreseeable future.

If any of the assumptions used in the Black-Scholes option pricing model change significantly, stock-based compensation for future awards may differ materially compared with the awards granted previously. See Note 10 to our financial statements included elsewhere in this prospectus for further details.

***Common Stock Valuation***

Given the absence of a public trading market to date, the fair value of our common stock has been determined by our board of directors at the time of each option grant, with input from management, considering contemporaneous independent third-party valuations of common stock, and our board of directors' assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant, including: the timing and prices at which we sold shares of our convertible preferred stock to outside investors in arms-length transactions, and the superior rights, preferences, and privileges of our convertible preferred stock relative to our common stock at the time of each grant; our stage of development and commercialization; our business strategy; operating and financial performance; the lack of liquidity of our common stock; trends in the broader economy and industry; the likelihood of achieving a liquidity event for our securityholders, such as an initial public offering or a sale of the company, taking into consideration prevailing market conditions; and the hiring of key personnel and the experience of management.

These independent third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants' Auditing and Valuation Guide, *Valuation of Privately-Held-Company Equity Securities Issued as Compensation* (the "Guide"). The methodology to determine the fair value of our common stock included estimating the fair value of the enterprise using a market approach, which estimates the fair value of a company by including an estimation of the value of the business based on guideline public companies under a number of different scenarios. The Guide identifies various available methods for allocating enterprise value across classes and series of capital stock to determine the estimated fair value of common stock at each valuation date.

In accordance with the Guide, we considered the following methods:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Current Value Method*. Under the current value method, once the fair value of the enterprise is established, the value is allocated to the various series of preferred and common stock based on their respective seniority, liquidation preferences or conversion values, whichever is greatest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Option Pricing Method ("OPM")*. Under the OPM, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The estimated fair values of the convertible preferred stock and common stock are inferred by analyzing these options. This method is appropriate to use when the range of possible future outcomes is so difficult to predict that estimates would be highly speculative, and dissolution or liquidation is not imminent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Probability-Weighted Expected Return Method ("PWERM")*. The PWERM is a scenario-based analysis that estimates value per share based on the probability-weighted present value of expected future investment returns, considering each of the possible outcomes available to us, as well as the economic and control rights of each share class.

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Based on our early stage of development and commercialization, frequency of financing transactions, the difficulty in predicting the range of specific outcomes (and their likelihood), and other relevant factors, we determined the OPM scenario was most appropriate for valuations of stock options awarded through October 2024.

Once a public trading market for our common stock has been established in connection with the consummation of this offering, it will no longer be necessary for our board of directors to estimate the fair value of our common stock in connection with our accounting for equity-based awards, as the fair value of our common stock will be determined based on the trading price of our common stock on the New York Stock Exchange.

The intrinsic value of all outstanding options as of March 31, 2025, was approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million, based on the assumed initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share, which is the midpoint of the price range set forth on the cover page of this prospectus, of which approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million was related to vested options and approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million was related to unvested options.

***Determination of Fair Value of Warrant Liabilities***

Given the absence of a public trading market to date, the fair value of our common stock has been determined by our board of directors at the time of issuance of warrants, with input from management, considering contemporaneous independent third-party valuations of common and preferred stock, and our board of directors' assessment of additional objective and subjective factors that it believed were appropriate.

Our common stock and preferred stock warrants require liability classification and accounting. The warrants are recorded at fair value upon issuance and are subject to remeasurement to fair value at each balance sheet date, with any changes in fair value recognized in other (income) expense, net. The fair value was estimated using a Black-Scholes option pricing model. The valuation model used incorporates significant assumptions and estimates, which include, but are not limited to, the fair value per share of the underlying shares, the remaining contractual term of the warrants, risk-free interest rate and expected volatility of the price of the underlying shares.

**Recently Issued Accounting Pronouncements**

See Note 1 to our financial statements included elsewhere in this prospectus for a description of recent accounting pronouncements applicable to our financial statements.

**Qualitative and Quantitative Disclosures About Market Risk**

***Interest Rate Risk***

The primary risk associated with fluctuating interest rates is related to our debt. The term loans under the Trinity Loan Agreement bear interest at an annual rate equal to the greater of the prime rate plus 3.50% and 11.50%. Under the terms of the Trinity Loan Agreement, the prime rate is equal to the greater of 8.0% per year and the prime rate as reported in The Wall Street Journal. In addition, we hold cash and cash equivalents as well as marketable securities, all of which may generate interest income. The primary objectives of our investment activities are to preserve principal and provide liquidity. Since our results of operations are not dependent on investments, we believe the risk associated with fluctuating interest rates is limited. We do not believe that a hypothetical 10% increase or decrease in interest rates during any of the periods presented would have had a material effect on our financial statements included elsewhere in this prospectus. We do not currently use or plan to use financial derivatives in our investment portfolio and we do not currently engage in hedging transactions to manage our exposure to interest rate risk.

***Financial Institution Risk***

Substantially all of our cash, cash equivalents and marketable securities are held with two financial institutions. Cash amounts held at financial institutions are insured by the Federal Deposit Insurance Corporation up to $250,000.

***Inflation Risk***

Inflation generally affects us by increasing our cost of labor. Inflationary and supply chain pressures may adversely impact our future financial results. Our operating costs have increased and may continue to increase

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because of these pressures, and we may not be able to fully offset these cost increases by raising prices for products or other mitigation efforts, which could result in downward pressure on margins.

**Emerging Growth Company and Smaller Reporting Company Status**

We are an emerging growth company, as defined in the JOBS Act. The JOBS Act permits an "emerging growth company" such as us to take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. We have elected to use the extended transition period for any other new or revised accounting standards during the period in which we remain an emerging growth company; however, we may adopt certain new or revised accounting standards early. As a result, we will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies and our financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates. The JOBS Act also exempts us from having to provide an attestation and report from our independent registered public accounting firm on the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act.

We will remain an emerging growth company until the earliest of: (i) the last day of the fiscal year following the fifth anniversary of the consummation of this offering; (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which we are deemed to be a "large accelerated filer" as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common stock held by non-affiliates exceeded $700.0 million as of the last business day of the second fiscal quarter of such year; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

We are also a "smaller reporting company" as defined in the Exchange Act. We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and our voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter. We cannot predict if investors will find our shares of common stock less attractive because we may rely on these exemptions. If some investors find our shares of common stock less attractive as a result, there may be a less active trading market for shares of our common stock and our share price may be more volatile.

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**BUSINESS**

**Overview**

We are a commercial-stage medical technology company exclusively focused on transforming the shoulder surgical care market. We currently offer advanced implant systems for shoulder arthroplasty. These systems are a core element of our ecosystem, which we designed to improve core components of shoulder surgical care – preoperative planning, implant design and procedural efficiency – to benefit each stakeholder in the care chain. Our ecosystem is also comprised of enabling technologies, efficient instrument systems, specialized support and surgeon-to-surgeon collaboration. Together, these elements seek to address the long-standing clinical and operational challenges in the shoulder surgical care market by delivering predictable outcomes, procedural simplicity, and efficiency across all sites of care. We believe our exclusive focus on shoulder surgical care, combined with a highly specialized commercial organization and strong clinical data, positions us well to capture significant share in this large, growing market.

Shoulder pain is highly prevalent, often chronic, and can significantly reduce quality of life. The primary conditions that can result in shoulder pain and reduced functionality include osteoarthritis, rheumatoid arthritis, rotator cuff tears and shoulder fractures. Shoulder conditions are widespread, often debilitating, are commonly experienced concurrently as interrelated musculoskeletal disorders, and are estimated to result in more than eight million physician visits annually in the United States, based on data from the National Ambulatory Medical Care Survey 2015-2016 conducted by the National Center for Health Statistics of the Centers for Disease Control and Prevention ("CDC"). Despite this prevalence, we believe there has been a historical underutilization of surgical treatments for shoulder care due to several factors including patient hesitation to pursue surgical intervention, insufficient technology to appropriately treat shoulder conditions, complex shoulder anatomy, perceived difficulty of surgical intervention and barriers to patient access of care.

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty. Shoulder arthroplasty is an established surgical procedure involving the reconstruction of the shoulder joint with prosthetic implants through one of two main approaches: aTSA and rTSA. Both approaches can be performed in inpatient hospital settings and in outpatient settings, including ASCs. A key competitive advantage of ours has been the emergence of ASCs as a cost-efficient site of care with positive outcomes relative to hospital-based care. We expect that future growth in the shoulder surgical care market will be significantly driven by ASCs as hospitals face capacity constraints and are more limited in their ability to meet increasing demand.

We estimate that approximately 250,000 shoulder arthroplasty procedures will be performed in the United States in 2025, which we believe represents an approximately $1.7 billion market opportunity. Based on data from a healthcare market research provider regarding the estimated number of shoulder arthroplasty procedures performed, our internal estimates and analysis of such data, as well as our knowledge of our industry, we expect the number of annual procedures performed to grow by approximately 11% annually through 2029. We also believe a significant opportunity exists outside of the United States and, based on a market research report issued by Transparency Market Research in 2025, we estimate that the total annual international shoulder arthroplasty market is approximately $1.0 billion in 2025. Together, this represents a global annual shoulder arthroplasty market of approximately $2.8 billion. We believe we have an opportunity to expand to address adjacent areas in the shoulder surgical care market over time.

We believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These limitations can result in continued pain, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

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We developed our ecosystem with an approach to innovation that prioritizes ease of use, flexibility, predictability of outcomes and site of care efficiency, attributes we believe are critical to win in this market. Our ecosystem is comprised of the following elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Advanced Implant Systems:** Our advanced implants include a diverse range of interchangeable InSet anatomic and reverse total shoulder arthroplasty systems that leverage our novel, InSet Glenoid and InSet humeral stem technologies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **ProVoyance Preoperative Planning Technology:** This preoperative planning technology integrates AI and ML to transform planar CT imaging into 3D renderings, allowing surgeons to create bespoke surgical plans considering patient-specific anatomy ahead of surgery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Efficient Instrument System:** Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays, considerably less than the six to nine trays typically required by other offerings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Specialized Support:** Our team of dedicated shoulder specialists enables us to deliver a highly tailored experience to surgeons operating in a complex and technically demanding procedure category.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Surgeon-to-Surgeon Collaboration:** Our CEME team fosters a collaborative network of expert surgeon educators and promotes surgeon-to-surgeon training and peer education.

Our ecosystem offers notable benefits that differentiate it within the shoulder surgical care market. These benefits include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Fixation and Stability**: Our foundational InSet Glenoid technology is biomechanically designed to specifically address what we believe is the primary problem in legacy aTSA implants: glenoid loosening.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Restores Full Functionality**: We engineered our three humeral stem options to provide consistent, optimized biomechanics in both aTSA and rTSA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Exceptional Longevity**: Our advanced implant systems are designed for longevity. In one published study, our InSet Glenoid demonstrated no surgical complications, cases of glenoid loosening or revision surgeries at a mean follow-up time of 8.7 years in a particularly challenging patient population.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Implant Selection and Positioning**: ProVoyance preoperative planning technology empowers surgeons to create bespoke surgical plans that facilitate consistent, effective positioning of our implants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Optimized Procedural Workflow and Efficiency**: Our efficient instrument system supports our implant portfolio across both aTSA and rTSA. This can provide significant workflow advantages for our customers by minimizing the operating room footprint, reducing procedural setup time, lowering sterilization requirements and costs and reducing the risk of errors - key advantages for the ASC setting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Access to Expert Advice**: Our commercial organization creates deep relationships with surgeons and allows us to support their practice with specialized customer service and case support before, during and after surgery. In addition to direct support, our commercial team connects surgeons to the broader shoulder surgical community in various settings with a goal to improve connectivity across the shoulder surgical community and contribute to better patient outcomes.

We developed our comprehensive implant portfolio to address the unique needs of patients and surgeons. Our advanced implants are comprised of our aTSA and rTSA systems, which include various, specifically designed components capable of a wide array of system configurations to facilitate different modes of operation (anatomic or reverse) that are optimized for patient-specific needs. Our InSet Glenoid technology serves as the foundation for our advanced implant systems and includes a novel "InSet" design that aims to reduce mechanical stress at the bone implant interface, improve fixation mechanics, enhance stability and reduce micromotion. Our implant systems leverage consistent surgical techniques and the same efficient, two tray instrumentation system.

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In addition to our advanced implant systems, we offer a leading preoperative surgical planning technology: ProVoyance. We believe that surgeon-level engagement in preoperative planning provides for better care for patients, and that bespoke surgical plans can help facilitate consistent positioning of implants. ProVoyance integrates AI and ML to transform planar CT imaging into 3D renderings of patient-specific anatomy ahead of surgery, and is cleared by the FDA for preoperative shoulder planning. ProVoyance received 510(k) clearance in 2021 and is classified by the FDA as a Class II device. ProVoyance is listed on the FDA's AI/ML-enabled medical devices list, which is a resource maintained, published, and periodically updated by the FDA to identify AI/ML-enabled devices that have been authorized for marketing in the United States through any of the standard paths to market for medical devices, although it is not intended to be a comprehensive list of all such devices that incorporate AI/ML. We believe the differentiation and value proposition of ProVoyance is validated by high utilization rates across procedures using our advanced implant systems. For example, for the three months ended March 31, 2025, we estimate an implied utilization rate for our ProVoyance technology of approximately 90%, based on 1,303 surgical plans created using ProVoyance technology and 1,443 implant systems sold during such period. This implied utilization rate is based on real-world data from our customers during such period, as ProVoyance technology tracks and reports each surgical plan that our customers create, and the actual number of implant systems sold during the respective period.

A key component of shoulder arthroplasty procedures are instrument trays, equipped with the specific instruments, supplies, and equipment needed for the surgery. We have developed a proprietary two-tray instrument system designed to enable interoperability between our aTSA and rTSA systems and a range of humeral stem options. We believe our efficient, two tray instrument system can enable surgeons and staff to reduce operating room footprint, procedural setup time, sterilization time and expense, and procedural complexity.

To best support our surgeon customers, we have built our commercial organization around their unique needs. Our commercial organization is comprised of a dedicated commercial leadership team that drives our internal commercial efforts with an exclusive focus on shoulder care, a CEME team that enhances surgeon engagement and training and a network of independent distributors. These three key components of our commercial organization work in tandem to form a commercial flywheel that is designed to build and reinforce relationships with surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention.

We leverage our team's decades of experience developing and launching novel shoulder surgical care technologies to identify the unmet needs of patients and surgeons and develop solutions to address those unmet needs. With respect to our advanced implant systems, we commenced development efforts with our InSet Glenoid in 2009 and received 510(k) clearance in 2011. We commercially launched an initial aTSA system with our InSet Glenoid in 2016. Since this initial launch in 2016, we have successfully launched a wide range of new technologies to enhance our ecosystem and provide surgeons with the tools and support needed to deliver quality outcomes for patients requiring shoulder surgical care. For example, we commenced development efforts for our InSet PLUS Augmented Glenoid in 2019 and received 510(k) clearance in 2020. We commenced development efforts for our rTSA system in 2019 and received 510(k) clearance in 2021. We commenced development efforts for our short stem, stemless and I-Series humeral stem system options for our aTSA and rTSA systems in 2017, 2019 and 2021, respectively, and received our primary 510(k) clearances in 2018 and 2022, with an additional 510(k) clearance in 2024 for use of our primary I-Series humeral stem for use with anatomic fractures. Each of these devices is classified by the FDA as a Class II device. We have a robust pipeline of new technologies in various stages of development and evaluation, including the anticipated expansion of our humeral stem line, indication expansions into fracture and revision, and implants tailored for metal-sensitive patients. For example, we commenced development of InSet 70, InSet 135 and InSet 185 stems to expand our I-Series humeral stem line in 2024, and we anticipate pursuing FDA clearance of these stems, as needed, over the next twelve months. We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

We have contributed to numerous publications that we believe evidence and strengthen our position as a leader in shoulder surgical care. There is a significant body of clinical evidence that supports the safety, efficacy, and durability of our implants in shoulder arthroplasty, including our InSet Glenoid technology. For example, a retrospective long-term follow-up analysis of patients who received our InSet Glenoid was published in the *Journal of Shoulder and Elbow Surgery* in 2019, which demonstrated a 72-point improvement in the mean ASES outcome

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score, statistically significant improvements in pain scores and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at a mean follow-up time of 8.7 years. We are committed to continued investment in obtaining further clinical evidence with the support of surgeons who are recognized as thought leaders in shoulder surgical care. We believe these efforts will continue to generate a substantial body of clinical evidence that will drive increased awareness and adoption of our products.

We have experienced significant growth in recent years, primarily driven by growth in our net revenue from the sale of our advanced implant systems. We generated net revenue of $31.6 million for the year ended December 31, 2024, compared to net revenue of $19.3 million for the year ended December 31, 2023, representing 64.0% year-over-year growth. We recognized a gross margin of 77.0% and net loss of $15.6 million for the year ended December 31, 2024, compared to a gross margin of 79.2% and net loss of $12.7 million for the year ended December 31, 2023. We generated net revenue of $10.1 million for the three months ended March 31, 2025, compared to net revenue of $7.2 million for the three months ended March 31, 2024, representing an increase of 41.0%. We recognized a gross margin of 76.9% and net loss of $4.7 million for the three months ended March 31, 2025, compared to a gross margin of 76.8% and net loss of $3.6 million for the three months ended March 31, 2024.

**Our Success Factors** 

We attribute our success to a combination of the following factors. We believe these attributes are central to our business outcomes and will be significant factors in our continued success and growth.

***Disruptive Ecosystem to Address Existing Limitations Within Shoulder Surgical Care***

Our purpose-built ecosystem is designed to directly address several of the limitations associated with shoulder surgical care, starting with shoulder arthroplasty. This ecosystem is comprised of our advanced implant systems for aTSA and rTSA, ProVoyance, efficient instrument system, specialized support and surgeon-to-surgeon collaboration. Our advanced implant systems are designed to address existing challenges, such as glenoid loosening, subscapularis tendon failure, limited range of motion, stability and eventual implant failure. Glenoid loosening is a leading cause of revision shoulder arthroplasty procedures, with studies showing that approximately 30% of implants exhibit moderate to severe loosening within 6.6 years and up to 40% require revision within ten years. Unlike traditional glenoid designs, our InSet Glenoid sits within a rim of the native bone, which we believe enhances stability and reduces micromotion that contributes to loosening and potential failure. Complementing our InSet Glenoid technology, our humeral stem technology is fully compatible across both aTSA and rTSA procedures using consistent surgical techniques and instrumentation. This design facilitates interoperability and is intended to enable simplified revision and conversion procedures, which we believe provides surgeons flexibility, preserves bone mass and reduces the procedural burden associated with switching implant systems during a procedure. Surgeons leverage ProVoyance to create bespoke surgical plans that can help ensure consistent, effective positioning of our implants. Additionally, our design has allowed us to consolidate all of the instruments necessary to complete either an aTSA or a rTSA into two convenient trays, which can reduce operational complexity. We complement our offerings with specialist support and by facilitating surgeon-to-surgeon collaboration. We believe the elements of our ecosystem work together to help surgeons reduce operational complexity and surgical time, while supporting improved patient outcomes, lower revision risk and improved long-term satisfaction. We believe our differentiated design and approach positions us as a leader in addressing the critical clinical issues facing shoulder arthroplasty, as evidenced by our commercial traction to date. Since the initial launch of our InSet Glenoid in 2016, our implants have been utilized in more than 12,000 procedures.

***Strong Clinical Results and Positive Outcomes for Patients and Surgeons***

Our InSet Glenoid technology is supported by a compelling body of clinical evidence, with approximately nine years of published data and four clinical studies and articles published in the *Journal of Shoulder and Elbow Surgery* demonstrating its significant impact on patient outcomes. These studies demonstrate that, following surgery using our InSet Glenoid, patients have experienced greater functionality, lower pain and higher overall satisfaction than before surgery. Clinical data has also demonstrated strong performance in key indicators, such as forward flexion, rotational movement, range of motion, pain reduction and implant durability. Notably, a retrospective long-term follow-up analysis of patients who received our InSet Glenoid was published in the *Journal of Shoulder and Elbow* 

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*Surgery* in 2019, which demonstrated a 72-point improvement in the mean ASES outcome score as compared to before surgery, reflecting a meaningful improvement in function (range and strength) and patient well-being following surgery. In addition, no surgical complications, cases of glenoid loosening or revision surgeries were reported at a mean follow-up time of 8.7 years. In a finite element analysis published in the *Journal of Shoulder and Elbow Surgery* in 2012, our InSet Glenoid demonstrated an 87% reduction in "rocking horse" motion, which is a widely known key contributor to implant loosening and failure. We have also focused on optimizing rTSA biomechanics by aiming for a more anatomic feel and aesthetic, preserving native bone and replicating the anatomic humeral positioning, which can contribute to improved postoperative range of motion and function. We believe the biomechanics of our reverse offerings are an important differentiator of our technology. Our improved biomechanics are driven by our proprietary InSet design, which was engineered to create a more anatomic relationship between the glenoid and humeral stem to enhance range of motion. We believe the existing published data and patient outcomes, coupled with growing clinical validation and positive physician feedback, support the long-term adoption and utilization of our products within the shoulder surgical care market.

***Well Positioned as Shoulder Surgical Care Market Grows in Outpatient Settings***

Shoulder procedures can be performed in multiple care settings, including at hospitals, outpatient care centers and ASCs. Over the past three decades, there has been significant growth in outpatient care, driven by lower overall costs and increased procedural efficiency. We believe we are well positioned to succeed in these outpatient settings, particularly ASCs, because our purpose-built ecosystem can facilitate reproducible procedures with low complication rates, intraoperative flexibility, simplified workflows and efficient use of operating room space. We believe these attributes are particularly relevant in the ASC setting, where surgeons commonly face more limited resources (cost constraints and limited space for instrumentation) and financial risk if a surgery requires escalation. In addition to procedural and clinical reliability, ASCs generally prioritize or require cost-efficient, streamlined solutions. Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays, considerably less than the six to nine trays typically required by other offerings. This two tray instrument system can reduce operational complexity and lower costs by, for example, increasing room turnover and surgical throughput and minimizing storage and handling, ultimately helping ASCs to treat more patients with fewer resources. As a result of our positioning in the outpatient market, we have achieved significant growth in the ASC setting. The number of ASC-based procedures using our systems increased approximately 350% from 2023 to 2024, significantly outpacing the approximately 26% growth in ASC-based shoulder arthroplasty procedures in the United States over the same period. Approximately 30% of procedures performed with our implant systems during the month ended December 31, 2024 were performed in ASCs, as compared to approximately 10% during the month ended December 31, 2023. Additionally, as of March 31, 2025, approximately one third of our surgeons performed their first surgery with our implants in an ASC setting, underscoring our capabilities within this high-growth care setting and our alignment with the evolving site-of-care dynamics in the shoulder surgical care market.

***Proven and Experienced Management Team***

Our proven and experienced management team collectively has decades of experience in orthopedic product development and commercialization. Members of our leadership team have held senior and executive roles at some of the most recognized companies in the medical technology industry, including publicly traded companies, and have track records of delivering strong growth and results. We are an innovation-centric team, having played instrumental roles in the development and commercialization of foundational technologies in the shoulder space, including rTSA, stemless implants and advanced preoperative planning technologies. Our commitment to innovation is further evidenced by our combined 250+ orthopedic patents developed over the course of our management team's careers, reflecting deep clinical insight, technical expertise and a nuanced understanding of the orthopedic market. As a result, we are able to leverage deep clinical insight, technical expertise and an informed understanding as to the limitations of existing technologies in the development of next-generation solutions. In addition, through decades of thought leadership in the space, our team has established strong relationships with key opinion leaders and surgeons. We believe the history and experience of our management team position us to effectively execute on our strategic objectives.

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***Unique Commercial Organization Dedicated to the Shoulder Surgical Care Market***

Shoulder surgeries are some of the most complex procedures in the orthopedic space due to the joint's complex range of motion, surrounding soft tissue structures and difficult surgical exposure. This complexity requires a high degree of surgical precision, clinical support, depth of expertise and specialization. We view ourselves as specialists serving specialists and are exclusively focused on shoulder care, which we believe represents a level of expertise that is essential for addressing the unique challenges of these procedures. Our commercial organization is comprised of a dedicated commercial leadership team that drives our internal commercial efforts, our CEME team, and our network of independent distributors. As of March 31, 2025, we had 31 shoulder specialists across our dedicated commercial leadership team and CEME team, representing more than 500 years of combined direct selling, physician engagement and clinical education experience. These specialists collaborate closely with our distributors to direct our sales activities and specialized support services, including hands-on support for surgeons—from procedure planning to execution—and help to facilitate surgeon training and performance management. In addition, our network of independent distributors allows for prospecting, relationship management and case coverage. As of March 31, 2025, our distributor network comprised of over 38 independent groups and 140 trained agents across the United States. These three key components of our commercial organization work in tandem to form a commercial flywheel that is designed to build and reinforce relationships with surgeons and other stakeholders in the shoulder surgical care market. We estimate that there are approximately 15,000 surgeons in the United States who perform at least one shoulder arthroplasty procedure per year, of which we target the approximately 1,800 high-volume surgeons who perform the vast majority of procedures. We believe these high-volume surgeons require dedicated shoulder expertise and support. Our entrenched relationships with many high-volume surgeons, together with engagement through highly tailored support, ongoing medical education and third-party symposiums, lab events, and surgeon-to-surgeon activities, all contribute to fuel our commercial strategy and reinforce our position as a leader in the shoulder surgical care market.

***AI-Enabled Business and Clinical Intelligence Technologies***

We leverage AI-enabled technology solutions to support our business and surgeons. At the center of our commercial strategy is our internal business intelligence platform, which draws insights from our proprietary database to help us target the right stakeholders in the shoulder surgical care market. We also offer similar tools to physician practices to help them identify and acquire new patients through proprietary search engine and funnel optimization strategies. By engaging with surgeons early in the care process and supporting patient acquisition, we become deeply integrated across the surgical workflow. In addition, our proprietary AI powered preoperative planning technology, ProVoyance, is designed to enable consistent, effective positioning of our advanced implant systems. ProVoyance is cleared by the FDA for preoperative shoulder planning, and is listed on the FDA's AI/ML-enabled medical devices list. We believe the benefits of our preoperative planning technology are evidenced by the fact that, for the three months ended March 31, 2025, we estimate an implied utilization rate for our ProVoyance technology of approximately 90% based on the number of surgical plans reported to have been created using ProVoyance technology and the number of our implant systems sold during such period. We also maintain a patient registry that allows practices to monitor outcomes and engage with patients postoperatively. Together, these tools are designed to provide information to enable surgeons to improve care delivery, optimize practice performance and achieve better outcomes. We believe these technologies play an important role in solidifying us as a differentiated, data-enabled leader in shoulder surgical care.

**Our Growth Strategies**

Our goal is to leverage our purpose-built ecosystem to become the leader for shoulder surgical care. The key elements of our growth strategy include:

***Increase Awareness of our Purpose-Built, Innovative Shoulder Surgical Care Ecosystem to Continue Taking Share Across Care Settings***

We plan to center our marketing efforts around educating surgeons about our ecosystem's advantages across all care settings, including hospitals, outpatient care centers and ASCs. Our ecosystem has been thoughtfully developed from the ground up to address the limitations associated with current offerings and help surgeons and patients access

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consistent quality care regardless of where it is delivered. We believe that by focusing on increasing awareness of our holistic, innovation-driven approach, we can drive broader adoption of our ecosystem. We believe our ecosystem provides key advantages that surgeons seek in shoulder arthroplasty solutions, including improved fixation and stability, restoration of full functionality, exceptional longevity, improved implant selection and positioning, optimized procedural workflow and efficiency and access to expert advice. The output of our innovation-first and patient-centric approach has resonated with surgeons, as demonstrated by our 62% increase in procedure volume from 2023 to 2024. As the shoulder surgical care market continues to grow, we believe increased awareness of our ecosystem's advantages will position us to continue capturing market share from less specialized offerings.

***Expand our Commercial Flywheel of Shoulder Specialists, Surgeon-to-Surgeon Collaboration, and Network of Independent Distributors***

Our commercial flywheel includes our dedicated commercial leadership team, CEME team and network of independent distributors. We believe our dedication to shoulder surgical care is a strategic differentiator that enables us to deliver a highly tailored experience to surgeons operating in what is a complex and technically demanding procedure category. We intend to continue scaling our commercial organization with a continued specialized focus on shoulder care. By increasing the size of our dedicated commercial leadership team, we believe we can enhance targeting and prospecting efficiency, in an effort to ensure we engage the highest-value surgeon customers. Likewise, we believe growing our CEME team will allow us to increase the frequency and reach of our educational initiatives, such as symposiums, lab events, and surgeon-to-surgeon training programs. This increased presence will aim to continue to foster and grow our collaborative network of expert surgeon educators who can serve as powerful promoters of broader adoption through surgeon-to-surgeon training and peer education. Finally, by expanding our network of independent distributors, we will strive to ensure the quality of our customer service and execution remains up to our current standard as we scale. We believe our commercial flywheel and exclusive focus on shoulder care allow us to convert high-potential accounts and nurture new surgeons into loyal users of our ecosystem. Through expansion of this integrated and specialized commercial approach, we aim to accelerate growth, drive surgeon engagement, and expand adoption of our differentiated shoulder surgical care solutions in a cost-efficient manner.

***Capitalize on Our Unique Advantages to Capture Outsized ASC Growth***

We intend to expand our presence in the ASC setting through a multi-pronged approach that aims to capitalize on the outsized growth of ASCs as key sites for shoulder surgical care. We will drive targeted sales initiatives to increase awareness of our unique advantages in the ASC setting, including the potential efficiency and economic benefits of our ecosystem. We will also leverage surgeon-to-surgeon collaboration to reinforce these advantages with real-world experiences and will continue to generate clinical and economic validation of our ecosystem's benefits in the ASC. In addition, we intend to continue innovating our systems with the ASC setting in mind. As ASC procedure volume grows, we believe we will be able to drive meaningful growth and establish ourselves as the leader for shoulder arthroplasty in the ASC setting.

***Increase our Addressable Market Through our Commitment to Continuous Innovation and Advancing Shoulder Surgical Care***

We have a strong track record of innovation and product commercialization, having successfully launched a wide range of new technologies to address unmet needs in the shoulder surgical care market. We believe this track record demonstrates our ability to identify clinical needs and bring differentiated solutions to market. We plan to continue investing in our robust product pipeline to expand our capabilities and service additional segments of the shoulder surgical care market. Our near-term development efforts in shoulder arthroplasty include a fracture-specific system, a revision solution, and implants tailored for metal-sensitive patients. Additionally, we intend to build on our existing aTSA and rTSA systems by introducing product line extensions that support continuous improvement and are assessing the implementation of robotic-assisted technology for our implant systems. We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets. By leveraging our innovation capabilities and deep customer relationships, we believe we can expand our

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addressable market and generate incremental sources of revenue through targeted product development. We may also evaluate entering other markets through business development opportunities.

***Continue Building and Driving Marketing of our Technology Solutions***

We view digital enablement as an essential component of modern shoulder surgical care and believe that our technologies can drive greater clinical value and deepen physician engagement. We see four key aspects to the growth opportunity for our technologies. First, we can continue to leverage our internal business intelligence platform to help us efficiently target high-volume surgeon prospects. Second, we can strategically deploy our enabling technologies to connect patients to those physicians. Third, ProVoyance preoperative planning technology can increase surgeon loyalty by helping to improve workflows and drive positive clinical outcomes. Fourth, we can offer surgeons a platform for outcomes measurement to assess performance. We expect our underlying algorithms and predictive capabilities to improve as we drive increased adoption of our technologies and can leverage additional data inputs, which we believe will reinforce a virtuous cycle of increased accuracy, better outcomes and greater reliance on our tools. Additionally, we intend to continue investing in and expanding our technology capabilities and we are actively developing other complementary enabling technologies to support the full continuum of care in shoulder surgery. We believe these innovations will further establish our position as a comprehensive, technology-driven solution provider within the shoulder surgical care market.

***Pursue Expansion in International Markets***

While our primary commercial focus to date has been within the United States, we believe the international shoulder surgical care market represents a compelling opportunity for long-term growth. Based on a market research report issued by Transparency Market Research, we estimate the annual international shoulder arthroplasty market opportunity outside the United States to be approximately $1.0 billion, driven by many of the same factors we see domestically. We plan to strategically pursue entry into certain international markets over time.

**Market Overview**

***Overview of Shoulder Anatomy***

The shoulder is a distinct anatomical structure comprised of bones, muscles, tendons, and ligaments that work in tandem to allow for a complex range of motion for the arm. The key bones of the shoulder include the humerus (upper arm bone), scapula (shoulder blade), and clavicle (collarbone). The humerus articulates with the glenoid fossa of the scapula to form the glenohumeral joint, while the acromion (scapular projection) and clavicle form the acromioclavicular joint. The rotator cuff includes four muscles and their tendons (infraspinatus, subscapularis, supraspinatus, and teres minor) that serve to stabilize the head of the humerus in the glenoid.

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The illustration below depicts the key anatomy of the shoulder (anterior view):

![business1da.jpg](business1da.jpg)

***Overview of Conditions Impacting the Shoulder***

Shoulder pain is highly prevalent and can significantly impact and reduce quality of life as well as result in chronic pain. According to a study published in the *Journal of Shoulder and Elbow Surgery*, an estimated 38% of patients with shoulder pain reported an inability to perform activities of daily life. Furthermore, a study published in the *American Journal of Sports Medicine* estimated 89% of patients with rotator cuff tears had difficulty sleeping. Today approximately one in five adults in the United States over the age of 65 experience shoulder pain.

The primary conditions that can result in shoulder pain and reduced functionality include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Osteoarthritis ("OA")**: OA is a degenerative joint disease characterized by the breakdown of cartilage and underlying bone, leading to pain, stiffness, and reduced mobility in the shoulder's glenohumeral joint. This condition results from wear-and-tear, aging, or prior injury, progressively worsening over time. OA is highly prevalent, affecting approximately one in three adults in the United States over the age of 60.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Rheumatoid Arthritis ("RA")**: RA is a chronic autoimmune disease characterized by synovial inflammation as well as bone and cartilage destruction and deformity. RA typically impacts the large joints more than peripheral joints in later stages of the disease leading to progressive damage in the shoulder. According to the Centers for Disease Control and Prevention, RA impacts over 1.5 million adults in the United States, with various studies estimating incidence in the shoulder as high as 90%.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Shoulder Fractures**: Acute and traumatic injuries may result in severe fractures of the humerus or other adjacent bones in the shoulder. Such incidents are most prevalent among elderly patients and those with chronic conditions such as OA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Rotator Cuff Tears**: Rotator cuff tears refer to partial or full-thickness disruptions of the tendons stabilizing the shoulder joint. Rotator cuff tears can be caused by acute trauma, repetitive stress, or

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degeneration. Rotator cuff tears are highly prevalent and impact nearly 25% of adults over the age of 40 in the United States.

Shoulder conditions are widespread, often debilitating, are commonly experienced concurrently as interrelated musculoskeletal disorders, and are estimated to result in more than eight million physician visits annually in the United States, based on data from the CDC. Despite this prevalence, we believe there has been a historical underutilization of surgical treatments for shoulder care due to several factors including patient hesitation to pursue surgical intervention, insufficient technology to appropriately treat shoulder conditions, perceived difficulty of surgical intervention, and barriers to patient access of care.

***Our Addressable Market Opportunity in Shoulder Surgical Care***

We believe the shoulder surgical care market today presents a significant market opportunity. Our initial focus within this broader market is on shoulder arthroplasty, and we believe we have an opportunity to expand to address adjacent areas in the shoulder surgical care market over time.

We currently serve the large, immediately addressable and rapidly growing market for shoulder arthroplasty procedures. We estimate that approximately 250,000 shoulder arthroplasty procedures will be performed in the United States in 2025, which we believe represents an approximately $1.7 billion market opportunity based on our average sales price. Based on data from a healthcare market research provider regarding the number of shoulder arthroplasty procedures performed, our internal estimates and analysis of such data, as well as our knowledge of our industry, we expect the number of annual procedures performed to grow by approximately 11% annually through 2029. While our current commercial focus is on the United States, we plan to pursue market access initiatives in other attractive, high-growth international markets. We believe a significant opportunity exists outside of the United States and, based on a market research report issued by Transparency Market Research, we estimate that the total international shoulder arthroplasty market is approximately $1.0 billion in 2025. Together, we believe these markets represent a global annual addressable market of approximately $2.8 billion. These market opportunities represent the total overall revenue opportunity that we believe is available for our systems if 100% market share is achieved by us, and are not a representation that we will achieve any such market share. The market share we achieve is subject to a number of assumptions, risks and uncertainties, including the adoption of our implant systems and our ability to execute on our commercial strategy. For more information, please see the section titled "Risk Factors—Risks Related to Our Business and Industry—Our business plan relies on certain assumptions about the market for our implant systems, however, the size and expected growth of our addressable market has not been established with precision and may be smaller than we estimate, and even if the addressable market is as large as we have estimated, we may not be able to capture additional market share."

The number of shoulder arthroplasty procedures in the United States grew at approximately 10% per year from 2019 to 2024, reflecting one of the fastest-growing segments within orthopedic reconstruction since other sectors are growing in low single digits. This growth was primarily driven by multiple, ongoing demographic factors and industry tailwinds. For example, the population in the United States is both aging and remaining more active later in life, which has contributed to a higher incidence of degenerative shoulder conditions. Additionally, greater awareness of treatment options, earlier diagnosis and broader acceptance of shoulder arthroplasty as an interventional solution have expanded the pool of potential patients. In parallel, there has been continued growth of outpatient and ASC settings, which has further increased patient access to care and care settings where surgeons can perform these procedures.

We believe the growth in shoulder arthroplasty procedures will continue to be driven by existing tailwinds. Further, we believe the number of patients who may potentially benefit from shoulder arthroplasty is significantly higher than the number of patients who currently seek treatment today. Over time, as access to care increases and clinical outcomes improve as a result of better technology, we believe the proportion of patients seeking shoulder arthroplasty will eventually approach that of the knee arthroplasty market.

***Overview of Shoulder Arthroplasty***

Shoulder arthroplasty is an established surgical procedure involving a reconstruction of the shoulder joint with prosthetic implants. Arthroplasty involves the resection of surfaces around the glenoid fossa and humeral head

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followed by the implantation of prostheses that articulate with each other. Typically, an arthroplasty procedure includes the implantation of two devices, one "glenoid component" which attaches to the scapula and one "humeral component" which attaches to the humerus. Overall success of these procedures is measured by reduced pain, improved function, fewer post-operative complications, and increased survivorship of the implant.

In all shoulder arthroplasty procedures, appropriate biomechanical fit of the protheses is critical to ensure precise alignment with the patient's natural shoulder anatomy to optimize stability, range of motion, and long-term functionality. Appropriate device type, size, positioning and fixation are all essential to ensuring biomechanical fit and procedure success. ASES scores, which are derived from a postoperative questionnaire used by surgeons to assess shoulder function and patient well-being following surgeries, are commonly used to measure operative success. Today, there are two approaches to shoulder arthroplasty, aTSA and rTSA:

*Anatomic Total Shoulder Arthroplasty (aTSA)* — aTSA imitates the natural joint anatomy by using prosthetic implant components to replace the humeral head with a prosthetic ball and stem and the glenoid with a prosthetic cup. aTSA is most often used in OA and RA patients with arthritic shoulder joints and intact rotator cuffs, using the rotator cuff to stabilize the joint and dictate motion. While aTSA procedures may reduce pain and restore function, complications such as subscapularis tendon failure and glenoid loosening have been relatively common with aTSA procedures.

*Reverse Total Shoulder Arthroplasty (rTSA)* — rTSA inverts the shoulder anatomy and joint configuration, reversing the ball and socket positions. rTSA transforms the humeral head into a socket and the scapula into a ball, shifting the reliance from the rotator cuff to the deltoid muscle for stability and motion. rTSA addresses a broader range of conditions, including rotator cuff arthropathy, irreparable rotator cuff tears, glenoid bone loss, acute fractures, and post-traumatic reconstruction. The development of the rTSA procedure has allowed shoulder arthroplasty to be used to address additional shoulder issues, including rotator cuff damage. While rTSA procedures have corrected some of the limitations of aTSA, historically there has been a tradeoff with patients often sacrificing shoulder motion and movement patterns in rTSA.

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| | |
|:---|:---|
| **Anatomical**<br>Replicates the normal mechanics and anatomy of the shoulder, replacing the ball and socket as they are normally found in the body with prosthetic implants. | **Reverse**<br>"Reverses" the ball and socket placement, transforming the humeral head into a socket and the scapula into a ball. |
| ![business2ba.jpg](business2ba.jpg) | ![business3ba.jpg](business3ba.jpg) |

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*Market Dynamics in Shoulder Arthroplasty*

Shoulder arthroplasty can be performed both as an inpatient hospital procedure and in outpatient settings, including ASCs. In recent years, as the volume of shoulder arthroplasty procedures has grown, the majority of the incremental procedures have been performed at ASCs. This trend is similar to what has occurred in the hip and knee joint replacement markets and tracks the broader long-term growth of surgical procedures shifting to outpatient settings. ASCs have emerged as a low-cost site of care and positive post-care outcomes. We expect that future growth in the market will be significantly driven by ASCs as hospitals face capacity constraints and are more limited in their ability to meet increasing demand. In 2024, CMS added total shoulder arthroplasty to the list of covered procedures that can be performed in ASCs, which facilitated reimbursement and further supported the growth of

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ASCs as a key site of care in the shoulder surgical care market. This growth within ASCs also presents other benefits for key stakeholders, including streamlined workflows, scheduling flexibility and operational autonomy. Further, surgeons often have economic ownership of the ASCs where they operate, with as many as 80% of ASCs owned at least in part by operating surgeons according to a study published in *Global Spine Journal*, which we believe further incentivizes surgeons to utilize ASCs for shoulder arthroplasty procedures.

Shoulder arthroplasty volumes in the United States experienced a significant increase driven by clear and meaningful growth of the rTSA procedure. First approved in the United States in 2004, rTSA has expanded the market and now accounts for a significant majority of shoulder arthroplasty procedures due to their broad treatment applications, surgeon preference relative to aTSA, and advantages in clinical outcomes, such as reduced likelihood of revision surgeries. In 2020, approximately 70% of all shoulder arthroplasty procedures were rTSA procedures.

***Limitations of Existing Product Offerings in Shoulder Arthroplasty***

Despite their frequent use and wide adoption, we believe traditional implants used in shoulder arthroplasty procedures are hindered by several limitations, including poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning due to limited surgical planning, inefficient and burdensome workflow designs and non-specialized case support. These shortcomings can impact both patients and surgeons and result in continued pain or discomfort, lack of mobility, postoperative complications, low rates of implant survivorship, necessity of revision surgeries and costly and inefficient procedures for healthcare providers.

We believe traditional shoulder arthroplasty products present several limitations, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Fixation of the Glenoid Component in aTSA**: Due to poor fixation of the glenoid component in aTSA, normal movement from the humerus can also rock the glenoid loose, commonly referred to as the "rocking horse" effect, creating instability within the implant. The illustration below depicts the "rocking horse" effect resulting from an implant with poor fixation:

![business5aa.jpg](business5aa.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Poor Product Design Resulting in Suboptimal Kinematics in rTSA:** Traditional implants in rTSA utilize an onlay design, placed above the anatomic neck of the humerus on top of a bony surface, without directly penetrating the bone. This design often results in overstuffing whereby the implant excessively fills the joint space and alters the shoulder's natural anatomy. This can increase pressure on surrounding tissues, restrict motion, and result in pain and discomfort. Furthermore, competitor implants that utilize an inlay design inserted directly into the bone often result in poor kinematics, restricting shoulder rotation and movement. These traditional implants may also modify the shoulder anatomy and move the humerus further away from the scapula where it would naturally sit, resulting in poor aesthetic results where the shoulder does not regain its natural form post-procedure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Difficult to Replace and Convert:** Traditional implant designs place the implant stem deep into the humerus, requiring the removal of the stem from the humerus for replacement and revision surgeries and for conversions to rTSAs. This design results in a high degree of bone removal and potential damage to the surrounding soft tissue region during such procedures, and significantly limits and complicates intraoperative flexibility and the ability of surgeons to switch from aTSA to rTSA. aTSA procedures are increasingly using a stemless humeral implant as a bone-preserving alternative. These implants, however, are often not easily convertible to stemmed implants or in rTSA procedures, restricting their utility.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Imprecise Implant Positioning Due to Limited Surgical Planning:** Shoulder arthroplasty procedures require precision and accuracy and clinical evidence demonstrates that positioning as little as five degrees off angle can lead to inferior patient outcomes. Surgeons have historically relied on basic imagery to inform their surgical approach, using tools that often lack 3D bone rendering or biomechanical simulation that do not fully capture patient-specific anatomy and properly simulate postoperative range of motion and joint stability. These existing market offerings have resulted in limited surgeon engagement as well as the outsourcing of imaging interpretation components and planning that surgeons might otherwise seek to perform themselves.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Inefficient and Burdensome Surgical Workflow Design:** Traditional implant systems have typically been developed and expanded product by product, indication by indication, over long periods of time. The complexity of these systems and the related equipment, including multiple trays of instruments, generally requires a wide range of surgical techniques and can considerably complicate surgical workflows across care settings. This legacy approach has led to an outsized amount of equipment in the operating room, leading to logistical challenges including an increased capital footprint, and extended procedure and operating room turnover time, thereby creating unnecessary costs to healthcare providers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Non-Specialized Case Support:** Shoulder arthroplasty is a highly complex and technical procedure. Operating room staff and surgeons routinely rely on the product knowledge and know-how of orthopedic salespeople. Legacy shoulder implants are predominantly sold by non-specialized salespeople who also sell devices in other segments of orthopedics, such as hip and knee implants. The lack of specific product and technical knowledge in shoulder arthroplasty can result in suboptimal case support and patient outcomes.

These limitations of legacy shoulder arthroplasty products can result in the following shortcomings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Failure to Reduce Pain and Improve Shoulder Function:** The key objectives of undertaking shoulder arthroplasty surgery – reduction in pain and increased shoulder functionality – are often not achieved post-surgery. For example, studies have shown that approximately 20% of shoulder arthroplasty patients remain in pain or discomfort beyond one to two years following surgery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Frequent Post-Operative Complications:** As a result of poor fixation and suboptimal kinematics, traditional implants can lead to several complications including overstuffing, glenoid loosening, shoulder subluxation (dislocation), humeral fractures, and subscapularis tendon failure (a condition where the tendon connecting the subscapularis muscle to the humeral bone is damaged, which in one study published in the *Journal of Shoulder and Elbow Surgery* was demonstrated to occur in approximately 15% of aTSA procedures). These complications may result in further pain, reduced function for patients, and require additional intervention.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Low Rates of Implant Survivorship:** Glenoid implant loosening is frequent and common. According to a study published in the *Journal of Shoulder and Elbow Surgery*, approximately 30% of aTSA procedures demonstrated moderate to severe loosening at mean follow-up time of 6.6 years. The resulting pain and inflammation from excessive and continued loosening over time may require additional intervention. In a separate study of aTSA revision surgeries published in the same journal, approximately 70% of glenoid failures that resulted in revision surgery demonstrated glenoid loosening. In this study, approximately 20% demonstrated glenoid loosening within 5 years post procedure and approximately 25% demonstrated precursors to loosening within 5 years post procedure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Necessity of Revision Surgeries:** Poor clinical outcomes and complications significantly increase the likelihood for a second surgery, often requiring a revision surgery to correct or replace a failed implant. Revision surgeries are common with studies showing up to 40% of glenoid implants were subject to revision surgery at 10-year follow-up. These repeat surgeries compromise patients' health and quality of life and are an unnecessary burden and avoidable cost to the healthcare system, with clinical evidence demonstrating that complication rates in revision surgeries are significantly higher. According to a study published in the *Journal of Shoulder and Elbow Surgery*, overall complication rates were 69% in revision rTSA, significantly higher than the 25% complication rate for initial rTSA procedures.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Costly and Inefficient for Healthcare Providers:** Current instrumentation processes require up to nine trays for a single shoulder arthroplasty procedure. Each tray requires significant storage space and must be sterilized before and after every use resulting in higher costs and burdening staff. This inefficient workflow has an outsized impact on outpatient care centers and ASCs given the inherent resource and space constraints in these settings. We believe that requiring more time and space in the operating room for maintaining surgery trays and using large quantities of unfamiliar equipment increase the risk of infection and impact patient safety.

***Additional Opportunities***

We plan to continue investing in our robust product pipeline to expand our capabilities in shoulder arthroplasty and serve additional, adjacent segments of the shoulder surgical care market that we do not currently address. Our near-term development efforts include a revision solution to address the $85 million annual shoulder revision market in the United States (which, based on our estimates, represents approximately 5% of the estimated $1.7 billion annual shoulder arthroplasty market in the United States). We also are developing a fracture-specific system to address the $28.9 million annual shoulder fracture market in the United States. Fracture fixation of the shoulder is a surgical intervention designed to stabilize and repair broken bones within the shoulder employing internal fixation techniques to secure fractured segments and ensure proper healing and functional recovery. We are also developing a line of humeral head and glenoid technologies for the approximately 10% to 15% of the general population who test positively for a metal hypersensitivity and may experience persistent pain, or other symptoms associated with allergic reactions from metal implants. In addition to these near-term development efforts, we are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets, and are assessing the implementation of robotic-assisted technology for our implant systems.

**Our Solutions**

***Our Approach to Innovation***

We are building Shoulder Innovations with the goal of addressing some of the most pressing challenges to patient outcomes in shoulder surgical care: poor biomechanical fit, suboptimal kinematics, difficult replacement and conversion procedures (aTSA to rTSA or stemless to stem), imprecise implant positioning, inefficient and burdensome workflow designs, and limitations of a generalist approach. Our innovation-first mentality centers on the patient, realizing that each stakeholder in the care chain is motivated by and benefits from focused and improved patient care. We seek to improve core components of shoulder surgical care — preoperative planning, implant design and procedural efficiency — in an effort to benefit each stakeholder in the care chain. We believe our approach has positioned us to drive long-term success in the shoulder surgical care market.

We believe that the following attributes are critical to win in this market:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Ease of Use:** We are simplifying the shoulder arthroplasty procedure to help surgeons achieve reproducible results with confidence and ease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Flexibility:** We are developing implant systems to enable surgeons to perform both aTSA and rTSA procedures with consistent surgical techniques and instrumentation, with interchangeable systems.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Predictable Outcomes:** We are leveraging a leading AI-enabled technology to analyze patient anatomy and preoperatively plan surgeries that, together with thoughtful implant design, can lead to improved implant positioning and outcomes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Site of Care Efficiency:** We are engineering our offerings to optimize workflow efficiency across care settings.

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The image below depicts our approach to innovation and key attributes for success in the shoulder surgical care market:

![business6ca.jpg](business6ca.jpg)

***Key Elements of Our Ecosystem***

Our ecosystem is comprised of the following key elements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Advanced Implant Systems:** Our advanced implants include a diverse range of interchangeable InSet aTSA and rTSA systems that leverage our novel, InSet Glenoid and InSet humeral stem technologies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **ProVoyance Preoperative Planning Technology:** This preoperative planning technology integrates AI and ML to transform planar CT imaging into 3D renderings, allowing surgeons to create bespoke surgical plans considering patient-specific anatomy ahead of surgery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Efficient Instrument System:** Our efficient instrument system supports both aTSA and rTSA procedures from start to finish with just two convenient trays.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Specialized Support:** Our team of dedicated shoulder specialists enable us to deliver a highly tailored experience to surgeons operating in a complex and technically demanding procedure category.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Surgeon-to-Surgeon Collaboration:** Our CEME team fosters a collaborative network of expert surgeon educators and promotes surgeon-to-surgeon training and peer education.

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The image below depicts the key elements of our ecosystem:

![business7aa.jpg](business7aa.jpg)

***Key Benefits of Our Ecosystem***

Our ecosystem offers notable benefits that differentiate it within the shoulder surgical care market. These key benefits include**:**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Fixation and Stability:** Our foundational InSet Glenoid technology is biomechanically designed to specifically address what we believe is the primary problem in legacy aTSA implants: glenoid loosening. Our design aims to reduce mechanical stress at the bone-implant interface, improve fixation mechanics, enhance stability and reduce micromotion. These biomechanical advantages are evidenced by a published finite element analysis in which our InSet Glenoid technology demonstrated an 87% reduction in "rocking horse" motion, which is a widely known key contributor to implant loosening and failure. Notably, a separate published retrospective long-term follow-up analysis of patients who received our InSet Glenoid demonstrated a 72-point improvement in the mean ASES outcome score as compared to before surgery, reflecting a meaningful improvement in function (range and strength) and patient well-being following surgery.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Restores Full Functionality:** We engineered our three humeral stem options to provide consistent, optimized biomechanics in both aTSA and rTSA. Using our InSet approach for rTSA, our system is designed with the goal of enabling patients to regain full range of motion, including the ability to raise their arm and reach behind (*i.e.*, forward elevation and internal rotation), and avoid lengthening and overstuffing. We believe our design supports improved postoperative functionality and results in a postoperative feel and aesthetic that more closely tracks the shoulder's natural form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Exceptional Longevity:** Our advanced implant systems are designed for longevity, with minimal need for replacement. A published retrospective long-term follow-up analysis of patients who received our InSet Glenoid demonstrated no surgical complications, cases of glenoid loosening or revision surgeries at a mean follow-up time of 8.7 years in a particularly challenging patient population. We believe this durability provides surgeons and patients with confidence in our long-term implant performance and clinical outcomes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Improved Implant Selection and Positioning:** ProVoyance preoperative planning technology empowers surgeons to create bespoke surgical plans that facilitate consistent, effective positioning of our implants.

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The highly intuitive interface enables surgeon planning without the need for third party intervention and we believe that surgeon-level engagement in preoperative planning provides for better care for patients.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Optimized Procedural Workflow and Efficiency:** Our efficient instrument system supports our implant portfolio across both aTSA and rTSA. This can provide significant workflow advantages for our customers by minimizing the operating room footprint, reducing procedural setup time, lowering sterilization requirements and costs and reducing the risk of errors. This streamlined approach is enabled by leveraging our InSet Glenoid and humeral stem technologies across our aTSA and rTSA systems, minimizing the number of sets and instruments required. Our advanced implant systems leverage consistent surgical techniques, which we believe can improve procedural outcomes while allowing for intraoperative flexibility and seamless interchangeability between aTSA and rTSA procedures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• **Access to Expert Advice:** Our commercial organization creates deep relationships with surgeons and allows us to support their practice with specialized customer service and case support before, during and after surgery. In addition to direct support, our commercial team connects surgeons to the broader shoulder surgical community in various settings with a goal to improve connectivity across the shoulder surgical community and contribute to better patient outcomes.

**Our Implants Systems**

We developed a comprehensive implant portfolio to address the unique needs of patients and surgeons. Our advanced implants are comprised of our aTSA and rTSA systems, which include various, specifically designed components capable of a wide array of system configurations to facilitate different modes of operation (anatomic or reverse) that are optimized for patient-specific needs. These systems leverage consistent surgical techniques and the same efficient, two tray instrumentation system. The design of our advanced implant systems helps to facilitate shoulder surgical care with significant operational flexibility and reduced equipment and operating room footprint requirements.

***InSet aTSA System***

Our aTSA configuration consists of two main components, a glenoid scapular implant and a humeral fixation device, or stem. Each of these components was developed with a view to the overall implant system in an effort to provide maximum benefits to patients and flexibility for surgeons. A retrospective long-term follow-up analysis of patients who underwent aTSA procedures with our InSet Glenoid was published in the *Journal of Shoulder and Elbow Surgery* in 2019, which demonstrated a 72-point improvement in the mean ASES outcome score, statistically significant improvements in pain scores and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at a mean follow-up time of 8.7 years.

*InSet Glenoid*

Unlike traditional glenoid implants that utilize an onlay design, our InSet Glenoid technology features a design that positions the implant within a pocket of sclerotic or cortical bone and aims to reduce mechanical stress at the bone-implant interface, improve fixation mechanics, enhance stability and reduce micromotion, all of which are key contributors to glenoid loosening. This design also enables a less invasive surgical approach that reduces surgical steps and difficulty of tissue exposure. Our InSet Glenoid implants were developed with a patented complex articular surface that contributes to reduction of the rocking horse motion. The InSet Glenoid design also enables a significantly reduced central fixation peg to provide further surgical flexibility.

The InSet PLUS Augmented Glenoid was designed to treat advanced shoulder conditions in patients with severe bone loss. The design of the InSet PLUS Augmented Glenoid corrects defects on the articular surface (in contrast to the fixation side of the implant) with five or ten-degree options. This method allows surgeons to easily adjust the

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implant's position for optimal patient fit and stability through this dialable and articular side augmentation. The image below depicts the implant characteristics of our InSet Glenoid:

![business8ba.jpg](business8ba.jpg)

Supported by a growing body of peer-reviewed studies and approximately nine years of published data, our InSet Glenoid technology has demonstrated effectiveness across a variety of clinical indications, including cases involving advanced arthritis and severe bone loss. In addition to preserving bone in patients, our InSet Glenoid technology has been shown to facilitate quick recovery times, decreased pain, and improved range of motion for patients after surgery.

We commenced development efforts with our InSet Glenoid in 2009 and received 510(k) clearance in 2011. We commercially launched an initial aTSA system with our InSet Glenoid in 2016. We commenced development efforts for our InSet PLUS Augmented Glenoid in 2019 and received 510(k) clearance in 2020. Each of these devices is classified by the FDA as a Class II device.

*InSet Humeral Stems* 

We offer three unique InSet humeral stem system options for our aTSA and rTSA systems—Humeral Stemless, Humeral Short Stem, and I-Series Humeral Stem—each purpose-built to address the specific needs of patients and physicians. Our humeral stems feature a proprietary porous coating designed to promote bone ingrowth by allowing bone tissue to grow into the porous structure (osseointegration), which creates a strong natural biological fixation and improves implant stability. Our stems also feature what we believe is an industry-only 132.5 degree neck shaft angle, a feature that enables our simplified surgical technique focused on proximal geometry—the shape, size, and

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position of the proximal humerus (upper arm bone) and its relationship to the glenoid (shoulder blade). The image below depicts our primary current humeral stems:

![business9ba.jpg](business9ba.jpg)

We commenced development efforts for our short stem, stemless and I-Series humeral stem system options for our aTSA and rTSA systems in 2017, 2019 and 2021, respectively, and received our primary 510(k) clearances in 2018 and 2022, with an additional 510(k) clearance in 2024 for use of the InSet 95 stem for use with anatomic fractures. Each of these devices is classified by the FDA as a Class II device.

Our novel humeral stem solutions are differentiated and designed to be compatible across the full range of our implant systems. Surgery with each humeral stem involves a consistent surgical technique and instruments, which enables seamless interchangeability between our aTSA and rTSA systems. This interchangeability is important in cases where the surgeon makes an intraoperative decision to switch from a stemless to a stemmed implant, or in revision or conversion surgeries where the determination is made to switch to a different implant modality (anatomic or reverse) or alternative humeral stem design. The image below depicts the designed compatibility of our systems:

![business10ba.jpg](business10ba.jpg)

***InSet rTSA System***

Our rTSA configuration leverages the same humeral fixation platform as our aTSA configuration but utilizes alternative humeral and glenoid articular components designed for the reverse modality. The humeral component is configured to allow attachment of a tray and bearing assembly, designed to articulate with the glenoid sphere ("glenosphere"). The glenosphere is attached to a baseplate configured to provide reliable fixation to the glenoid on the scapular bone.

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Our rTSA system was designed to optimize biomechanics and provide patients and physicians with a novel reverse implant solution that functions more like an anatomic implant in terms of improved range of motion. The InSet design of our rTSA system allows for retention of the patient's native anatomy and aesthetic and helps to achieve desirable, impingement free range of motion by avoiding arm lengthening, overstuffing, and other common challenges.

*Humeral Tray and Bearing Assembly*

Our humeral tray and bearing assembly are comprised of two components—a titanium humeral tray, and a polyethylene bearing—designed for low-profile assembly using our proprietary "Twistlock" locking mechanism. The Twistlock mechanism improves bearing-to-tray pullout strength, reducing the potential for bearing disassociation, a serious complication in rTSA where the polyethylene liner ("socket") separates from the humeral tray ("ball").

Our humeral tray and bearing assembly feature a unique bowl-shaped design that, together with the low profile nature of the Twistlock design, allows for inlay biomechanics with a rTSA modality, in which the apex of the glenosphere is positioned on the articular surface. This tray and bearing assembly, a key component of our rTSA system, connects to our humeral stems in the same manner as our InSet humeral head solutions, a key component of our aTSA system. The identical connection mechanism between these key components of our aTSA and rTSA systems is a critical design feature that enables the interchangeability of our systems and the potential for the humeral stem to remain in place during a revision or conversion surgery.

*Scapular Reverse Assembly*

The scapular assembly for rTSA is comprised of two main components—a baseplate, and a glenosphere—assembled by attaching the baseplate to the scapula using peripheral and central screws, then connecting the glenosphere to the baseplate using our proprietary locking cap technology. We have developed a wide range of baseplate and glenosphere options, which allows for multiple configurations to support a broad range of patient anatomy. With the use of ProVoyance, the assembly is configured to a patient's unique needs. This assembly enables a lateralized center of rotation that, together with our humeral assembly, results in a reverse implant that we believe feels and functions more like an anatomic shoulder replacement, with optimized range of motion and joint stability.

A key advantage of our rTSA system is the ability to treat complex glenoid deformities with minimal bone removal, enabled by our augmented baseplates developed with a concave backside design. The augmented baseplate is positioned within the subchondral bone which allows for correction of complex glenoid defects, which we believe improves implant stability and can preserve bone. Unlike typical augmentation options, our InSet reverse scapular components enable complete, flush contact between the implant and the native bone, without the need for a bone graft and eliminating multiple bone preparation steps.

We commenced development efforts for our rTSA system in 2019 and received 510(k) clearance in 2021. Our rTSA system is classified by the FDA as a Class II device.

**ProVoyance Preoperative Planning Technology** 

We believe that surgeon-level engagement in preoperative planning—that is, detail-by-detail procedural planning performed by surgeons themselves—is a key element in providing effective surgical care for the patient. Hands-on preoperative planning by the surgeon provides for intimate familiarization with the patient's unique anatomy and surgical needs and reveals key learnings which guide preoperative and intraoperative decision making. For these reasons, we offer a highly approachable, easy to use preoperative planning technology with an intuitive interface designed to engage surgeons at levels we believe are industry leading.

ProVoyance integrates AI and ML to transform planar CT imaging into 3D renderings of patient-specific anatomy ahead of surgery. Its AI and ML algorithms empower surgeons to independently create bespoke surgical plans that can help ensure consistent, effective positioning of our implants.

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ProVoyance received 510(k) clearance from the FDA in 2021 and is classified by the FDA as a Class II device. ProVoyance is listed on the FDA's AI/ML-enabled medical devices list, which is a resource maintained, published, and periodically updated by the FDA to identify AI/ML-enabled devices that have been authorized for marketing in the United States through any of the standard paths to market for medical devices, although it is not intended to be a comprehensive list of all such devices that incorporate AI/ML. This is highly differentiated from other preoperative planning solutions, where the implant manufacturer or another third-party creates a surgical plan that is sent to the surgeon for their consideration.

We believe the differentiation and value proposition of ProVoyance is validated by high utilization rates of ProVoyance across procedures using our advanced implant systems. For example, for the three months ended March 31, 2025, we estimate an implied utilization rate for our ProVoyance technology of approximately 90%, based on 1,303 surgical plans created using ProVoyance technology and 1,443 implant systems sold during such period. This implied utilization rate is based on real-world data from our customers during such period, as ProVoyance technology tracks and reports each surgical plan that our customers create, and the actual number of implant systems sold during the respective period. We believe this high surgeon utilization rate of ProVoyance is due to its ease of use and technical feature set. Ease of use is facilitated by the platform's highly intuitive, Unity-based interface with full user control and high-quality graphics capabilities. Technically, ProVoyance delivers true full-depth 3D rendering, 2D/3D bone density analysis, and biplanar glenoid deformity correction. ProVoyance provides an enhanced preoperative planning experience for surgeons and allows them to approach procedures with high confidence in their surgical plan.

The image below depicts the ProVoyance interface:

![business11aa.jpg](business11aa.jpg)

**Efficient Instrument System**

We re-engineered the components and technique for shoulder arthroplasty in order to create our proprietary InSet instrument system. This system was designed to enable interoperability between our novel aTSA and rTSA systems and a range of humeral stem options, while minimizing complexity and streamlining workflows.

Our instrument system is comprised of many components that fit within two trays, that we have specifically designed to facilitate the surgical technique used in connection with our implant systems. The components of each tray were designed for our implant characteristics and function. For example, the shape of the fixation fins on the

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humeral components were specifically designed to facilitate a surgical technique that can be used across procedure types and systems, and each instrument was designed with a view to maximize utility and reduce the overall quantity of instruments used in procedures involving our systems.

We believe our efficient, two tray instrument system can enable surgeons and staff to reduce operating room footprint, procedural setup time, sterilization time and expense and procedural complexity. We believe these benefits make it an optimal solution for aTSA and rTSA procedures performed across care settings and meaningfully reduce the per procedure capital outlay in shoulder surgical care. This advantage is particularly evident in ASCs, which generally have fewer resources and smaller footprints to handle or coordinate significant operative tools and complex instrument systems. The image below depicts our efficient instrumentation system for aTSA and rTSA:

![business12ba.jpg](business12ba.jpg)

**Our Commercial Approach**

We view ourselves as specialists serving specialists, having purposefully built our commercial organization around the unique needs of shoulder surgeons. Our commercial organization is comprised of three key components: (a) a dedicated commercial leadership team, (b) a CEME team and (c) a network of independent distributors. These key components work in tandem to form a commercial flywheel that is designed to build and reinforce relationships with surgeons and other stakeholders in the shoulder surgical care market, accelerate adoption, and enhance long-term retention.

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The image below depicts our the three key components of our commercial organization:

![business13ba.jpg](business13ba.jpg)

We estimate that approximately 15,000 surgeons in the United States perform at least one shoulder arthroplasty procedure per year, with approximately 1,800 high-volume surgeons performing the vast majority of procedures. We believe these high-volume surgeons require dedicated expertise and support. To optimize our commercial strategy, we have developed proprietary business intelligence tools that enable us to identify and engage with the high-volume surgeons most likely to adopt our solutions. These tools analyze key data points such as surgeon location, procedure mix and care settings, enabling us to prioritize outreach and allocate commercial resources efficiently. By understanding where and how these high-volume surgeons practice, we can tailor our engagement strategies to align with their clinical and operational needs.

Once a surgeon is integrated into our ecosystem, we focus on expanding utilization by increasing the percentage of procedures performed with our solutions. To support our targeting and commercial efforts, we have classified surgeon customers into three categories: prospect surgeons, who perform between one and two shoulder arthroplasty procedures using our implant systems per quarter ("Prospect surgeons"); contender surgeons, who perform between three and eight shoulder arthroplasty procedures using our implant systems per quarter ("Contender surgeons"); and core surgeons, who perform at least nine shoulder arthroplasty procedures using our implant systems per quarter ("Core surgeons"). A key driver of increasing adoption within our existing surgeon base over time (helping Prospect surgeons become Contender surgeons, and Contender surgeons to become Core surgeons) is our surgeon-to-surgeon education program facilitated by our CEME team. We are committed to fostering a collaborative community among shoulder surgeons where expertise is shared, new ideas are exchanged and best practices are disseminated to enhance clinical outcomes. By facilitating these peer connections, we strengthen engagement within our ecosystem and reinforce its real-world success. As surgeons share their positive experiences with our ecosystem and the impact on patient outcomes, we believe this organic advocacy further accelerates adoption, positioning us to benefit from the natural network effects within the shoulder surgical care community.

Using this commercial approach, we aim to drive adoption and momentum with both existing and new surgeons and are continuing to increase our number of high-volume surgeons over time. For example, our number of Core and Contender surgeons has increased over time. For the quarter ended December 31, 2022, 2023 and 2024, we had 41, 60 and 83 Core and Contender surgeons, respectively, who performed 486, 888 and 1,145 shoulder arthroplasty procedures using our implant systems, respectively, in each of the respective periods. Over the course of 2022, 2023 and 2024, Core and Contender surgeons performed 1,408, 2,482 and 4,102 shoulder arthroplasty procedures, respectively, using our implant systems. For the quarter ended March 31, 2025, we had 92 Core and Contender surgeons who performed 1,376 shoulder arthroplasty procedures using our implant systems during this period. We have efficiently leveraged our commercial organization and approach to drive additional growth and to increase utilization of our implant systems by existing and new surgeons, and aim to continue to execute on this strategy going forward.

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***Dedicated Commercial Leadership Team***

As of March 31, 2025, our dedicated commercial leadership team was comprised of 24 specialized representatives, organized into two commercial territories in the United States. Our team is focused on identifying high-volume surgeons specializing in shoulder surgical care. Their main responsibilities include: (a) target prospecting, by leveraging our business intelligence tools to identify and engage high-volume surgeons; (b) manage our distributor relationships, which helps to ensure alignment across our commercial organization and network of third party distributors; and (c) facilitate case coverage for each shoulder surgery performed with our systems, either directly or through our network of distributors.

***Dedicated Customer Experience and Medical Education Team***

As of March 31, 2025, our CEME team was comprised of seven expert surgeon educators who facilitate rewarding and meaningful experiences for surgeons focused on clinical value. Key responsibilities of our CEME team include key account conversions, expanding surgeon utilization of our solutions, and importantly, facilitating quality surgeon-to-surgeon educational opportunities. This team hosts medical education events and activities such as symposiums and lab events where like-minded surgeons can exchange ideas and nurture a culture of innovation in shoulder care. These in-person engagements are designed to build long-term relationships that extend well beyond the events themselves. For that purpose, we have developed online forums where high-volume users of our products can collaborate, share case experiences, and consult one another in real time. This community of surgeons often becomes the most passionate advocates for our solutions, often educating, training, and engaging other surgeons in the benefits of joining our ecosystem.

***Independent Distributor Network***

As of March 31, 2025, our network was comprised of 38 independent distributors with an aggregate of 140 trained representatives. Unlike typical stocking distributors, this network plays a critical role in expanding our market reach and driving adoption of our solutions in a cost-effective and scalable manner. In most cases, these distributors are focused on the orthopedic marketplace and sign exclusive agreements to carry our systems as their dedicated shoulder solution. They provide valuable feedback from the marketplace and are responsible for prospecting new surgeon customers, managing relationships, servicing existing accounts, and providing case coverage to support surgical execution. By maintaining strong, localized relationships with surgeons and healthcare facilities, our distributors help facilitate initial engagement, ongoing support, and long-term retention. Our dedicated commercial leadership team actively manages these relationships, ensuring distributors are meeting performance expectations and driving sales growth. We continuously evaluate distributor performance, maintaining relationships with those who generate the most sales while upgrading distribution partners where commercial execution can be improved.

**Product Development and Pipeline**

We leverage our team's decades of collective experience developing and launching novel shoulder surgical care technologies to identify solutions addressing the unmet needs of patients and surgeons. Since the initial launch of our InSet Glenoid in 2016, we have successfully commercialized a wide range of new technologies to enhance our ecosystem and provide surgeons with the tools and support needed to deliver quality outcomes for patients requiring shoulder surgical care. We believe our commitment to continuous innovation has been demonstrated by our track record of developing leading new technologies.

We continue to see clinical outcomes in the shoulder surgical care space that are inferior to those seen in more mature orthopedic markets and intend to continue working with our surgeon advisors to further improve clinical outcomes in shoulder surgical care. We believe this continued commitment to innovation will further expand our addressable market opportunity and improve our competitive position in shoulder surgical care.

We have a robust pipeline of new technologies in various stages of development and evaluation, including the following select projects.

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***I-Series Expansion and New Indications***

We engineered the I-Series humeral stem line to provide a novel stem option for patients suffering from arthritis and a wide spectrum of proximal humeral bone loss or density. Our I-Series humeral stems feature a 2-fin design, specifically engineered for superior rotational control and stability. We launched our initial I-Series system in 2023, the InSet 95 Humeral Stem, which has been well received by the marketplace. We are developing additional stems, including InSet 70, InSet 135 and InSet 185 stems to expand our I-Series humeral stem line. We commenced development efforts for these additional InSet 70, InSet 135 and InSet 185 stems in 2024 and we anticipate pursuing FDA clearance of these stems, as needed, over the next twelve months. These additional clearances, if received from the FDA, will extend the range of available stem sizes and include expanded indications into fracture and revision surgeries.

***Technologies for Metal Hypersensitive Patients***

Market awareness of the risks and prevalence of metal hypersensitivity has risen in recent years. We are developing a line of humeral head and glenoid technologies for the approximately 10% to 15% of the general population who test positively for a metal hypersensitivity and may experience persistent pain, or other symptoms associated with allergic reactions from metal implants. These development technologies include our Humeral Head and Glenosphere, each constructed from alternative materials which do not incorporate elements that typically represent higher allergic risk for patients who test positively for a metal hypersensitivity. We anticipate pursuing FDA clearance of these solutions over the next twelve months.

***Adjacent Market Expansion***

We are also evaluating expansion into adjacent areas in shoulder surgical care, which may include sports medicine and shoulder trauma markets.

**Clinical Overview**

There is a significant body of clinical evidence that supports the safety, efficacy, and durability of our implants in shoulder arthroplasty, including our InSet Glenoid technology. We are committed to continued investment in obtaining further clinical evidence with the support of surgeons who are recognized as thought leaders in shoulder surgical care. We believe these efforts will continue to generate a substantial body of additional clinical evidence that will drive increased awareness and adoption of our products.

Since our founding, we have contributed to numerous publications that we believe evidence and strengthen our position as a leader in our industry. These studies focus on various patient outcome measures related to pain relief, range of motion, and complication rates, such as ASES outcome scores, Visual Analog Scale ("VAS") scores and Single-Assessment Numeric Evaluation ("SANE") scores. An ASES score is a metric derived from a postoperative questionnaire used by surgeons to assess shoulder function and patient well-being. ASES scores are based on a 100-point scale with higher scores indicating better function and less pain. A VAS score is a metric used to measure patient-perceived pain intensity with 10 indicating highest level of pain and 0 indicating no pain. A SANE score is a metric used to measure patient improvement where patients rate their shoulder on a scale from 0 to 100, with 100 being the patient's normal function. In addition, these studies focus on the most frequent complication associated with shoulder arthroplasty, failure of the glenoid component and published research demonstrates superior implant survivorship (*i.e.*, lack of revision).

As described in greater detail in the table below, the following is a summary of certain of these supportive, peer-reviewed publications:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A study published in *The Journal of Shoulder and Elbow Surgery* in 2011 evaluated clinical outcomes of our InSet Glenoid implants at a mean follow-up time of 4.3 years. The results demonstrated statistically significant improvements in the mean ASES outcome score (68-point improvement), VAS scores (6.8-point improvement) and range of motion, with no surgical complications.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A study published in *The Journal of Shoulder and Elbow Surgery* in 2012 evaluated the fixation strength and stress distribution of our InSet Glenoid fixation technique. In this study, our InSet Glenoid implants demonstrated no signs of loosening and up to an 87% reduction in displacement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A study published in *The Journal of Shoulder and Elbow Surgery* in 2019 evaluated clinical outcomes of aTSA procedures with our InSet Glenoid at a mean follow-up time of 8.7 years. The results indicated statistically significant improvements in the mean ASES outcome score (72-point improvement), VAS scores (7.6-point improvement) and range of motion, with no surgical complications, no cases of glenoid loosening and no revision surgeries performed at follow-up.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• A study published in *The Journal of Shoulder and Elbow Surgery* in 2023 evaluated clinical outcomes of aTSA procedures with our InSet Glenoid at a mean follow-up time of 28.7 months. There results indicated significant improvements in ASES scores (43-point improvement), VAS scores (4.2-point improvement) and SANE scores (51.6-point improvement, and statistically significant improvement in range of motion). Additionally, there were low rates of central peg radiographic lucency, asymptomatic loosening of the InSet Glenoid implant, and no patients were revised for implant-related complications.

The table below sets forth additional information regarding these peer-reviewed publications. Some of these studies were conducted with small sample sizes, did not control for clinical variables or have other design limitations (e.g., the studies may be retrospective and are not randomized controlled trials). Except as otherwise noted in the table below, we did not fund or sponsor any of these peer-reviewed publications nor were our employees involved in the studies or publications.

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| **Reference** | **Source** | **Study Summary** |
| Gunther et al. (2011) | *The Journal of Shoulder and Elbow Surgery* | <u>Title</u>: Total shoulder replacement surgery with custom glenoid<br>implants for severe bone deficiency<br><u>Authors</u>: Stephen B. Gunther, MD; Tennyson L. Lynch, BS<br><u>Description</u>: A retrospective review of seven consecutive patients (three men, four women) treated with shoulder arthroplasty surgery with custom inset glenoid implants for severe bone deficiency at a minimum of three years.<br><u>Conclusions</u>: This study documented for the first time the use of custom-made inset glenoid implants in the treatment of severely deficient bone defects for which standard implants are contraindicated. The surgical technique has allowed glenoid implantation to be performed safely in this small group of patients, and the inset technique has been an effective short-term solution for these patients.<br>At a mean follow-up of 4.3 years, there were statistically significant improvements (*P < 0.02*) in VAS scores (6.9 to 0.1), ASES outcome scores (26 to 94), and range of motion. No surgical complications occurred. Independent radiographic analysis determined all implants were classified as ''low risk'' for glenoid loosening. |
| Gunther et al. (2012) | *The Journal of Shoulder and Elbow Surgery* | <u>Title</u>: Finite element analysis and physiologic testing of a novel, inset glenoid fixation technique<br><u>Authors</u>: Stephen B. Gunther, MD; Tennyson L. Lynch, BS; Desmond O'Farrell, B.Eng (Hons) MM; Christian Calyore; Andrew Rodenhouse, BS<br><u>Description</u>: A comparative scientific analysis of glenoid loosening using an inset glenoid fixation technique vs the standard onlay technique used with a keel or pegged implant. The analysis consists of two separate methods: First, physiologic in vivo cyclic loading of glenoid implants was simulated using the dynamic model described by Anglin et al and American Society for Testing and Materials (ASTM) F2028-08 Standard Test Methods for Dynamic Evaluation of Glenoid Loosening or Disassociation. Second, finite element analysis was performed to estimate the glenohumeral joint stress and displacement for both standard onlay implants and an inset glenoid implant.<br><u>Conclusions</u>: The mechanical testing in this study of the inset glenoid design and fixation technique showed a significant reduction in post-testing distraction after physiologic loading compared with standard onlay design and fixation. The results of the finite element analysis support the concept of inset glenoid fixation based on the significant reduction in stresses on the backside surface on the inset implant compared with the standard onlay implant. Also, the nodal displacement at the edges of the implants under rim loading conditions was significantly reduced for the inset implants, and there was more uniformity of stress distribution along the inset polyethylene surface. This testing shows increased glenoid fixation strength using an inset technique, which may be beneficial in minimizing clinical glenoid loosening. |

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| **Reference** | **Source** | **Study Summary** |
| Gunther et al. (2019)\* | *The Journal of Shoulder and Elbow Surgery* | <u>Title</u>: Long-term follow-up of total shoulder replacement surgery with inset glenoid implants for arthritis with deficient bone<br><u>Authors</u>: Stephen B. Gunther, MD; Sterling K. Tran, BS<br><u>Description</u>: A retrospective analysis was performed on 21 of 24 consecutive patients treated with inset glenoid implants for severe glenohumeral joint arthritis with bone deficiency with prospectively collected data. Inclusion criteria were patients with shoulder arthritis and severe glenoid bone deficiency, defined by perpendicular glenoid vault depth less than 15 mm. No bone grafts were used. All patients were evaluated preoperatively and after surgery with physical examination, radiographic studies and outcome measures. There were 10 males and 11 females, 17 cases with osteoarthritis and 4 with inflammatory arthritis, and 5 patients with rotator cuff tears (3 full thickness and 2 partial tears). Mean age was 68 years.<br><u>Conclusions</u>: This inset glenoid fixation technique offers an innovative approach to a difficult clinical conundrum of shoulder arthritis with deficient glenoid bone. In this series, there were no complications, no cases of glenoid implant loosening and no revision surgeries performed at a mean 8.7-year follow-up. This technique is also safe, because there is only minimal penetration of the glenoid surface bone. Finally, the technique is simple and easily reproducible. It is a reasonable alternative to other current techniques available for patients with shoulder joint arthritis, severe bone deficiency, and an intact rotator cuff.<br>At a mean follow-up of 8.7 years, there were statistically significant improvements (*P < 0.001*) in VAS scores (7.7 to 0.1), ASES outcome scores (23 to 95) and range of motion. |
| Johnston et al. (2023) | *The Journal of Shoulder and Elbow Surgery* | <u>Title</u>: Clinical and radiographic outcomes following anatomic total shoulder arthroplasty utilizing an inset glenoid component at 2-year minimum follow-up: a dual center study<br><u>Authors</u>: Peter S. Johnston, MD; John T. Strony, MD; Jessica L. Churchill, MD; Roma Kankaria, BS; Benjamin W. Sears, MD; Grant E. Garrigues, MD; Robert J. Gillespie, MD<br><u>Description</u>: A retrospective review of 75 patients undergoing aTSA using an inset glenoid component by two fellowship-trained shoulder surgeons at two separate institutions from August 2016 to August 2019 with minimum follow-up of two years. Range of motion and ASES, VAS and SANE scores were obtained. Radiographic outcomes, including central peg lucency and glenoid loosening, were assessed by three independent reviewers on the postoperative Grashey and axillary radiographs obtained at the final follow-up.<br><u>Conclusions</u>: At 2-year minimum follow-up, there were significant improvements in range of motion, VAS, SANE and ASES scores with low rates of central peg radiographic lucency and glenoid loosening. Additional long-term follow-up is needed to further clarify the advantages of InSet glenoid components when used in anatomic shoulder arthroplasty. |

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\*As part of this publication, Mr. Gunther received 125,000 Warrants to purchase our Series B convertible preferred stock in January 2020.

In addition, we are investing in a registry to collect observational non-randomized standard-of-care data to document survival of our implant and evaluate the short- and long-term clinical and radiographic outcomes associated with real world use of our implant systems. The primary purpose of the registry will be to assess survival of our implant with or without revision at 2 years, 5 years and 10 years post-operatively. We believe this registry will provide further clinical support and additional clinical evidence that will drive increased awareness and adoption of our products. We expect the first publication of this registry to be available as early as 2026.

**Coverage and Reimbursement**

We sell our systems directly to hospitals, outpatient care centers and ASCs. These customers in turn bill various third-party payors, such as Medicare, Medicaid and private health insurance plans, for the total healthcare services required to treat the patient. Government agencies, private insurers and other payors determine whether to provide coverage for a particular procedure and to reimburse hospitals, outpatient care centers and ASCs at rates based on a prospective payment system. For procedures performed during a hospital inpatient stay, Medicare generally reimburse hospitals a single bundled payment that is based on the patient's principal diagnosis, up to 24 additional diagnoses and up to 25 procedures performed during the stay. Cases are classified into Medicare Severity-Diagnosis Related Groups ("MS-DRGs"), for payment under the Medicare Inpatient Prospective Payment System, for all items and services provided to the patient during a single hospitalization, regardless of whether procedures utilizing our products are performed during such hospitalization. Medicare rates for the same or similar procedures vary due to geographic location, nature of facility in which the procedure is performed and other factors. With respect to procedures performed in a hospital outpatient setting, all items and services paid under the Medicare outpatient prospective payment system, are assigned to payment groups called Ambulatory Payment Classifications, which group together items and services that are similar clinically and in terms of resource use. With respect to ASCs, covered procedures are assigned to ASC payment groups, which then determines the amount that Medicare pays for facility services furnished in connection with a covered procedure. Effective January 1, 2024, CMS added total shoulder arthroplasty to the list of covered procedures that can be performed in ASCs, which facilitated reimbursement and further supported the growth of ASCs as a key site of care in the shoulder surgical care market. While private payors vary in their coverage and payment policies, most use coverage and payment by Medicare as a benchmark by which to make their own decisions.

Reimbursement for professional services performed by physicians are also reported using CPT codes and based on a different payment methodology. Procedures using our systems are reported under CPT code 23470 for partial shoulder arthroplasty and CPT Code 23472 for total shoulder arthroplasty:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *CPT 23470 (Arthroplasty, glenohumeral joint; hemiarthroplasty) –* Customers may categorize a procedure using our system as a partial shoulder arthroplasty when the reconstruction procedure is limited to the humeral articulation, and no replacement of the scapular articular surface (glenoid) is made.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *CPT 23472 (Arthroplasty, glenohumeral joint; total shoulder (glenoid and proximal humeral replacement (e.g., total shoulder)))* – Customers may categorize a procedure using our system as a total shoulder arthroplasty when either aTSA or rTSA reconstruction is performed and the articular surfaces of both the humerus and the scapula are replaced by artificial components.

**Intellectual Property**

Intellectual property, including patents, trade secrets, trademarks and copyrights, is important to our business. Our commercial success depends in part on our ability to obtain and maintain proprietary intellectual property protection for our current products as well as for future product candidates and novel discoveries, product development technologies, and know-how. Our commercial success also depends in part on our ability to operate without infringing the proprietary rights of others and to prevent others from infringing our proprietary rights. We seek to maintain our proprietary position by, among other means, filing United States and foreign patent applications to obtain issued patents with claims directed to our products, product candidates, technology, inventions, and improvements that are important to the development and implementation of our business. We may also license from

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third parties certain patent rights and proprietary know-how that we believe to be necessary or useful to our business. Additionally, we protect our proprietary know-how that may not be patentable, and other confidential information, by maintaining and implementing appropriate policies and procedures with respect to secrecy and confidentiality.

We are currently seeking and maintaining patent protection in the United States and key foreign jurisdictions where we intend to market our products, and plan to do so with respect to any of our future product candidates. Our patent portfolio includes a combination of patents and pending patent applications solely held by us.

As of May 16, 2025, our owned patent estate contains eleven (11) patent families comprising eleven (11) issued U.S. patents, seven (7) issued foreign patents, eleven (11) pending U.S. non-provisional patent applications and twenty (20) pending foreign patent applications. The eleven (11) issued U.S. patents are expected to expire between April 2025 and October 2041, after accounting for potentially available patent term adjustments, and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. Any patents that may issue from the eleven (11) pending U.S. patent applications are expected to expire between March 2030 and January 2045, without accounting for potentially available patent term adjustments, term-limiting effects of terminal disclaimers and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. The seven (7) issued foreign patents include one or more issued patents in jurisdictions such as Australia, Canada and Europe (validated in one or more of Germany, France, Switzerland and the U.K. and/or as having unitary effect), and are expected to expire between February 2026 and April 2039, without accounting for potentially available patent term extensions and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. The twenty (20) pending foreign patent applications include one or more pending applications in jurisdictions such as Australia, China, Europe and Japan, and are expected to expire between April 2038 and March 2044, without accounting for potentially available patent term extensions and assuming payment of appropriate maintenance, renewal, annuity and other governmental fees. Calculation of the expiration of issued patents is complex, varies by country and is based upon many factors. Accordingly, the following expiration dates are estimates.

Our owned U.S. and foreign patents and patent applications generally relate to anatomic total shoulder arthroplasty, reverse total shoulder arthroplasty, and instrumentation systems for anatomic total shoulder arthroplasty and reverse total shoulder arthroplasty. Our owned issued U.S. and foreign patents are set forth in the table below, which are directed to our relevant technologies, including glenoid implants, humeral implants, reverse shoulder replacement systems and instrumentation for shoulder replacement.

The table below sets forth information regarding our owned non-provisional patents and pending patent applications:

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| **Country** | **Status** | **Application No.** | **Patent No.** | **Estimated Expiration** | **Description** | **Related Technology** | **Types** |
| US | Issued | 11/066978 | 8007538 | 8/9/2027 | SHOULDER IMPLANT FOR GLENOID REPLACEMENT | Glenoid Implants | Devices |
| US | Pending | 18/786,205 | n/a | n/a | SHOULDER IMPLANT FOR GLENOID REPLACEMENT | Glenoid Implants | Devices |
| EP | Issued | 11753831.4 | 2544632 | 3/3/2031 | METHODS AND DEVICES FOR LESS INVASIVE GLENOID REPLACEMENT | Glenoid Implants | Devices |
| AU | Issued | 2006218936 | 2006218936 | 2/22/2026 | SHOULDER IMPLANT FOR GLENOID REPLACEMENT AND METHODS OF USE THEREOF | Glenoid Implants | Methods |
| CA | Issued | 2598659 | 2598659 | 2/22/2026 | SHOULDER IMPLANT FOR GLENOID REPLACEMENT AND METHODS OF USE THEREOF | Glenoid Implants | Devices |

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| **Country** | **Status** | **Application No.** | **Patent No.** | **Estimated Expiration** | **Description** | **Related Technology** | **Types** |
| EP | Issued | 6735834.1 | 1858453 | 2/22/2026 | SHOULDER IMPLANT FOR GLENOID REPLACEMENT | Glenoid Implants | Devices |
| US | Issued | 13/308221 | 9381086 | 3/25/2032 | STEM FOR USE IN JOINT ARTHROPLASTY | Humeral Implants | Devices |
| US | Issued | 15/202364 | 10143559 | 11/30/2031 | STEM FOR USE IN JOINT ARTHROPLASTY | Humeral Implants | Devices |
| US | Issued | 14/845136 | 10492926 | 1/25/2037 | ALIGNMENT GUIDE FOR HUMERAL OR FEMORAL STEM REPLACEMENT PROSTHESES | Instrumentation | Methods |
| US | Issued | 16/701118 | 12109126 | 5/13/2036 | ALIGNMENT GUIDE FOR HUMERAL OR FEMORAL STEM REPLACEMENT PROSTHESES | Instrumentation | Devices |
| US | Pending | 18/824638 | n/a | n/a | ALIGNMENT GUIDE FOR HUMERAL OR FEMORAL STEM REPLACEMENT PROSTHESES | Instrumentation | Devices and Methods |
| US | Issued | 15/952063 | 11065125 | 5/1/2038 | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices and Methods |
| AU | Issued | 2018251815 | 2018251815 | 4/11/2038 | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices and Methods |
| AU | Pending | 2024203972 | n/a | n/a | CONVERTIBLE TOTAL SHOULDER PROSTHESIS | Humeral Implants | Devices and Methods |
| AU | Pending | 2025200941 | n/a | n/a | CONVERTIBLE TOTAL SHOULDER PROSTHESIS | Humeral Implants | Devices |
| AU | Pending | 2024201672 | n/a | n/a | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices and Methods |
| US | Pending | 17/379894 | n/a | n/a | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices |

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| **Country** | **Status** | **Application No.** | **Patent No.** | **Estimated Expiration** | **Description** | **Related Technology** | **Types** |
| EP | Issued | 18783984 | 3609440 | 4/11/2038 | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices |
| EP | Pending | 19767708.1 | n/a | n/a | CONVERTIBLE TOTAL SHOULDER PROSTHESIS | Humeral Implants | Devices |
| EP | Pending | 25152107.6 | n/a | n/a | TOTAL SHOULDER PROSTHESIS HAVING INSET GLENOID IMPLANT CONVERTIBLE FROM ANATOMIC TO REVERSE | Glenoid Implants | Devices |
| US | Pending | 17/652046 | n/a | n/a | TRI-FLANGE HUMERAL PROSTHESIS | Humeral Implants | Devices |
| AU | Pending | 2025202154 | n/a | n/a | INSET/ONLAY GLENOID, POROUS COATED CONVERTIBLE GLENOID, AND HUMERAL HEADS WITH TEXTURED UNDERSIDES | Glenoid Implants | Devices |
| US | Pending | 18/762437 | n/a | n/a | INSET/ONLAY GLENOID, POROUS COATED CONVERTIBLE GLENOID, AND HUMERAL HEADS WITH TEXTURED UNDERSIDES | Glenoid Implants | Devices and Methods |
| EP | Issued | 19796484.4 | 3787562 | 4/30/2039 | INSET/ONLAY GLENOID, POROUS COATED CONVERTIBLE GLENOID, AND HUMERAL HEADS WITH TEXTURED UNDERSIDES | Glenoid Implants | Devices |
| EP | Pending | 24194270.5 | n/a | n/a | INSET/ONLAY GLENOID, POROUS COATED CONVERTIBLE GLENOID, AND HUMERAL HEADS WITH TEXTURED UNDERSIDES | Glenoid Implants | Devices |
| US | Issued | 17/052126 | 12138172 | 10/27/2041 | INSET/ONLAY GLENOID, POROUS COATED CONVERTIBLE GLENOID, AND HUMERAL HEADS WITH TEXTURED UNDERSIDES | Glenoid Implants | Devices and Methods |
| AU | Pending | 2020237088 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |

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| **Country** | **Status** | **Application No.** | **Patent No.** | **Estimated Expiration** | **Description** | **Related Technology** | **Types** |
| US | Issued | 18/058058 | 11771561 | 3/11/2040 | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| US | Issued | 18/605361 | 12023254 | 3/11/2040 | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| US | Issued | 18/761202 | 12268611 | 3/11/2040 | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| US | Pending | 19/064439 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| CN | Pending | 202080020804.1 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| EP | Pending | 20770328.1 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| JP | Pending | 2021-555077 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| US | Pending | 17/435333 | n/a | n/a | TOTAL REVERSE SHOULDER SYSTEMS AND METHODS | Reverse Shoulder Replacement Systems | Devices |
| US | Issued | 29/683368 | D977643 | 2/7/2038 | HUMERAL STEM IMPLANT | Humeral Implants | Design |
| US | Pending | 29/870666 | n/a | n/a | HUMERAL STEM IMPLANT | Humeral Implants | Design |
| AU | Pending | 2023240964 | n/a | n/a | STEMLESS, CONVERTIBLE, HUMERAL SHOULDER PROSTHESIS | Glenoid Implants | Devices and Methods |
| US | Pending | 18/883873 | n/a | n/a | STEMLESS, CONVERTIBLE, HUMERAL SHOULDER PROSTHESIS | Glenoid Implants | Devices and Methods |
| CN | Pending | 202380041809.6 | n/a | n/a | STEMLESS, CONVERTIBLE, HUMERAL SHOULDER PROSTHESIS | Glenoid Implants | Devices |
| EP | Pending | 23716967.7 | n/a | n/a | STEMLESS, CONVERTIBLE, HUMERAL SHOULDER PROSTHESIS | Glenoid Implants | Devices |
| JP | Pending | 2024-556274 | n/a | n/a | STEMLESS, CONVERTIBLE, HUMERAL SHOULDER PROSTHESIS | Glenoid Implants | Devices |
| EP | Pending | 23847398.7 | n/a | n/a | REUSABLE, CUSTOMIZABLE SHOULDER REPLACEMENT INSTRUMENTATION | Instrumentation | Devices |
| JP | Pending | 2025-504571 | n/a | n/a | REUSABLE, CUSTOMIZABLE SHOULDER REPLACEMENT INSTRUMENTATION | Instrumentation | Devices |

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| **Country** | **Status** | **Application No.** | **Patent No.** | **Estimated Expiration** | **Description** | **Related Technology** | **Types** |
| US | Pending | 18/998988 | n/a | n/a | REUSABLE, CUSTOMIZABLE SHOULDER REPLACEMENT INSTRUMENTATION | Instrumentation | Devices and Methods |
| AU | Pending | 2022229902 | n/a | n/a | IMPLANT STEM WITH SUTURE RETENTION STRUCTURE | Humeral Implants | Devices and Methods |
| EP | Pending | 22764119.8 | n/a | n/a | IMPLANT STEM WITH SUTURE RETENTION STRUCTURE | Humeral Implants | Devices |
| EP | Pending | 25166640 | n/a | n/a | IMPLANT STEM WITH SUTURE RETENTION STRUCTURE | Humeral Implants | Devices |
| US | Pending | 18/548059 | n/a | n/a | IMPLANT STEM WITH SUTURE RETENTION STRUCTURE | Humeral Implants | Devices and Methods |

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The term of individual patents in our portfolio depends upon the legal term of patents in the countries in which they are obtained. In most countries in which we file, including the United States, the patent term is 20 years from the earliest date of filing a non-provisional patent application. In the United States, the term of a patent may be reduced due to terminal disclaimer made to overcome a double patenting rejection, or may be lengthened by patent term adjustment, which permits patent term restoration as compensation for delays incurred at the USPTO during the patent prosecution process.

The patent positions of companies like ours are generally uncertain and involve complex legal and factual questions. The relevant patent laws and their interpretation outside of the United States is also uncertain. Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our technology or product candidates and could affect the value of such intellectual property. In particular, our ability to stop third parties from making, using, selling, offering to sell or importing products that infringe our intellectual property will depend in part on our success in obtaining and enforcing patent claims that cover our technology, inventions and improvements. We cannot guarantee that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications we may file in the future, nor can we be sure that any patents that may be granted to us in the future will be commercially useful in protecting our products, the methods of use or manufacture of those products. Moreover, issued patents do not guarantee the right to practice our technology in relation to the commercialization of our products. Issued patents only allow us to block potential competitors from practicing the claimed inventions of the issued patents in the countries in which such patents are issued.

Further, patents and other intellectual property rights in the medical device space are evolving and involve many risks and uncertainties. For example, third parties may have blocking patents that could be used to prevent us from commercializing our product candidates and practicing our proprietary technology. Our issued patents may be challenged, invalidated or circumvented, which could limit our ability to stop competitors from marketing related products or could limit the term of patent protection that otherwise may exist for our product candidates. In addition, the scope of the rights granted under any issued patents may not provide us with protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may independently develop similar technologies that are outside the scope of the rights granted under any issued patents. For these reasons, we may face competition with respect to our product candidates. Moreover, because of the extensive time required for development, testing and regulatory review of a potential product, it is possible that, before any particular product candidate can be commercialized, any patent protection for such product may expire or remain in force for only a short period following commercialization, thereby reducing the commercial advantage the patent provides.

We also rely on trade secrets relating to our discovery programs and product candidates, and seek to protect and maintain the confidentiality of proprietary information to protect aspects of our business that are not amenable to, or that we do not consider appropriate for, patent protection. It is our policy and practice to require our employees,

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consultants, outside scientific collaborators, sponsored researchers and other advisors to execute confidentiality agreements upon the commencement of employment or consulting relationships with us, and for employees and consultants to enter into invention assignment agreements with us. These agreements provide that all confidential information developed or made known to the individual during the course of the individual's relationship with us is to be kept confidential and not disclosed to third parties except in specific circumstances. Where applicable, the agreements provide that all inventions to which the individual contributed as an inventor shall be assigned to us, and as such, will become our property. There can be no assurance, however, that these agreements will provide meaningful protection or adequate remedies for our trade secrets in the event of unauthorized use or disclosure of such information.

***Software License Agreement with Genesis Software***

On October 22, 2020, we entered into a software license agreement with Genesis Software, which was amended and restated on January 1, 2023 and subsequently amended and restated on June 10, 2025 (as amended and restated, the "License Agreement"). Pursuant to the License Agreement, Genesis Software granted us an exclusive, worldwide, transferable, sublicensable and royalty-bearing license under Genesis Software's SaaS surgery planning platform software, including all intellectual property rights therein, updates, upgrades and other modifications thereto, and object code, source code and other surgery planning software developed or controlled by Genesis Software during the term of the License Agreement (collectively, the "Licensed Software"), to store, use copy, make derivative works from, modify, extend, enhance and improve the Licensed Software in the field of shoulder surgical procedures primarily related to replacement of the shoulder joint articulation (*i.e*., anatomic shoulder arthroplasty, reverse shoulder arthroplasty, revision shoulder arthroplasty, and hemi-shoulder arthroplasty) (the "Field of Use"). The Licensed Software is utilized in connection with ProVoyance. We granted Genesis Software a limited, non-exclusive, non-transferable license to use data generated by us through our use of the Licensed Software solely in connection with customization of an implant other software products outside the Field of Use. Genesis Software granted us a limited, non-exclusive, non-transferable license under identified data collected by Genesis Software through its use of the Licensed Software outside of the Field of Use for our use within the Field of Use. We also agreed to compensate Genesis Software for certain development, consulting, and support services related to the Licensed Software that we may request from time to time.

Pursuant to the License Agreement, we paid Genesis Software an upfront license fee of $1.0 million and a milestone payment of $0.5 million upon receipt of FDA clearance of the Licensed Software. We are also required to pay Genesis Software royalties of a mid-single-digit percentage on net sales of shoulder replacement products that incorporate or use the Licensed Software until the earlier of (i) the tenth anniversary of the effective date of the License Agreement and (ii) such time as the aggregate amount of royalties, upfront license fee and milestone due upon receipt of FDA clearance paid to Genesis Software reaches $7.0 million. At any time prior to the tenth anniversary of the effective date of the License Agreement, we have the right to buy out our royalty obligations by paying Genesis Software the difference between the aggregate amounts already paid to Genesis Software and $7.0 million, upon which our rights under the License Agreement shall become irrevocable and perpetual and shall be royalty-free and fully-paid. In 2025, we are obligated to pay Genesis Software $1.7 million for certain development, consulting and support services.

The term of the License Agreement shall continue until earlier terminated in accordance with the terms therein. The License Agreement may be terminated for cause by either party: (i) if the other party breaches a material provision of the License Agreement and fails to cure such breach within a specified notice and cure period or (ii) upon the bankruptcy, insolvency or certain dissolution or liquidation events of other party.

For each of the years ended December 31, 2024 and 2023, we paid Genesis Software $3.1 million and $3.2 million, respectively, pursuant to the License Agreement, including royalties of $1.2 million and $0.6 million in the years ended December 31, 2024 and 2023, respectively. For the three months ended March 31, 2025 and 2024, we paid Genesis Software $0.9 million and $0.7 million, respectively, including royalties of $0.4 million and $0.3 million in the three months ended March 31, 2025 and 2024, respectively.

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**Manufacturing and Supply**

We utilize third-party manufacturing and supply providers to manufacture our implants. We believe this outsourcing strategy provides the expertise and capacity required to effectively and efficiently scale production based on demand, and helps to ensure low-cost production and a capital efficient business model. Almost all of our products are provided by single-source suppliers. For example, Avalign Technologies manufactures and supplies our humeral stems, Micropulse is our sole source for Inset Glenoid, Trifecta Medical Group manufactures and supplies our trays and RMD supplies surgical instruments used during procedures involving our systems. We also utilize a single supplier for significant majority of our sterilization needs.

We generally do not have long-term contracts with these third parties and our supply arrangements generally do not include minimum manufacturing or purchase obligations. We primarily order products through the use of purchase orders. As such, we generally do not have any obligation to purchase any given quantity of products, and our suppliers generally have no obligation to sell to us or to manufacture for us any given quantity of our products or components of our systems. We maintain strong working relationships with our suppliers and we believe our current network of third-party manufacturing and supply providers provides for sufficient capacity to meet projected market demand for our products for the foreseeable future.

While there are other suppliers that could make or provide any one of our products, we seek to manage single-source supplier risk by regularly assessing the quality and capacity of our suppliers, implementing supply and quality control protocols where appropriate and actively managing lead times and inventory levels. In addition, we are currently in the process of identifying and approving alternative suppliers to dual or multi-source certain of our products. We generally seek to maintain sufficient supply levels to help mitigate any supply interruptions and enable us to find and qualify another source of supply. For certain products, we estimate that it could take between six and twelve months to find and qualify a second source. Order quantities and lead times are based on internal forecasts, which are derived from historical demand and anticipated future demand. Lead times vary depending on the size of the order, time required to manufacture, specific supplier requirements and current market demand and dynamics for the raw materials, sub-assemblies and parts related to our products.

Our third-party manufacturing and supply providers are evaluated, qualified and approved through our supplier quality program, which includes verification and monitoring procedures to help ensure that our suppliers comply with FDA and ISO standards, as well as our own specifications and requirements. We inspect and verify products under strict processes supported by internal policies and procedures. We maintain a rigorous change control policy to assure that no product or process changes are implemented without our prior review and approval.

We operate a distribution facility from our corporate headquarters located in Grand Rapids, Michigan. This facility has approximately 7,000 square feet of warehouse, distribution and office space. The lease related to this facility expires in January 2026 with the option to extend an additional five years. We also leverage a third-party 3,000 square foot distribution facility in Modesto, California that distributes our implant systems in the western United States. We believe these facilities are sufficient to meet our current and anticipated needs in the near term and that suitable additional space is available as needed to accommodate expansion of our operations and distribution activities.

**Competition**

Our industry is competitive, subject to technological change and significantly affected by new product introductions and market activities of other industry participants. Our competition includes medical device manufacturers in the shoulder surgical care market and in the shoulder arthroplasty market in particular. For example, companies operating in our market include Arthrex, Enovis, Exectech, Johnson & Johnson, Smith & Nephew, Stryker, and Zimmer Biomet as well as a number of smaller companies. There are a significant number of approved devices for shoulder surgical care and shoulder arthroplasty, and we expect competition will intensify over time.

Many of our competitors have longer, more established operating histories, and significantly greater name recognition and financial, technical, marketing, sales, distribution and other resources. In addition, certain competitors have several competitive advantages, including international operations with significant scale and

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established relationships with hospitals, outpatient care centers and ASCs and surgeons who use their devices and are familiar with existing devices on the market. In addition to competing for market share, we also compete against these companies for personnel, including qualified personnel that are necessary to grow our business.

We believe the principal competitive factors in our market include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• product features and design;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• patient experience, including recovery time, level of discomfort and post-operative results;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• acceptance by surgeons and other key stakeholders in the shoulder surgical care market;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• surgeon learning curves and willingness to adopt new techniques;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• ease of use and reliability, including preoperative planning tools;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• economic benefits and efficiencies for hospitals, outpatient care centers, ASCs and surgeons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• effective distribution and marketing to surgeons and potential patients, including physician education and information sharing programs;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• product quality and standards, including our reputation with customers and surgeons;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• intellectual property; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• customer service and support capabilities.

We believe we have established a compelling value proposition to compete favorably in this market. However, conditions in our market could change rapidly and significantly as a result of technological advancements, partnerships, or acquisitions by competitors or continuing market consolidation and we expect the competitive environment to remain intense. For example, we have seen and continue to see consolidation amongst our competitors and have seen and continue to see our competitors innovate and improve upon traditional implants and technologies. For example, certain competitors have pursued the utilization of new materials (metal backing) for traditional and onlay glenoid implant structures and have developed stand-alone single stems that can be used in anatomic and reverse procedures. If our competitors have greater resources and access to funding than us, they may be able to finance the development of new technologies and products before we are able to do so, which may allow them to gain market share or enter new markets before us or provide lower-priced or better-quality offerings.

**Government Regulation**

Our products and our operations are subject to extensive regulation by the FDA, and other federal and state authorities in the United States. Our products are subject to regulation as medical devices in the United States under the FDCA, as implemented and enforced by the FDA.

***United States Regulation of Medical Devices***

The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices, including software such as AI/ML to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.

*FDA Marketing Authorization Requirements*

Unless an exemption applies, each medical device commercially distributed in the United States requires either FDA clearance of a premarket notification submitted under Section 510(k) of the FDCA, approval of a PMA, or classification under the *de novo* classification process. Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device

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and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness. Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA's General Controls for medical devices, which include compliance with the applicable portions of the QSR (and once it goes into effect in 2026, the QMSR, which amended the QSR), facility registration and product listing, reporting of adverse medical events, and truthful and non-misleading labeling, advertising, and promotional materials. Class II devices are subject to the FDA's General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.

While most Class I devices are exempt from the 510(k) premarket notification requirement, manufacturers of most Class II devices are required to submit to the FDA a premarket notification under Section 510(k) of the FDCA requesting permission to commercially distribute the device. The FDA's permission to commercially distribute a device subject to a 510(k) premarket notification is generally known as 510(k) clearance. Devices deemed by the FDA to pose the greatest risks, such as life sustaining, life supporting or some implantable devices, or devices that have a new intended use, or use advanced technology that is not substantially equivalent to that of a legally marketed device, are placed in Class III, requiring approval of a PMA. Some pre-amendment devices are unclassified, but are subject to FDA's premarket notification and clearance process in order to be commercially distributed. Where software, including AI/ML, qualifies as a device, this same classification scheme and regulatory path to market applies.

*510(k) Clearance Marketing Pathway*

To obtain 510(k) clearance, a company must submit to the FDA a premarket notification submission demonstrating that the proposed device is "substantially equivalent" to a legally marketed predicate device. A predicate device is a legally marketed device that is not subject to premarket approval, *i.e*., a device that was legally marketed prior to May 28, 1976 (pre-amendments device) and for which a PMA is not required, a device that has been reclassified from Class III to Class II or I, or a device that was found substantially equivalent through the 510(k) process. The FDA's 510(k) clearance process usually takes from three to twelve months, but may take longer. The FDA may require additional information, including clinical data, to make a determination regarding substantial equivalence. In addition, FDA collects user fees for certain medical device submissions and annual fees and for medical device establishments.

If the FDA agrees that the device is substantially equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device. If the FDA determines that the device is "not substantially equivalent" to a previously cleared device, the device is automatically designated as a Class III device. The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with the *de novo* classification process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.

After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change or modification in its intended use, will require a new 510(k) clearance or, depending on the modification, PMA approval. The FDA requires each manufacturer to determine whether the proposed change requires submission of a 510(k) or a PMA in the first instance, but the FDA can review any such decision and disagree with a manufacturer's determination. If the FDA disagrees with a manufacturer's determination, the FDA can require the manufacturer to cease marketing and/or request the recall of the modified device until such marketing authorization has been granted. Also, in these circumstances, the manufacturer may be subject to significant regulatory fines or penalties.

*PMA Approval Pathway*

Class III devices require PMA approval before they can be marketed, although some pre-amendment Class III devices for which FDA has not yet required a PMA are cleared through the 510(k) process. The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials. The PMA must also contain a full description of the device and its components, a

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full description of the methods, facilities, and controls used for manufacturing, and proposed labeling. Following receipt of a PMA, the FDA determines whether the application is sufficiently complete to permit a substantive review. If FDA accepts the application for review, it has 180 days under the FDCA to complete its review of a PMA, although in practice, the FDA's review often takes significantly longer, and can take up to several years. An advisory panel of experts from outside the FDA may be convened to review and evaluate the application and provide recommendations to the FDA as to the approvability of the device. The FDA may or may not accept the panel's recommendation. In addition, the FDA will generally conduct a pre-approval inspection of the applicant or its third-party manufacturers' or suppliers' manufacturing facility or facilities to ensure compliance with the QSR. PMA applications are also subject to the payment of user fees, which are higher than in the 510(k) process.

The FDA will approve the new device for commercial distribution if it determines that the data and information in the PMA constitute valid scientific evidence and that there is reasonable assurance that the device is safe and effective for its intended use(s). The FDA may approve a PMA with post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported PMA approval or requirements to conduct additional clinical studies post-approval. The FDA may condition PMA approval on some form of post-market surveillance when deemed necessary to protect the public health or to provide additional safety and efficacy data for the device in a larger population or for a longer period of use. In such cases, the manufacturer might be required to follow certain patient groups for a number of years and to make periodic reports to the FDA on the clinical status of those patients. Failure to comply with the conditions of approval can result in material adverse enforcement action, including withdrawal of the approval.

Certain changes to an approved device, such as changes in manufacturing facilities, methods, or quality control procedures, or changes in the design performance specifications, which affect the safety or effectiveness of the device, require submission of a PMA supplement. PMA supplements often require submission of the same type of information as a PMA, except that the supplement is limited to information needed to support any changes from the device covered by the original PMA and may not require as extensive clinical data or the convening of an advisory panel. Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness.

*De Novo Classification*

Medical device types that the FDA has not previously classified as Class I, II, or III are automatically classified into Class III regardless of the level of risk they pose. The Food and Drug Administration Modernization Act of 1997 established a route to market for low-to-moderate risk medical devices that are automatically placed into Class III due to the absence of a predicate device, called the "Request for Evaluation of Automatic Class III Designation," or the *de novo* classification procedure. This procedure allows a manufacturer whose novel device is automatically classified into Class III to request down-classification of its medical device into Class I or Class II on the basis that the device presents low or moderate risk, rather than requiring the submission and approval of a PMA application. Pursuant to the Food and Drug Administration Safety and Innovation Act ("FDASIA"), manufacturers may request *de novo* classification directly without first submitting a 510(k) pre-market notification to the FDA and receiving a not-substantially-equivalent determination.

Under FDASIA, FDA is required to classify the device within 120 days following receipt of the *de novo* request, although the process may take significantly longer. If the manufacturer seeks reclassification into Class II, the manufacturer must include a draft proposal for special controls that are necessary to provide a reasonable assurance of the safety and effectiveness of the medical device. If FDA grants the *de novo* request, the device may be legally marketed in the United States. However, the FDA may reject the request if the FDA identifies a legally marketed predicate device that would be appropriate for a 510(k) notification, determines that the device is not low-to-moderate risk, or determines that General Controls would be inadequate to control the risks and/or special controls cannot be developed. After a device receives *de novo* classification, any modification that could significantly affect its safety or efficacy, or that would constitute a major change or modification in its intended use,

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will require a new 510(k) clearance or, depending on the modification, another *de novo* request or even PMA approval.

*Clinical Trials*

Clinical trials are almost always required to support a PMA and *de novo* classification, and are sometimes required to support a 510(k) submission. All clinical investigations of devices to determine safety and effectiveness must be conducted in accordance with the FDA's investigational device exemption ("IDE") regulations which govern investigational device labeling, prohibit promotion of the investigational device, and specify an array of recordkeeping, reporting and monitoring responsibilities of study sponsors and study investigators. If the device presents a "significant risk" to human health, as defined by the FDA, the FDA requires the device sponsor to submit an IDE application to the FDA, which must become effective prior to commencing human clinical trials. If the device under evaluation does not present a significant risk to human health, then the device sponsor is not required to submit an IDE application to the FDA before initiating human clinical trials, but must still comply with abbreviated IDE requirements when conducting such trials. A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject. An IDE application must be supported by appropriate data, such as animal and laboratory test results, showing that it is safe to test the device in humans and that the testing protocol is scientifically sound. The IDE will automatically become effective 30 days after receipt by the FDA unless the FDA notifies the company that the investigation may not begin. If the FDA determines that there are deficiencies or other concerns with an IDE for which it requires modification, the FDA may permit a clinical trial to proceed under a conditional approval.

Regardless of the degree of risk presented by the medical device, clinical studies must be approved by, and conducted under the oversight of, an Institutional Review Board ("IRB") for each clinical site. The IRB is responsible for the initial and continuing review of the IDE, and may impose additional requirements for the conduct of the study. If an IDE application is approved by the FDA and one or more IRBs, human clinical trials may begin at a specific number of investigational sites with a specific number of patients, as approved by the FDA. If the device presents a non-significant risk to the patient, a sponsor may begin the clinical trial after obtaining approval for the trial by one or more IRBs without separate approval from the FDA, but must still follow abbreviated IDE requirements, such as monitoring the investigation, ensuring that the investigators obtain informed consent, and complying with labeling and record-keeping requirements. In some cases, an IDE supplement must be submitted to, and approved by, the FDA before a sponsor or investigator may make a change to the investigational plan that may affect its scientific soundness, study plan or the rights, safety or welfare of human subjects.

During a study, the sponsor is required to comply with the applicable FDA requirements, including, for example, trial monitoring, selecting clinical investigators and providing them with the investigational plan, ensuring IRB review, adverse event reporting, record keeping and prohibitions on the promotion of investigational devices or on making safety or effectiveness claims for them. The clinical investigators in the clinical study are also subject to FDA's regulations and must obtain patient informed consent, rigorously follow the investigational plan and study protocol, control the disposition of the investigational device, and comply with all reporting and recordkeeping requirements. Additionally, after a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits.

*Post-Market Regulation of Medical Devices*

After a product is placed on the market, numerous regulatory requirements continue to apply. These requirements include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, validation, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process, and once it goes into effect, the QMSR;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• labeling regulations and FDA prohibitions against the promotion of products for uncleared or unapproved use or indication;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• authorization of marketing of certain modifications that could significantly affect safety or effectiveness or that would constitute a major change in intended use;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• post-market restrictions or conditions, including post-market study commitments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• post-market surveillance regulations, which apply, when necessary, to protect the public health or to provide additional safety and effectiveness data for the medical product;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the FDA's recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• regulations pertaining to voluntary recalls.

Manufacturing processes for medical devices are required to comply with the applicable portions of the QSR (and once it goes into effect, the QMSR), which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use. The QSR and QMSR also require, among other things, maintenance of a device master file, device history file, and complaint files. Manufacturers are subject to periodic scheduled and unscheduled inspections by the FDA. Failure to maintain compliance with the QSR and, once in effect, the QMSR requirements could result in the shut-down of, or restrictions on, manufacturing operations and the recall or seizure of marketed products. The discovery of previously unknown problems with any marketed products, including unanticipated adverse events or adverse events of increasing severity or frequency, whether resulting from the use of the device within the scope of its clearance or approval, or off-label by a physician in the practice of medicine, could result in restrictions on the device, including the removal of the product from the market or voluntary or mandatory device recalls.

The FDA has broad regulatory compliance and enforcement powers. If the FDA determines that a manufacturer has failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• recalls, withdrawals, or administrative detention or seizure of our products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• operating restrictions or partial suspension or total shutdown of production;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• refusing or delaying requests for 510(k) clearance, *de novo* classifications, or PMA approvals of new products or modified products;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• withdrawing 510(k) clearances, *de novo* classifications, or PMA approvals that have already been granted;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• refusal to grant export approvals for our products; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• criminal prosecution.

***Foreign Government Regulation***

In addition to U.S. regulations, medical devices are subject to a variety of foreign government regulations.

***Foreign Regulation of Medical Devices***

*Regulation of Medical Devices in the European Union*

The EU has adopted specific directives and regulations regulating the design, manufacture, clinical investigation, conformity assessment, labeling and adverse event reporting for medical devices.

Until May 25, 2021, medical devices were regulated by the Council Directive 93/42/EEC ("EU Medical Devices Directive"), which has been repealed and replaced by Regulation (EU) No 2017/745 ("EU Medical Devices Regulation"). Unlike directives, regulations are directly applicable in all EU member states without the need for member states to implement into national law.

In the EU, there is currently no premarket government review of medical devices. However, all medical devices placed on the EU market must meet general safety and performance requirements, including the requirement that a medical device must be designed and manufactured in such a way that, during normal conditions of use, it is suitable for its intended purpose. Medical devices must be safe and effective and must not compromise the clinical condition or safety of patients, or the safety and health of users and – where applicable – other persons, provided that any risks which may be associated with their use constitute acceptable risks when weighed against the benefits to the patient and are compatible with a high level of protection of health and safety, taking into account the generally acknowledged state of the art.

Compliance with the general safety and performance requirements is a prerequisite for European conformity marking ("CE mark"), without which medical devices cannot be marketed or sold in the EU. To demonstrate compliance with the general safety and performance requirements medical device manufacturers must undergo a conformity assessment procedure, which varies according to the type of medical device and its (risk) classification. Except for low-risk medical devices (Class I), where the manufacturer can self-assess the conformity of its products with the general safety and performance requirements (except for any parts which relate to sterility, metrology or reuse aspects), a conformity assessment procedure requires the intervention of a notified body. Notified bodies are independent organizations designated by EU member states to assess the conformity of devices before being placed on the market. A notified body would typically audit and examine a product's technical dossiers and the manufacturer's quality system. If satisfied that the relevant product conforms to the relevant general safety and performance requirements, the notified body issues a certificate of conformity, which the manufacturer uses as a basis for its own declaration of conformity. The manufacturer may then apply the CE mark to the device, which allows the device to be placed on the market throughout the EU.

Throughout the term of the certificate of conformity, the manufacturer will be subject to periodic surveillance audits to verify continued compliance with the applicable requirements. In particular, there will be a new audit by the notified body before it will renew the relevant certificate(s).

All manufacturers placing medical devices into the market in the EU must comply with the EU medical device vigilance system. Under this system, serious incidents and Field Safety Corrective Actions ("FSCAs"), must be reported to the relevant authorities of the EU member states. Manufacturers are required to take FSCAs defined as any corrective action for technical or medical reasons to prevent or reduce a risk of a serious incident associated with the use of a medical device that is made available on the market. An FSCA may include the recall, modification, exchange, destruction or retrofitting of the device.

The aforementioned EU rules are generally applicable in the EEA, which consists of the 27 EU Member States plus Norway, Liechtenstein and Iceland.

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*Regulation of Medical Devices in the United Kingdom*

The EU Medical Devices Regulation is not applicable in Great Britain due to Brexit. Existing EU directives governing all medical devices have been given effect in domestic law through the Medical Devices Regulations 2002 (SI 2002 No 618, as amended) ("UK Medical Devices Regulations"). This means that since January 1, 2021, the Great Britain route to market is still based on the requirements derived from the pre-existing EU legislation. As a standalone regulatory body, the Medicines and Healthcare products Regulatory Agency ("MHRA") is responsible for regulating medical devices in Great Britain (England, Scotland and Wales) and Northern Ireland, though Northern Ireland is aligned with EU legislation and regulations regarding medical devices as a result of the Northern Ireland Protocol that took effect in January 2021. The UK government has passed the Medicines and Medical Devices Act which came into force on 11 February 2021 and which allows the secretary of state or an 'appropriate authority' to amend or supplement existing regulations in the area of medical devices including the UK Medical Devices Regulations. In addition, the Trade Deal between the UK and the EU generally provides for cooperation and exchange of information between the parties in the areas of product safety and compliance, including market surveillance, enforcement activities and measures, standardization-related activities, exchanges of officials, and coordinated product recalls. As such, processes for compliance and reporting should reflect requirements from regulatory authorities.

Under the UK Medical Devices Regulations, in order to be lawfully placed on the Great Britain market, certain medical devices need to be "UKCA" certified by a UK approved body. However, certain medical devices in compliance with: (1) the EU Medical Devices Directive can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2028; or (2) the EU Medical Devices Regulation can continue to be placed on the Great Britain market until the sooner of certificate expiration or June 30, 2030. The EU no longer recognizes conformity assessment activities performed by UK notified bodies for medical devices placed on the market since January 1, 2021. Notified bodies must be located in an EU member state, or territory where there is a Mutual Recognition Agreement ("MRA"), that allows the marketing of medical devices that meet EU requirements, there is (currently) no such MRA between the UK and the EU.

Furthermore, on December 16, 2024, the UK government published an amendment to UK Medical Devices Regulations to clarify and strengthen the post-market surveillance requirements for medical devices in Great Britain. This amendment will come into force on June 16, 2025 and aims to facilitate greater traceability of incidents and trends enabling the MHRA to act swiftly when needed to address safety issues and support the entire health system in better protecting patients. In addition, the MHRA launched a consultation from November 14, 2024 to January 5, 2025 on proposals to update the pre-market requirements for medical devices in Great Britain, covering four topics, namely: (1) a new international reliance scheme to enable swifter market access for certain devices that have already been approved in a comparable regulator country; (2) the new UK Conformity Assessed ("UKCA") mark and, in particular, proposals to remove the requirement to place such UKCA marking on devices; (3) conformity assessment procedures for in vitro diagnostic devices; and (4) maintaining in UK law certain pieces of "assimilated" EU law which are due to sunset in 2025. This consultation builds on the MHRA's previous consultation between September and November 2021, and the UK government's response to that consultation which was published on June 26, 2022. The MHRA has stated that it will incorporate feedback to its recent consultation into new legislation on pre-market requirements for medical devices in Great Britain. The new legislation is expected to be implemented in 2026 and aims to enable greater international collaboration and practices, with more patient-centered, proportionate requirements for medical devices which are responsive to technological advances.

***Coverage and Reimbursement***

In the United States, our currently approved products are commonly treated as general supplies utilized in orthopedic surgery and if covered by third-party payors, are paid for as part of the surgical procedure. Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used. Failure by physicians, hospitals, ASCs and other users of our products to obtain sufficient coverage and reimbursement from third-party payors for procedures in which our products are used, or adverse changes in government and private third-party payors' coverage and reimbursement policies.

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Based on our experience to date, third-party payors generally reimburse for the surgical procedures in which our products are used only if the patient meets the established medical necessity criteria for surgery. Some payors are moving toward a managed care system and control their healthcare costs by limiting authorizations for surgical procedures, including elective procedures using our devices. Although no uniform policy of coverage and reimbursement among payors in the United States exists and coverage and reimbursement for procedures can differ significantly from payor to payor, reimbursement decisions by particular third-party payors may depend upon a number of factors, including the payor's determination that use of a product is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a covered benefit under its health plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appropriate and medically necessary for the specific indication;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• cost effective; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• neither experimental nor investigational.

Third-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative devices or procedures before they will reimburse healthcare providers who use the products or therapies. Even though a new product may have been cleared for commercial distribution by the FDA, we may find limited demand for the product unless and until reimbursement approval has been obtained from governmental and private third-party payors.

We believe the overall escalating cost of medical products and services being paid for by the government and private health insurance has led to, and will continue to lead to, increased pressures on the healthcare and medical device industry to reduce the costs of products and services. All third-party reimbursement programs are developing increasingly sophisticated methods of controlling healthcare costs through prospective reimbursement and capitation programs, group purchasing, redesign of benefits, requiring second opinions prior to major surgery, careful review of bills, encouragement of healthier lifestyles and other preventative services and exploration of more cost-effective methods of delivering healthcare.

In addition to uncertainties surrounding coverage policies, there are periodic changes to reimbursement levels. Third-party payors regularly update reimbursement amounts and also from time to time revise the methodologies used to determine reimbursement amounts. This includes routine updates to payments to physicians, hospitals and ASCs for procedures during which our products are used. These updates could directly impact the demand for our products.

***Other U.S. Healthcare Laws***

Device manufacturers are subject to additional healthcare regulation and enforcement by the federal government and by authorities in the states and foreign jurisdictions in which they conduct their business. Such laws include, without limitation, U.S. federal and state anti-kickback, fraud and abuse, false claims, consumer fraud, and transparency laws and regulations.

For example, the federal Anti-Kickback Statute prohibits, among other things, individuals or entities from knowingly and willfully offering, paying, soliciting or receiving remuneration, directly or indirectly, overtly or covertly, in cash or in kind to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation.

The federal civil and criminal false claims laws, including the civil False Claims Act, prohibit, among other things, any individual or entity from knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. In addition, the government may assert that a claim

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including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

The Civil Monetary Penalty Laws impose penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary's decision to order or receive items or services reimbursable by the government from a particular provider or supplier.

HIPAA created additional federal civil and criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the healthcare fraud statute implemented under HIPAA or specific intent to violate it in order to have committed a violation.

The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program, with specific exceptions, to report annually to the CMS information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain non-physician practitioners (defined to include physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, anesthesiology assistants and certified nurse midwives) and teaching hospitals, and further requires applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.

Similar state and local laws and regulations may also restrict business practices in the medical device industries, such as state anti-kickback and false claims laws, which may apply to business practices, including but not limited to, research, distribution, sales and marketing arrangements and claims involving healthcare items or services reimbursed by non-government third-party payors, including private insurers, or by patients themselves; state laws that require device companies to comply with the industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws and regulations that require manufacturers to file reports relating to pricing and marketing information or which require tracking gifts and other remuneration and items of value provided to physicians, other healthcare providers and entities; state laws that prohibit fee-splitting arrangements between companies and physicians and other healthcare professionals; and state and local laws that require the registration of sales representatives.

Violation of any of such laws or any other government regulations that apply may result in penalties, including, without limitation, civil and criminal penalties, damages, fines, additional reporting obligations, the curtailment or restructuring of operations, exclusion from participation in government healthcare programs and individual imprisonment.

***Healthcare Reform***

The United States is considering or has enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality or expanding access. Current and future legislative proposals to further reform healthcare or reduce healthcare costs may limit coverage of or lower reimbursement for the procedures associated with the use of our products. The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products.

The implementation of the ACA in the United States, for example, has changed healthcare financing and delivery by both governmental and private insurers substantially, and affected medical device manufacturers significantly. The ACA imposed, among other things, provided incentives to programs that increase the federal government's comparative effectiveness research, and implemented payment system reforms including a national

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pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models. Additionally, the ACA has expanded eligibility criteria for Medicaid programs and created a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.

In addition, other legislative changes have been proposed and adopted since the ACA was enacted. For example, the Budget Control Act of 2011, among other things, reduced Medicare payments to providers, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2032 unless additional Congressional action is taken. Additionally, the American Taxpayer Relief Act of 2012, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.

The Medicare Access and CHIP Reauthorization Act of 2015 repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments which began in 2019 that are based on various performance measures and physicians' participation in alternative payment models, such as accountable care organizations. Each year, CMS updates Medicare payments for physician services through rulemaking, based on parameters established under law. In November 2024, CMS finalized a 2.83% decrease in the physician fee schedule conversion factor, a key aspect of physician payment rates under the Medicare program. This resulted in an average payment cut of 2.93% to physicians and other clinicians, which took effect on January 1, 2025 and remains in effect today, unless Congress takes additional action.

We expect additional state and federal healthcare reform measures to be adopted in the future, particularly given the recent change in administration, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure.

***Data Privacy and Security Laws***

Numerous state, federal and foreign laws, regulations and standards govern the collection, use, access to, confidentiality and security of health-related and other personal information, and could apply now or in the future to our operations or the operations of our partners. In the United States, numerous federal and state laws and regulations, including data breach notification laws, health information privacy and security laws and consumer protection laws and regulations govern the collection, use, disclosure, and protection of health-related and other personal information. In addition, certain foreign laws govern the privacy and security of personal data, including health-related data. Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

**Employees and Human Capital Resources**

As of March 31, 2025, we had 56 full-time employees. None of our employees are represented by a labor union or party to a collective bargaining agreement. We consider our relationship with our employees to be good.

Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing, and integrating our existing and additional employees. The principal purposes of our equity incentive plans are to attract, retain, and motivate selected employees, consultants, and directors through the granting of stock-based compensation awards and cash-based performance bonus awards.

**Facilities**

Our corporate headquarters is located in Grand Rapids, Michigan where we lease a 7,000 square foot facility pursuant to a lease agreement that expires in January 2026. This facility includes warehouse, distribution and office space. We also leverage a third-party 3,000 square foot distribution facility in Modesto, California that distributes our implant systems in the western United States. We believe that this facility is sufficient to meet our current and

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anticipated needs in the near term and that suitable additional space is available as needed to accommodate expansion of our operations and distribution activities.

**Legal Proceedings**

From time to time, we may be involved in various legal proceedings arising from ordinary course business activities. For example, we may face various claims brought by third parties and we may make claims or take legal actions to assert our rights, including intellectual property rights and claims relating to employment matters and our products. Any of these claims could cause us to incur substantial costs and, while we believe that we have a typical level of insurance coverage for our industry, our insurance carriers may deny coverage, may be inadequately capitalized to pay on valid claims, or our policy limits may be inadequate to fully satisfy any associated costs, damage awards or settlements. If this were to happen, the payment of any such awards could have a material adverse effect on our operations, cash flows and financial position. Additionally, any such claims, whether or not successful, could damage our reputation and business.

On February 28, 2024, we filed a complaint against Catalyst Orthoscience Inc. ("Catalyst") in the United States District Court for the District of Delaware, Case No. 1:24-cv-00266-JPM, alleging that Catalyst has infringed certain claims of our patents. In response to our suit, Catalyst filed a counterclaim claiming patent infringement of certain claims of a patent owned by Catalyst based on certain of our products. We believe we have substantial and meritorious defenses to Catalyst's counterclaim and intend to vigorously defend our position, including through the trial and appellate stages if necessary. As the counterclaim is ongoing, we are unable to determine the likelihood of an outcome or estimate a range of reasonably possible settlement, if any. Accordingly, we have not made an accrual for any possible loss. The outcome of any litigation, however, is inherently uncertain, and an adverse judgment or settlement in the counterclaim proceeding, if any, could have a material and adverse effect on our business, financial position, results of operations or cash flows. See "Risk Factors—Risks Related to our Intellectual Property" for further description of risks associated with this litigation and our intellectual property rights generally.

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**MANAGEMENT**

The following table sets forth information regarding our executive officers and directors, including their ages as of June 30, 2025:

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| **Executive Officers and Employee Directors** | | |
| Robert Ball | 53 | Chief Executive Officer and Executive Chairman |
| Jeffrey Points | 48 | Chief Financial Officer |
| Matthew Ahearn | 56 | Chief Operating Officer and Director |
| David L. Blue | 64 | Chief Customer Experience Officer |
| **Non-Employee Directors and Director Nominee** |  |  |
| Paul Buckman<sup>(1)(3)</sup> | 69 | Director |
| Michael Carusi | 60 | Director |
| Geoff Pardo<sup>(2)(3)</sup> | 53 | Director |
| Kevin Sidow<sup>(1)(2)</sup> | 67 | Director |
| Casey Tansey<sup>(2)(3)</sup> | 67 | Director |
| Richard J. Buchholz<sup>(1)</sup> | 57 | Director Nominee |

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__________________

(1)Member of our audit committee.

(2)Member of our compensation committee.

(3)Member of our nominating and corporate governance committee.

**Executive Officers and Employee Directors**

***Robert Ball*** has served as our Chief Executive Officer since October 2020 and as our executive chairman of the board of directors since April 2015. Prior to joining Shoulder Innovations, Mr. Ball was a Principal at Imascap SA, a privately-held software company focusing on preoperative planning for shoulder arthroplasty, from July 2013 until its acquisition by Wright Medical Group, Inc. (now Stryker Corporation (NYSE: SYK)) in 2017. Prior to this, Mr. Ball held positions at Tornier NV, a global orthopedics company that was acquired by Wright Medical Group, Inc. (now Stryker Corporation), from August 2006 to December 2013, including Vice President, Research & Development, Regulatory and Clinical. Mr. Ball also previously held positions at Kinetikos Medical Inc., a privately-held company focusing on orthopedic implants, and DePuy, the Orthopaedics Company of Johnson & Johnson (NYSE: JNJ). Since its inception in January 2013, he has served as Chairman of Genesis Innovation, a company focused on early-stage medical device investing and development. Mr. Ball currently serves as a director for Genesis Innovation, Genesis Software, Genesis Investment Holdings, NSite LLC, Strados Labs LLC, and cultivate(MD) Holdings, LLC. Mr. Ball received a Bachelor of Science in Mechanical Engineering and a Master of Science in Mechanical Engineering from Kettering University. We believe Mr. Ball's extensive experience with medical technology companies and thorough knowledge of our industry and strategy as our Chief Executive Officer qualifies him to serve on our board of directors.

***Jeffrey Points*** has served as our Chief Financial Officer since September 2023. Prior to joining Shoulder Innovations, Mr. Points worked at Cardiovascular Systems, Inc. (Nasdaq: CSII), a medical device company that developed solutions for treating peripheral and coronary artery disease, from 2007 to 2023, where he held various roles, including most recently as Chief Financial Officer from 2018 to 2023. Mr. Points received an M.B.A. from the University of St. Thomas and a B.A. in Business focusing on Finance and Accounting from Bethel University.

***Matthew Ahearn*** has served as our Chief Operating Officer since October 2020 and a member of our board of directors since February 2017. Prior to this role, Mr. Ahearn was our Chief Executive Officer and President from February 2017 to October 2020 and our Chief Financial Officer and Chief Operating Officer from November 2020 to September 2023. Mr. Ahearn also currently serves as a director for HAPPE Spine, LLC, SpinTech MRI, Inc., CPD to SPD, LLC, cultivate(MD) Holdings, LLC, and Genesis Investment Holdings. He received a Bachelor of

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Arts in Economics and Management from Albion College. We believe that Mr. Ahearn's deep understanding of our business and extensive experience in financial management and operational leadership within the healthcare and technology sectors qualifies him to serve on our board of directors.

***David L. Blue*** has served as our Chief Customer Experience Officer since October 2023 and previously served as our Chief Commercial Officer from May 2017 to October 2023. From May 2017 to October 2021, Mr. Blue served as Director, VP, Sales & Marketing at Genesis Innovation and as Chief Commercial Officer at Conventus Orthopedics from July 2013 to May 2017. Since January 2018, Mr. Blue has also been a member of the board of directors of cultivate(MD) Capital Funds and currently serves as a director of cultivate(MD) Holdings, LLC. He received a Bachelor of Arts in Business Administration and Marketing from Augustana University.

**Non-Employee Directors and Director Nominee**

***Paul Buckman*** has served as a member of our board of directors since October 2020. Mr. Buckman has served as the Chief Executive Officer and a director of Rhythmlink International, LLC, a privately-held medical equipment manufacturer, since April 2024. He previously served as President of North America for LivaNova PLC (Nasdaq: LIVN), a publicly-held global medical technology company, from May 2017 to March 2023, and as the Chief Executive Officer of Coventus Orthopaedics, Inc. from 2013 to 2016. Mr. Buckman also currently serves as a director for Ablative Solutions, Inc., Helius Medical Technologies, Inc. (Nasdaq: HSDT), MiroMatrix Medical, Inc. and NeuroOne Medical Technologies Corporation (Nasdaq: NMTC). He received a Bachelor of Business Administration and a Master of Business Administration from Western Michigan University. We believe that Mr. Buckman's extensive background in the healthcare industry, directorship and management experience qualifies him to serve on our board of directors.

***Michael Carusi*** has served on our board of directors since October 2020. Since 2013, Mr. Carusi has served as a Managing Partner at Lightstone Ventures. Concurrently, Mr. Carusi serves as a member of the board of directors for several private companies, including Cala Health, Inc., Willow, Inc., Tallac Therapeutics, Inc., Allay Therapeutics, Inc., Apreo Health, Inc., Medisix Therapeutics, Inc., and Endogastric Solutions, Inc. Mr. Carusi received a B.S. in Mechanical Engineering from Lehigh University and an M.B.A. from the Tuck School of Business. We believe that Mr. Carusi's extensive experience in venture capital and his background in healthcare and medical technology investments qualifies him to serve on our board of directors.

***Geoff Pardo*** has served as a member of our board of directors since February 2023. Since June 2011, he has also served as the President and General Partner of Gilde Healthcare US Inc. Concurrently, he serves on the boards of Nalu Medical, Mainstay Medical Holding plc, Ablative Solutions Inc., GT Medical Technologies, Inc. and Alleviant Medical. Previously, Mr. Pardo also served on the board of directors, including various committees, for several public and formerly public companies, including Inari Medical Inc. from March 2018 to May 2021, Axonics Inc. (Nasdaq: AXNX) from July 2017 to April 2019, Eargo Inc. (Nasdaq: EAR) from July 2020 to July 2021, Vapotherm, Inc. from March 2014 to October 2020 and CVRx Inc. (Nasdaq: CVRX) from August 2016 to June 2022. He received a B.A. from Brown University and an M.B.A from The Wharton School of Business. We believe Mr. Pardo's experience leading and managing a medical technology company, as well as his healthcare industry knowledge and his experience serving on the board of directors of other companies, qualifies him to serve on our board of directors.

***Kevin Sidow*** has served as a member of our board of directors since October 2020. From February 2008 until his retirement in July 2017, Mr. Sidow was the President and Chief Executive Officer of Moximed, Inc., a medical device company focused on knee osteoarthritis. He currently serves on the board of directors of several private companies in the healthcare industry, including Carlsmed Inc., Hip Innovation Technology, LLC, and Mantis Health Inc. He received a B.S. in Accounting from West Virginia University. We believe Mr. Sidow's extensive experience in the medical device industry and leadership positions qualifies him to serve on our board of directors.

***Casey Tansey*** has served on our board of directors since October 2020. Since 2014, Mr. Tansey has served as the Managing Partner of USVP Management Company. Mr. Tansey has been a member of the board of directors of Inspire Medical Systems, Inc.(NYSE: INSP) since 2007 and of UCSF MTVP Investment Advisory since 2017. He has also served on the boards of several other medical technology and healthcare-related companies, including

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Cagent Vascular, HeartFlow, Inc., Highlife Medical, Inc., Luminopia, Inc., MicroTransponder, Inc., Neuros Medical, NeoChord, Inc., and ShiraTronics. He received a B.S. in Business and a M.B.A. in Business from the College of Notre Dame. We believe Mr. Tansey's significant investing experience and knowledge of our industry qualifies him to serve on our board of directors.

***Richard J. Buchholz*** will join our board of directors upon the effectiveness of the registration statement of which this prospectus is a part. Mr. Buchholz has served as Chief Financial Officer of Inspire Medical Systems, Inc. (NYSE: INSP) since 2014. Prior to that role, Mr. Buchholz served as the Chief Financial Officer, Secretary and Treasurer of superDimension, Ltd., a medical device manufacturer (which was acquired by Covidien plc in 2012), from 2006 to 2013. Mr. Buchholz holds a B.B.A from the University of Wisconsin, Eau Claire and is a Certified Public Accountant (inactive). We believe Mr. Buchholz's extensive knowledge of our industry, financial management skills and experience as an executive of a publicly-traded medical technology company qualifies him to serve on our board of directors.

**Family Relationships**

There are no family relationships among any of our directors or executive officers.

**Board Composition**

***Director Independence***

Our board of directors currently consists of seven members and will consist of eight members following the completion of this offering. Our board of directors has determined that all of our directors, other than Mr. Ball and Mr. Ahearn, qualify as "independent" directors in accordance with the rules of the New York Stock Exchange. Mr. Ball and Mr. Ahearn are not considered independent by virtue of their position as our Chief Executive Officer and Chief Operating Officer, respectively. Under the New York Stock Exchange rules, the definition of independence includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his or her family members has engaged in various types of business dealings with us. In addition, as required by the New York Stock Exchange rules, our board of directors has made a subjective determination as to each independent director that no relationship exists that, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our board of directors reviewed and discussed information provided by the directors and us with regard to each director's business and personal activities and relationships as they may relate to us and our management.

***Classified Board of Directors***

In accordance with our amended and restated certificate of incorporation, which will be effective immediately prior to the completion of this offering, our board of directors will be divided into three classes with staggered three-year terms. At each annual general meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election. Our directors will be divided among the three classes as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Class I directors will be Mr. Ball, Mr. Carusi and Mr. Pardo, and their terms will expire at the annual meeting of stockholders to be held in 2026;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Class II directors will be Mr. Buckman, Mr. Sidow and Mr. Tansey, and their terms will expire at the annual meeting of stockholders to be held in 2027; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• The Class III directors will be Mr. Ahearn and Mr. Buchholz, and their terms will expire at the annual meeting of stockholders to be held in 2028.

We expect that any additional directorships resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one-third of the directors. The division of our board of directors into three classes with staggered three-year terms may delay or prevent a change of our management or a change in control.

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**Leadership Structure of the Board** 

Our amended and restated bylaws and corporate governance guidelines to be in place immediately prior to the consummation of this offering will provide our board of directors with flexibility to combine or separate the positions of Chair of the board of directors and Chief Executive Officer and to implement a lead director in accordance with its determination regarding which structure would be in the best interests of our company.

Our board of directors has concluded that our current leadership structure is appropriate at this time. However, our board of directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.

**Role of Board in Risk Oversight Process** 

Risk assessment and oversight are an integral part of our governance and management processes. Our board of directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the strategic risks facing us. Throughout the year, senior management reviews these strategic risks with the board of directors at regular board meetings as part of management presentations that focus on particular business functions, operations, or strategies, and presents the steps taken by management to mitigate or eliminate such risks.

Our board of directors does not have a standing risk management committee, but rather administers this oversight function directly through our board of directors as a whole, as well as through various standing committees of our board of directors that address risks inherent in their respective areas of oversight. While our board of directors is responsible for monitoring and assessing strategic risk exposure, our audit committee is responsible for overseeing company-wide and information security risk assessment processes, our major financial risk exposures, regulatory compliance, and the steps our management has taken to monitor and control these risks and exposures. The audit committee then reviews these matters with the full board of directors as part of the audit committee's reports at regular board meetings. The audit committee also approves or disapproves any related-party transactions. Our nominating and corporate governance committee monitors the effectiveness of our corporate governance guidelines and risks related to environmental, social, and governance issues and oversees management succession planning. Our compensation committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

**Board Committees** 

Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. Our board of directors may establish other committees to facilitate the management of our business. The composition and functions of each committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board of directors. Each committee has a written charter that satisfies the applicable rules and regulations of the Securities and Exchange Commission and New York Stock Exchange rules, which we will post on our website at www.shoulderinnovations.com upon the completion of this offering.

***Audit Committee***

Our audit committee oversees our corporate accounting and financial reporting process. Among other matters, the audit committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appointing, compensating, retaining, evaluating, terminating, and overseeing our independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• discussing with our independent registered public accounting firm their independence from management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing with our independent registered public accounting firm the scope and results of their audit;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and monitoring our accounting principles, accounting policies, financial and accounting controls, and compliance with legal and regulatory requirements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing our policies on risk assessment and risk strategy and management, including risk policies and risk mitigation strategies by management;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing related party transactions; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls, or auditing matters.

Our audit committee consists of Mr. Buchholz, Mr. Buckman, and Mr. Sidow. Our board of directors has determined that Mr. Buchholz, Mr. Buckman and Mr. Sidow are independent under the New York Stock Exchange rules and Rule 10A-3(b)(1) of the Exchange Act. The chair of our audit committee is Mr. Buchholz. Our board of directors has determined that Mr. Buchholz, Mr. Buckman and Mr. Sidow are each financially literate. In addition, our board of directors has determined that Mr. Buchholz, Mr. Buckman and Mr. Sidow are each an "audit committee financial expert" as such term is currently defined in Item 407(d)(5) of Regulation S-K. Our board of directors has also determined that each member of our audit committee can read and understand fundamental financial statements, in accordance with applicable requirements.

***Compensation Committee***

Our compensation committee oversees policies relating to compensation and benefits of our officers and employees. Among other matters, the compensation committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and approving, or recommending that our board of directors approve, the compensation of our Chief Executive Officer and executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• appointing and overseeing any compensation consultants;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and approving or making recommendations to our board of directors regarding our incentive compensation and equity-based plans;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and making recommendations to our board of directors with respect to director compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and discussing annually with management our "Compensation Discussion and Analysis" disclosure if and to the extent then required by SEC rules; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• preparing the compensation committee report if and to the extent then required by SEC rules.

Our compensation committee consists of Mr. Pardo, Mr. Sidow, and Mr. Tansey. Our board of directors has determined that all members are independent under the New York Stock Exchange rules and that Mr. Sidow is a non-employee director, as defined by Rule 16b-3 promulgated under the Exchange Act. The chair of our compensation committee is Mr. Sidow.

***Nominating and Corporate Governance Committee***

Our nominating and corporate governance committee oversees policies relating to our corporate governance. Among other matters, the nominating and corporate governance committee:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• identifying individuals qualified to become members of our board of directors, consistent with criteria approved by our board of directors;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing and making recommendations to our board with respect to management succession planning;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• evaluating the overall effectiveness of our board of directors and its committees; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• reviewing developments in corporate governance compliance and developing and recommending to our board of directors a set of corporate governance guidelines and principles.

Our nominating and corporate governance committee consists of Mr. Buckman, Mr. Pardo, and Mr. Tansey. Our board of directors has determined that all members are independent under the New York Stock Exchange rules. The chair of our nominating and corporate governance committee is Mr. Pardo.

**Compensation Committee Interlocks and Insider Participation** 

None of the members of our compensation committee is currently, or has been at any time, one of our executive officers or employees. None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of directors or on our compensation committee.

**Code of Business Conduct and Ethics** 

In connection with this offering, our board of directors adopted a written code of business conduct and ethics that applies to all of our directors, officers, and employees, including our principal executive officer, principal financial officer, and principal accounting officer or controller, or persons performing similar functions, and agents and representatives, which will be effective upon the completion of this offering. The full text of our code of business conduct and ethics will be posted on our website at www.shoulderinnovations.com upon the completion of this offering. The audit committee of our board of directors will be responsible for overseeing our code of business conduct and ethics and any waivers applicable to any director, executive officer, or employee. We intend to disclose any future amendments to certain provisions of our code of business conduct and ethics, or waivers of such provisions applicable to our directors, officers, and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and agents and representatives, on our website identified above or in public filings.

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**EXECUTIVE AND DIRECTOR COMPENSATION**

**Executive Compensation**

This section discusses the material components of the executive compensation program for our executive officers who are named in the "2024 Summary Compensation Table" below. In 2024, our "named executive officers" and their positions were as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Robert Ball, our Chief Executive Officer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Jeffrey Points, our Chief Financial Officer; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• David Blue, our Chief Commercial Officer.

This discussion may contain forward-looking statements that are based on our current plans, considerations, expectations and determinations regarding future compensation programs. Actual compensation programs that we adopt following the completion of this offering may differ materially from the currently planned programs summarized in this discussion.

**2024 Summary Compensation Table**

The following table sets forth information concerning the compensation of our named executive officers for the year ended December 31, 2024.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary** | **Non-Equity Incentive Plan Compensation**<sup>(1)</sup> | **All Other Compensation**<sup>(2)</sup> | **Total** |
|  |  | **($)** | **($)** | **($)** | **($)** |
| Robert Ball | 2024 | 449613 | 164701 | 13800 | 628114 |
| &nbsp;&nbsp;&nbsp;&nbsp;*Chief Executive Officer* |  |  |  |  |  |
| Jeffrey Points | 2024 | 363440 | 134912 | 9460 | 507812 |
| &nbsp;&nbsp;&nbsp;&nbsp;*Chief Financial Officer* |  |  |  |  |  |
| David Blue | 2024 | 349939 | 133533 | 13800 | 497272 |
| &nbsp;&nbsp;&nbsp;&nbsp;*Chief Commercial Officer* |  |  |  |  |  |

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__________________

(1)Amounts reflect actual cash bonuses earned for the 2024 performance year, based on the achievement of goals under our quarterly bonus program for 2024.

(2)Amounts reflect company-paid matching contributions to 401(k) plan accounts.

**Narrative to Summary Compensation Table**

***2024 Salaries***

The named executive officers each receive a base salary to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive's skill set, experience, role and responsibilities.

For fiscal year 2024, Messrs. Ball, Points and Blue had annual salaries of $449,613, $363,440 and $349,939, respectively. Their fiscal year 2025 salaries are $467,943, $378,144 and $364,455, respectively.

The actual base salaries paid to each named executive officer in 2024 are set forth above in the Summary Compensation Table in the column titled "Salary."

***2024 Bonuses***

In 2024, our named executive officers were eligible to earn quarterly cash incentive bonuses based on our achievement of pre-determined revenue and adjusted EBITDA goals, as well as the achievement of individual performance goals. Under the 2024 bonus program, the revenue, adjusted EBITDA and individual performance

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goals were weighted as 60%, 20% and 20% of each executive's quarterly bonus opportunity. The executives were eligible to receive up to 200% of the executives' target bonus opportunity upon achievement of maximum financial goals.

For 2024, the target bonuses for Messrs. Ball, Points and Blue were 50% of each officer's respective quarterly base salary.

The actual annual cash bonuses awarded to each executive for 2024 performance are set forth above in the Summary Compensation Table in the column titled "—Non-Equity Incentive Plan Compensation."

***Equity Compensation***

We have historically used stock options as the primary incentive for long-term compensation to our employees (including our named executive officers) because they are able to profit from stock options only if our stock price increases relative to the stock option's exercise price, which generally is set at or above the fair market value of our common stock as of the applicable grant date. Prior to this offering, we maintained the Stock Option Plan. As mentioned below, in connection with this offering and the adoption of the 2025 Plan, no further awards will be granted under the Stock Option Plan.

In 2024, we did not grant stock options or any other equity awards to our named executive officers. However, in July 2024, we repriced certain of our outstanding stock options granted in 2023, including those granted to our named executive officers, that had a per share exercise price greater than or equal to $0.13, which was determined by our board of directors to be the per-share fair market value of our common stock at the time of the repricing.

In connection with this offering, we intend to adopt a 2025 Incentive Award Plan, referred to below as the 2025 Plan, in order to facilitate the grant of cash and equity incentives to directors, employees (including our named executive officers) and consultants of our company and certain of its affiliates and to enable our company and certain of its affiliates to obtain and retain services of these individuals, which is essential to our long-term success. For additional information about the 2025 Plan, please see the section titled "—Equity Incentive Plans" below.

***Other Elements of Compensation***

*Retirement Plan* 

We currently maintain a 401(k) retirement savings plan, or the 401(k) plan, for our employees, including our named executive officers, who satisfy certain eligibility requirements. Our named executive officers are eligible to participate in the 401(k) plan on the same terms as other full-time employees. The Code allows eligible employees to defer a portion of their compensation, within prescribed limits, through contributions to the 401(k) plan. Currently, we provide discretionary matching contributions equal to 100% of a participant's salary deferrals up to 3% of the participant's compensation and equal to 50% of the next 2% of the employee's contributions, subject to limits provided in the Code. These matching contributions are fully vested as of the date on which the contribution is made. We believe that providing a vehicle for retirement savings through our 401(k) plan adds to the overall desirability of our compensation package and further incentivizes our employees, including our named executive officers, in accordance with our compensation policies.

The amounts of such company matching contributions paid by us on behalf of each named executive officer are set forth above in the Summary Compensation Table in the column titled "—All Other Compensation."

*Health and Welfare and Perquisites* 

All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including medical, dental and vision benefits; health and dependent care flexible spending accounts; short-term and long-term disability insurance; accident insurance; and life and AD&D insurance.

We did not provide any perquisites or special personal benefits to our named executive officers in fiscal year 2024, but our compensation committee may from time to time approve them in the future when our compensation committee determines that such perquisites are necessary or advisable to fairly compensate or incentivize our

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employees. We believe the perquisites and benefits described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

*No Tax Gross-Ups Paid*

We did not make gross-up payments to cover our named executive officers' personal income taxes that may pertain to any of the compensation paid or provided by us during 2024.

*Clawback Policy* 

In connection with this offering, our board of directors intends to adopt a compensation recovery policy that is compliant with the New York Stock Exchange rules, as required by the Dodd-Frank Act.

**Outstanding Equity Awards at Fiscal Year-End**

The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2024. Each equity award listed in the following table was granted under the Stock Option Plan and covers our common stock.

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | | | **Option Awards** | **Option Awards** | **Option Awards** | **Option Awards** |
|<br>**Name** |<br>**Grant Date** |<br>**Vesting Commencement Date** | **Number of Securities Underlying Unexercised Options** <br>**Exercisable (#)** | **Number of Securities Underlying Unexercised Options** <br>**Unexercisable(#)** | **Option Exercise Price ($)** | **Option Expiration Date** |
| Robert Ball | 4/30/2019<sup>(1)</sup> | -- | 300000 | -- | $0.056 | 4/30/2029 |
|  | 2/11/2020<sup>(1)</sup> | -- | 31447 | -- | $0.054 | 2/11/2030 |
|  | 12/16/2020<sup>(1)</sup> | -- | 3500000 | -- | $0.11 | 12/16/2030 |
|  | 7/12/2024<sup>(2)</sup> | 5/17/2023 | 2490488 | 3801272 | $0.13 | 5/17/2033 |
| Jeffrey Points | 7/12/2024<sup>(2)</sup> | 9/25/2023 | 126539 | 1391941 | $0.13 | 11/16/2033 |
| David L. Blue | 12/16/2020<sup>(1)</sup> | -- | 1500000 | -- | $0.11 | 12/16/2030 |
|  | 7/12/2024<sup>(2)</sup> | 4/19/2023 | 222991 | 312188 | $0.13 | 5/9/2033 |

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(1)This option is fully vested and exercisable as of December 31, 2024.

(2)This option vests and becomes exercisable with respect to 1/4 of the total number of shares underlying the option on the one-year anniversary of the vesting commencement date, with the remaining number of shares vesting in equal increments on the last day of each month over the next 36 months. The grant date set forth in the table above reflects the date on which the option was repriced; the option originally was granted for Mr. Ball on May 17, 2023, for Mr. Points on November 16, 2023 and for Mr. Blue on May 9, 2023.

**Executive Compensation Arrangements**

***Employment Agreements***

The following is a description of the employment agreements that were in effect in 2024 with each of our named executive officers.

Each of the agreements is an "at will" employment agreement, pursuant to which Messrs. Ball, Points and Blue are entitled to receive a base salary of $400,000, $360,000 and $300,000, respectively, as well as an annual performance bonus of up to 50% of base salary. This annual performance bonus is paid on a quarterly basis and is based on both individual and company performance, as determined by our board of directors, and subject to the applicable executive's continued employment through the payment date. Each executive is also eligible to participate in our standard employee benefit plans.

If the employment of any executive is terminated by us without "cause" or by the executive for "good reason" (each, as defined in the applicable employment agreement), he will be entitled to receive (i) continued payments of base salary for 12 months following the date of termination and (ii) reimbursement for the cost of

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COBRA premiums for up to 12 months. These severance payments and benefits are subject to the executive's timely executive and non-revocation of a release of claims in our favor.

Pursuant to the terms of his employment agreement, we granted Mr. Points an option to purchase 2,024,641 shares of our common stock (on a pre-stock split basis). The option vests and becomes exercisable with respect to one fourth of the total number of shares underlying the option on the one-year anniversary of the effective date of his employment agreement, with the remaining number of shares vesting in equal increments on the last day of each month over the next 36 months. In addition, it will become fully vested and exercisable immediately prior to a change in control, subject to Mr. Points' timely execution and non-revocation of a general release of claims.

Each employment agreement includes a non-disclosure of confidential information provision, which applies indefinitely. The employment agreements for Messrs. Ball and Blue also include a non-competition provision and an employee and customer non-solicitation provision, both of which apply during employment and for either twelve months thereafter, in the event of a termination by us for "cause" or by the executive without "good reason," or six month months thereafter, in the event of a termination by us without "cause" or by the executive for "good reason." The employment agreement for Mr. Points includes an employee and customer non-solicitation provision, which applies during employment and for twelve months thereafter.

Further, the employment agreement with Mr. Points provides that in the event any "parachute payments" (within the meaning of Section 280G of the Code) become payable to Mr. Points that are subject to excise taxes under Section 4999 of the Code, we will provide Mr. Points with an additional amount sufficient to cover any such taxes up to $500,000.

***Option Acceleration Policy***

We maintain a policy that provides options granted under our Stock Option Plan will become fully vested and exercisable if the optionholder's employment is terminated by us without "cause" or by the optionholder for "good reason", in either case, within the period starting three months prior to, and ending 12 months after, a "change in control" (each, as defined in the policy).

**Director Compensation**

During the fiscal year ended December 31, 2024, our non-employee directors were Messrs. Buckman, Carusi, Pardo, Sidow and Tansey. In 2024, Messrs. Buckman and Sidow each earned $40,000 for services rendered as members of our board of directors. In addition, Mr. Sidow received an option covering 170,000 shares. This option vests and becomes exercisable in 12 substantially equal installments, with the first installment vesting on September 30, 2025 and the remaining installments vesting on the last day of each fiscal quarter thereafter. Messrs. Carusi, Pardo and Tansey did not receive any compensation for their services in 2024 and did not hold any outstanding equity awards as of December 31, 2024.

***2024 Director Compensation Table***

The table below shows compensation paid to Messrs. Buckman and Sidow for services rendered during 2024.

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| | | | |
|:---|:---|:---|:---|
| **Name** | **Fees Earned or Paid in Cash** | **Option Awards**<sup>(1)</sup> | **Total** |
|  | **($)** | **($)** | **($)** |
| Paul Buckman | 40000 | -- | 40000 |
| Kevin Sidow | 40000 | 18069 | 58069 |

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__________________

(1)Amounts reflect the full grant-date fair value of unit options granted during 2024 computed in accordance with ASC Topic 718, rather than the amounts paid to or realized by the named individual. We provide information regarding the assumptions used to calculate the value of all option awards made to executive officers in Note 11 to our audited financial statements included elsewhere in this prospectus.

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The table below shows the aggregate numbers of option awards (exercisable and unexercisable) and unvested stock awards held as of December 31, 2024 by each non-employee director who was serving as of December 31, 2024.

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| | |
|:---|:---|
| **Name** | **Options Outstanding at Fiscal Year End** |
| Paul Buckman | 891,964 |
| Kevin Sidow | 1,061,964 |

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***Director Compensation Program***

In connection with this offering, we intend to approve and implement a compensation program (the "Director Compensation Program"), which will become effective upon the closing of this offering. The Director Compensation Program consists of annual retainer fees and long-term equity awards for certain of our non-employee directors (each, an "Eligible Director"). The material terms of the Director Compensation Program are described below.

The Director Compensation Program also will consist of the following components:

<u>Cash Compensation:</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual Retainer: $45,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual Committee Chair Retainer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Audit: $20,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Compensation: $15,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Nominating and Governance: $10,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Annual Committee Member (Non-Chair) Retainer:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Audit: $10,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Compensation: $7,500

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;◦ Nominating and Corporate Governance: $5,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Lead Independent Director: $35,000

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• Non-Executive Chair: $40,000

The annual cash retainers will be paid in quarterly installments in arrears. Annual cash retainers will be pro-rated for any partial calendar quarter of service.

<u>Equity Compensation:</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *2025 Award:* In connection with the consummation of this offering, we expect to grant to each Eligible Director an award of RSUs covering shares of our common stock under the 2025 Plan (each, a "2025 Award") with an aggregate value of $115,000. The number of shares subject to a 2025 Award will be determined by dividing the value of the award by the price per share of our common stock on the pricing date of this offering.

The 2025 Awards will vest in full on the date of the annual meeting of stockholders to be held in 2026, or, if earlier, the first anniversary of the closing of this offering, subject to continued service through the applicable vesting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• *Annual Grant*: An Eligible Director who is serving on our board of directors as of the date of an annual meeting of stockholders (beginning with calendar year 2026) automatically shall be granted, on the date of such annual meeting, an RSU award with an aggregate value of $115,000. The number of RSUs subject to the award will be determined by dividing the value of the award by the price per share of the company's common stock on the applicable grant date.

Each Annual Grant will vest in full on the earlier to occur of the first anniversary of the grant date and the date of the next annual meeting following the grant date, subject to continued service.

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In addition, each equity award granted to an Eligible Director under the Director Compensation Program will vest in full immediately prior to the occurrence of a "change in control" (as defined in the 2025 Plan). Compensation under the Director Compensation Program will be subject to the annual limits on non-employee director compensation set forth in the 2025 Plan.

**Equity Incentive Plans**

The following summarizes the material terms of the Stock Option Plan and the 2025 Plan, which is the long-term incentive compensation plan in which our named executive officers will be eligible to participate following the consummation of this offering. In addition, the following summarizes the material terms of the ESPP, with is a tax-qualified employee stock purchase plan in which our named executive officers will be eligible to participate following the consummation of this offering. Our board of directors is still in the process of developing, approving and implementing the 2025 Plan and the ESPP and, accordingly, these summaries are subject to change.

***Stock Option Plan***

Prior to this offering, we maintained the Stock Option Plan. In connection with this offering, we expect to amend and restate the Stock Option Plan. The material terms of the Stock Option Plan, as amended and restated, are summarized below. Following the effectiveness of the 2025 Plan, the Stock Option Plan will terminate, and we will not make any further awards under the Stock Option Plan.

However, any outstanding awards granted under the Stock Option Plan will remain outstanding, subject to the terms of the Stock Option Plan and applicable award agreements. Shares of our common stock subject to awards granted under the Stock Option Plan that expire unexercised or are cancelled, terminated or forfeited in any manner without issuance of shares thereunder following the effective date of the 2025 Plan will become available for issuance under the 2025 Plan in accordance with its terms.

A total of &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock are reserved for issuance under the Stock Option Plan.

*Eligibility and Administration*. Employees and other individuals selected by our board of directors are eligible to receive awards under the Stock Option Plan. The Stock Option Plan is administered by our board of directors, which may delegate its duties and responsibilities to a committee as it deems appropriate. Following the completion of this offering, we expect that our board of directors will delegate its duties to administer the plan to our compensation committee with respect to participants who are not non-employee directors (references in this summary to "board of directors" will mean the compensation committee, to the extent authority has been delegated). The board of directors has the authority to determine who will be granted options, what type of options will be granted and in what amount, when and how options will be granted, the provisions of each option and the exercise price applicable to each option; to approve forms of award agreement for use under the Stock Option Plan; to accelerate the vesting or exercisability of any award; to submit amendments to the Stock Option Plan for stockholder approval; to adopt any procedures or subplans necessary to permit non-U.S. participation in the Stock Option Plan; to construe and interpret the Stock Option Plan; and to prescribe, amend and rescind rules and regulations relating to the Stock Option Plan.

*Awards*. The Stock Option Plan provides for the grant of nonqualified stock options and incentive stock options. Each option under the Stock Option Plan is evidenced by a separate agreement between our company and the participant, which evidences the terms and conditions of the options, including any applicable vesting and payment terms and post-termination exercise limitations. The following types of options have been granted under the Stock Option Plan:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Nonqualified Stock Options</u>. Nonqualified stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date. The exercise price of a stock option is fixed by the board of directors and may not be less than 100% of the fair market value of the underlying share on the date of grant. The term of a stock option is determined by our board of directors, but may not exceed ten years. Vesting conditions determined by our board of directors may apply to stock options and may include the occurrence of certain events, the passage of a specified period of time, and/or other fulfillment of certain conditions.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Incentive Stock Options</u>. Incentive stock options are designed to comply with the provisions of the Code and are subject to specified restrictions contained in the Code applicable to incentive stock options. Among such restrictions, incentive stock options must have an exercise price of not less than the fair market value of a share of common stock on the date of grant, may only be granted to employees, lose ISO status within a specified period of time following the participant's termination of employment, and must be exercised within ten years after the date of grant. In the case of an incentive stock option granted to an individual who owns (or is deemed to own) more than 10% of the total combined voting power of all classes of our capital stock on the date of grant, the exercise price must be at least 110% of the fair market value of a share of common stock on the date of grant and the incentive stock option must expire on the fifth anniversary of the date of its grant.

*Certain Transactions*. In the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, or a combination or other change in shares of our common stock, our board of directors may, in order to prevent the diminution or enlargement of benefits or potential benefits, adjust the number and class of shares that may be issued under the Stock Option Plan, and adjust the number, class and price of shares underlying outstanding options. In the event of a dissolution or liquidation, all outstanding awards will terminate. In the event of a merger or a change in control affecting the ownership of our company, all outstanding awards may be assumed, converted, replaced or substituted by the successor or acquiring corporation. If the successor or acquiring corporation refuses to assume, convert, replace or substitute options granted under the Stock Option Plan, then the options will expire upon the consummation of the transaction, provided that the administrator may, in its sole discretion, elect to accelerate the vesting and exercisability of any outstanding awards in full or in part prior to the consummation of the transaction on such terms and conditions that the administrator shall determine in its sole discretion.

*Repricing*. The administrator may, without approval of the stockholders, reduce the exercise price of any stock option, or cancel any stock option in exchange for cash, other awards or stock options with an exercise price per share that is less than the exercise price per share of the original stock options.

*Plan Amendment and Termination*. Our board of directors may suspend or terminate the Stock Option Plan or any portion thereof at any time and may also amend the Stock Option Plan at any time in such respects as our board of directors may deem necessary or advisable, provided that no such amendment shall be made without stockholder approval to the extent such approval is necessary and desirable to comply with applicable law. Further, no such amendment, suspension or termination shall impair the rights of participants under outstanding options without the consent of the affected participants.

As described above, the Stock Option Plan will terminate as of the effective date of the 2025 Plan.

***2025 Incentive Award Plan***

In connection with the offering, we intend to adopt the 2025 Plan, under which we may grant equity and cash incentive awards to eligible service providers in order to attract, motivate and retain the talent for which we compete, subject to stockholder approval.

*Eligibility and Administration*. Our employees, consultants and directors, and employees, consultants and directors of our subsidiaries, will be eligible to receive awards under the 2025 Plan. Following the completion of this offering, the 2025 Plan will be administered by our board of directors with respect to awards to non-employee directors and by our compensation committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of our directors and/or officers (referred to collectively as the plan administrator below), subject to certain limitations that may be imposed under the 2025 Plan, Section 16 of the Exchange Act, stock exchange rules and/or other applicable laws. The plan administrator will have the authority to take all actions and make all determinations under the 2025 Plan, to interpret the 2025 Plan and award agreements and to adopt, amend and repeal rules for the administration of the 2025 Plan as it deems advisable. The plan administrator will also have the authority to determine which eligible service providers receive awards, grant awards and set the terms and conditions of all awards under the 2025 Plan, including any vesting and vesting acceleration provisions, subject to the conditions and limitations in the 2025 Plan.

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*Limitation on Awards and Shares Available*. The initial aggregate number of shares of our common stock that will be available for issuance under the 2025 Plan is equal to 10% of the number of fully-diluted shares of our common stock outstanding as of immediately following the completion of this offering (calculated on an as-converted basis and including the shares issuable under the 2025 Plan and the ESPP) (which is expected to be shares, assuming an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share, which is the midpoint of the price range set forth on the cover page of this prospectus).

In addition, the number of shares of our common stock available for issuance under the 2025 Plan will be subject to an annual increase on the first day of each calendar year beginning January 1, 2026 and ending on and including January 1, 2035, equal to the lesser of (i) 5% of the aggregate number of shares of our common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by our board of directors. The maximum number of shares that may be issued pursuant to the exercise of incentive stock options ("ISOs"), granted under the 2025 Plan, will be 100,000,000. Any shares issued pursuant to the 2025 Plan may consist, in whole or in part, of authorized and unissued common stock, treasury common stock or common stock purchased on the open market.

If an award under the 2025 Plan or Stock Option Plan expires, lapses or is terminated, exchanged for or settled in cash, any shares subject to such award (or portion thereof) may, to the extent of such expiration, lapse, termination or cash settlement, be used again for new grants under the 2025 Plan. Shares delivered to us to satisfy the applicable exercise or purchase price of an award under the 2025 Plan or the Stock Option Plan and/or to satisfy any applicable tax withholding obligations (including shares retained by us from the award under the 2025 Plan or the Stock Option Plan being exercised or purchased, and/or creating the tax obligation) will become or again be available for award grants under the 2025 Plan. Further, the payment of dividend equivalents in cash in conjunction with any awards under the 2025 Plan will not reduce the shares available for grant under the 2025 Plan. However, the following shares may not be used again for grant under the 2025 Plan: (i) shares subject to stock appreciation rights ("SARs") that are not issued in connection with the stock settlement of the SAR on exercise, and (ii) shares purchased on the open market with the cash proceeds from the exercise of options.

Awards granted under the 2025 Plan upon the assumption of, or in substitution for, awards authorized or outstanding under a qualifying equity plan maintained by an entity with which we enter into a merger or similar corporate transaction will not reduce the shares available for grant under the 2025 Plan but will count against the maximum number of shares that may be issued upon the exercise of ISOs.

The 2025 Plan provides that the sum of any cash compensation and the aggregate grant date fair value (determined as of the date of the grant under Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of all awards granted to a non-employee director as compensation for services as a non-employee director during any fiscal year, or director limit, may not exceed an amount equal to $500,000 (increased to $1,000,000 in the calendar year of a non-employee director's initial service as a non-employee director or any calendar year during which a non-employee director serves as chairman of our board of directors or lead independent director), which limits will not apply to the compensation for any non-employee director who serves in any capacity in addition to that of a non-employee director for which he or she receives additional compensation or any compensation paid prior to the calendar year following the calendar year in which the 2025 Plan becomes effective.

*Awards*. The 2025 Plan provides for the grant of stock options, including ISOs, and nonqualified stock options ("NSOs"), restricted stock, dividend equivalents, restricted stock units ("RSUs"), SARs, and other stock or cash based awards. Certain awards under the 2025 Plan may constitute or provide for a payment of "nonqualified deferred compensation" under Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards under the 2025 Plan will be evidenced by award agreements, which will detail the terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards other than cash awards generally will be settled in shares of our common

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stock, but the applicable award agreement may provide for cash settlement of any award. A brief description of each award type follows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Stock Options and SARs</u>. Stock options provide for the purchase of shares of our common stock in the future at an exercise price set on the grant date. ISOs, in contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. SARs entitle their holder, upon exercise, to receive from us an amount equal to the appreciation of the shares subject to the award between the grant date and the exercise date. Unless otherwise determined by our board, the exercise price of a stock option or SAR may not be less than 100% of the fair market value of the underlying share on the grant date (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute awards granted in connection with a corporate transaction. The term of a stock option or SAR may not be longer than ten years (or five years in the case of ISOs granted to certain significant stockholders). Conditions applicable to stock options and/or SARs may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Restricted Stock and RSUs.</u> Restricted stock is an award of nontransferable shares of our common stock that are subject to certain vesting conditions and other restrictions. RSUs are contractual promises to deliver shares of our common stock in the future, which may also remain forfeitable unless and until specified conditions are met and may be accompanied by the right to receive the equivalent value of dividends paid on shares of our common stock prior to the delivery of the underlying shares (*i.e*., dividend equivalent rights). The plan administrator may provide that the delivery of the shares underlying RSUs will be deferred on a mandatory basis or at the election of the participant. The terms and conditions applicable to RSUs will be determined by the plan administrator, subject to the conditions and limitations contained in the 2025 Plan. Conditions applicable to restricted stock and RSUs may be based on continuing service, the attainment of performance goals and/or such other conditions as the plan administrator may determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Other Stock or Cash Based Awards</u>. Other stock or cash based awards are awards of cash, fully vested shares of our common stock and other awards valued wholly or partially by referring to, or otherwise based on, shares of our common stock. Other stock or cash based awards may be granted to participants and may also be available as a payment form in the settlement of other awards, as standalone payments and as payment in lieu of compensation to which a participant is otherwise entitled.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• <u>Dividend Equivalents</u>. Dividend equivalents represent the right to receive the equivalent value of dividends paid on shares of our common stock and may be granted alone or in tandem with awards other than stock options or SARs. Dividend equivalents are credited as of the dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator. Dividend equivalents payable with respect to an award prior to the vesting of such award instead will be paid out to the participant only to the extent that the vesting conditions are subsequently satisfied and the award vests.

*Certain Transactions*. The plan administrator has broad discretion to take action under the 2025 Plan, as well as make adjustments to the terms and conditions of existing and future awards, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events affecting our common stock, such as stock dividends, stock splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our stockholders known as "equity restructurings," the plan administrator will make equitable adjustments to the 2025 Plan and outstanding awards. In the event of a change in control (as defined in the 2025 Plan), to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then all such awards will become fully vested and exercisable in connection with the transaction. If, however, the surviving entity assumes outstanding awards and, on or within 12 months following such change in control, a participant's employment is terminated by the company (or the surviving entity or its affiliates) for any reason other than for "cause" or by the participant for "good reason" (each such term as defined in the 2025 Plan), then all such awards will become fully vested and exercisable as of the date of such termination. Upon or in anticipation of a change of control, the plan administrator may cause any outstanding awards to terminate at a specified time in the future and give the participant the right to

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exercise such awards during a period of time determined by the plan administrator in its sole discretion. Individual award agreements may provide for additional accelerated vesting and payment provisions.

*Repricing*. The plan administrator may, without approval of the stockholders, reduce the exercise price of any stock option or SAR, or cancel any stock option or SAR in exchange for cash, other awards or stock options or SARs with an exercise price per share that is less than the exercise price per share of the original stock options or SARs.

*Foreign Participants, Claw-Back Provisions, Transferability, and Participant Payments*. The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards will be subject to any company clawback policy as set forth in such clawback policy or the applicable award agreement. Awards under the 2025 Plan are generally non-transferrable, except by will or the laws of descent and distribution, or, subject to the plan administrator's consent, pursuant to a domestic relations order, and are generally exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2025 Plan, the plan administrator may, in its discretion, accept cash or check, shares of our common stock that meet specified conditions, a "market sell order" or such other consideration as it deems suitable.

Plan Amendment and Termination. Our board of directors may amend or terminate the 2025 Plan at any time; however, no amendment, other than an amendment that increases the number of shares available under the 2025 Plan, may materially and adversely affect an award outstanding under the 2025 Plan without the consent of the affected participant, and stockholder approval will be obtained for any amendment to the extent necessary to comply with applicable laws. The 2025 Plan will remain in effect until terminated by the plan administrator in accordance with the 2025 Plan. No awards may be granted under the 2025 Plan after its termination.

***2025 Employee Stock Purchase Plan***

In connection with the offering, we intend to adopt, and that our stockholders will approve, the ESPP.

*Shares Available; Administration*. The initial share reserve under the ESPP will equal 1% of the number of fully-diluted shares of our common stock outstanding as of immediately following the completion of this offering (calculated on an as-converted basis and including the shares issuable under the 2025 Plan and the ESPP) (which is expected to be&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares, based on an initial public offering price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;per share).

In addition, the number of shares available for issuance under the ESPP will be annually increased on the first day of each calendar year beginning January 1, 2026 and ending on and including January 1, 2035, equal to the lesser of (i) 1% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by our board of directors. In no event will more than 100,000,000 shares of our common stock be available for issuance under the ESPP.

Our board of directors or a committee designated by our board of directors will have authority to interpret the terms of the ESPP and determine eligibility of participants. The compensation committee will be the administrator of the ESPP.

*Eligibility*. The plan administrator may designate certain of our subsidiaries as participating "designated subsidiaries" in the ESPP and may change these designations from time to time. Employees of our company and our designated subsidiaries are eligible to participate in the ESPP if they meet the eligibility requirements under the ESPP established from time to time by the plan administrator. However, an employee may not be granted rights to purchase stock under the ESPP if such employee, immediately after the grant, would own (directly or through attribution) stock possessing 5% or more of the total combined voting power or value of all classes of our common or other class of stock.

If the grant of a purchase right under the ESPP to any eligible employee who is a citizen or resident of a foreign jurisdiction would be prohibited under the laws of such foreign jurisdiction or the grant of a purchase right to such employee in compliance with the laws of such foreign jurisdiction would cause the ESPP to violate the requirements

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of Section 423 of the Code, as determined by the plan administrator in its sole discretion, such employee will not be permitted to participate in the ESPP.

Eligible employees become participants in the ESPP by enrolling and authorizing payroll deductions by the deadline established by the plan administrator prior to the relevant offering date. Directors who are not employees, as well as consultants, are not eligible to participate. Employees who choose to not participate, or are not eligible to participate at the start of an offering period but who become eligible thereafter, may enroll in any subsequent offering period.

*Participation in an Offering*. We intend for the ESPP to qualify under Section 423 of the Code and stock will be offered under the ESPP during offering periods. The length of offering periods under the ESPP will be determined by the plan administrator and may be up to 27 months long. Employee payroll deductions will be used to purchase shares on each purchase date during an offering period. The number of purchase periods within, and purchase dates during, each offering period will be established by the plan administrator. Offering periods under the ESPP will commence when determined by the plan administrator. The plan administrator may, in its discretion, modify the terms of future offering periods.

The ESPP will permit participants to purchase our common stock through payroll deductions of up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;% of their eligible compensation, unless otherwise determined by the plan administrator, which will include a participant's gross base compensation for services to us, including overtime payments and periodic bonuses, and excluding sales commissions, one-time bonuses, expense reimbursements, fringe benefits and other special payments. The plan administrator will establish a maximum number of shares that may be purchased by a participant during any offering period or purchase period, which, in the absence of a contrary designation, will be 10,000 shares for an offering period and/or a purchase period. In addition, no employee will be permitted to accrue the right to purchase stock under the ESPP at a rate in excess of $25,000 worth of shares during any calendar year during which such a purchase right is outstanding (based on the fair market value per share of our common stock as of the first day of the offering period).

On the first trading day of each offering period, each participant automatically will be granted an option to purchase shares of our common stock. The option will be exercised on the applicable purchase date(s) during the offering period, to the extent of the payroll deductions accumulated during the applicable purchase period. The purchase price of the shares, in the absence of a contrary determination by the plan administrator, will be 85% of the lower of the fair market value of our common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period.

Participants may voluntarily end their participation in the ESPP at any time at least two weeks prior to the end of the applicable offering period (or such longer or shorter period specified by the plan administrator), and will be paid their accrued payroll deductions that have not yet been used to purchase shares of common stock. Participation ends automatically upon a participant's termination of employment.

*Transferability*. A participant may not transfer rights granted under the ESPP other than by will, the laws of descent and distribution or as otherwise provided in the ESPP.

*Certain Transactions*. In the event of certain transactions or events affecting our common stock, such as any stock dividend or other distribution, change in control, reorganization, merger, consolidation or other corporate transaction, the plan administrator will make equitable adjustments to the ESPP and outstanding rights. In addition, in the event of the foregoing transactions or events or certain significant transactions, including a change in control, the plan administrator may provide for (i) either the replacement of outstanding rights with other rights or property or termination of outstanding rights in exchange for cash, (ii) the assumption or substitution of outstanding rights by the successor or survivor corporation or parent or subsidiary thereof, (iii) the adjustment in the number and type of shares of stock subject to outstanding rights, (iv) the use of participants' accumulated payroll deductions to purchase stock on a new purchase date prior to the next scheduled purchase date and termination of any rights under ongoing offering periods or (v) the termination of all outstanding rights. Under the ESPP, a change in control has the same definition as given to such term in the 2025 Plan.

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*Plan Amendment; Termination*. The plan administrator may amend, suspend or terminate the ESPP at any time. However, stockholder approval of any amendment to the ESPP must be obtained for any amendment which increases the aggregate number or changes the type of shares that may be sold pursuant to rights under the ESPP, ESPP in any manner that would be considered the adoption of a new plan within the meaning of Treasury regulation Section 1.423-2(c)(4), or changes the ESPP in any manner that would cause the ESPP to no longer be an employee stock purchase plan within the meaning of Section 423(b) of the Code.

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**CERTAIN RELATIONSHIPS AND RELATED-PARTY TRANSACTIONS**

The following includes a summary of transactions since January 1, 2022 and any currently proposed transaction to which we have been a party or are to be a participant in which the amount involved exceeded or will exceed the lesser of $120,000 or one percent of the average of our total assets at year-end for the last two completed fiscal years, and in which any of our directors, executive officers or beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described in the section titled "Executive and Director Compensation." We also describe below certain other transactions with our directors, executive officers and stockholders.

**Convertible Promissory Note Financing**

From September 2022 to November 2022, we issued and sold to investors in private placements an aggregate principal amount of $6.9 million of convertible promissory notes. The convertible promissory notes bore interest at a rate of 8.0% per annum. In connection with the closing of our Series D convertible preferred stock financing in February 2023, the aggregate principal amount and accrued interest on the convertible promissory notes were converted into 16,464,493 shares of our Series D convertible preferred stock at an aggregate conversion price of $8.9 million.

The following table sets forth the aggregate principal amount of convertible promissory notes purchased by our directors, executive officers and beneficial owners of more than 5% of our capital stock, and any member of the immediate family of any of the foregoing persons.

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| | |
|:---|:---|
| **Participants**<sup>(1)</sup> | **Convertible Promissory Notes Purchased** |
| cultivate(MD) Capital Accelerator Fund, L.P. | $2213756 |
| Entities affiliated with U.S. Venture Partners | 1356513 |
| Entities affiliated with Lightstone Ventures | 1356513 |
| Robert Ball | 300000 |
| Paul Buckman | 50000 |
| Kevin Sidow | 100000 |

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(1)Additional details regarding these stockholders and their equity holdings are provided in this prospectus under the caption "Principal Stockholders" and in "—Preferred Stock Financings."

**Preferred Stock Financings** 

***Series D Convertible Preferred Stock Financing***

In February 2023 and March 2023, we issued and sold to investors in private placements an aggregate of 80,909,169 shares of our Series D convertible preferred stock at a purchase price of $0.54 per share, for aggregate consideration of approximately $43.8 million, inclusive of the issuance of 16,464,493 shares of our Series D convertible preferred stock in connection with the conversion of the convertible promissory notes as described above at an aggregate conversion price of $8.9 million.

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The following table sets forth the aggregate purchase price paid and the aggregate number of shares of Series D convertible preferred stock purchased by our directors, executive officers and beneficial owners of more than 5% of our capital stock, and any member of the immediate family of any of the foregoing persons.

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| | | |
|:---|:---|:---|
| **Participants**<sup>(1)</sup> | **Shares of Series D Convertible Preferred Stock** | **Aggregate Purchase Price** <br>**($)** |
| Coöperatieve Gilde Healthcare V U.A. | 33259424 | 18000000 |
| Entities affiliated with U.S. Venture Partners<sup>(2)</sup> | 6732238 | 3643487 |
| Entities affiliated with Lightstone Ventures<sup>(3)</sup> | 6732238 | 3643487 |
| Gilmartin Capital Fund I L.P. | 9238729 | 5000000 |

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(1)Additional details regarding these stockholders and their equity holdings are provided in this prospectus under the caption "Principal Stockholders" and in "—Preferred Stock Financings."

(2)Excludes the aggregate principal amount and accrued interest of $1.4 million that was converted into 3,217,970 shares of Series D convertible preferred stock issued upon conversion of the convertible promissory notes as described in "—Convertible Promissory Note Financing" above.

(3)Excludes the aggregate principal amount and accrued interest of $1.4 million that was converted into 3,217,970 shares of Series D convertible preferred stock issued upon conversion of the convertible promissory notes as described in "—Convertible Promissory Note Financing" above.

***Series E Convertible Preferred Stock Financing***

In March 2025, we entered into a Series E convertible preferred stock purchase agreement, pursuant to which we agreed to issue and sell to investors in a private placement an aggregate of up to 58,774,312 shares of our Series E convertible preferred stock at a purchase price of $0.68 per share, for aggregate consideration of up to approximately $40.1 million. The Series E convertible preferred stock was issued and sold in two tranches. The first tranche of 29,455,169 shares of Series E convertible preferred stock, representing aggregate consideration of approximately $20.1 million, closed in March 2025. On June 20, 2025, we closed the second tranche of 29,319,143 shares of Series E convertible preferred stock, representing aggregate consideration of approximately $20.0 million.

The following table sets forth details regarding the aggregate purchase price paid and the aggregate number of shares of Series E convertible preferred stock purchased by our directors, executive officers and beneficial owners of more than 5% of our capital stock, and any member of the immediate family of any of the foregoing persons.

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Initial Tranche** | **Initial Tranche** | **Second Tranche** | **Second Tranche** |
|<br>**Participants**<sup>(1)</sup> | **Shares of Series E Convertible Preferred Stock** | **Aggregate Purchase Price <br>($)** | **Shares of Series E Convertible Preferred Stock** | **Aggregate Purchase Price <br>($)** |
| Coöperatieve Gilde Healthcare V U.A. | 5126094 | 3499999 | 5126094 | 3499999 |
| Entities affiliated with U.S. Venture Partners | 10252188 | 6999999 | 10252188 | 6999999 |
| Gilmartin Capital Fund I L.P. | 1303493 | 890000 | 1303492 | 890000 |
| Arboretum Ventures VI, LP | 9519889 | 6499999 | 9519889 | 6499999 |
| Robert Ball | 83691 | 57143 | 62768 | 42857 |
| The David Lawrence Blue Living Trust | 20923 | 14286 | 15691 | 10714 |

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(1)Additional details regarding these stockholders and their equity holdings are provided in this prospectus under the caption "Principal Stockholders" and in "—Preferred Stock Financings."

***Series Seed Convertible Preferred Stock Warrant***

In February 2025, Genesis Investment Holdings, an entity affiliated with cultivate(MD), exercised its Series Seed preferred stock warrant for 2,233,960 shares of our Series Seed convertible preferred stock at an exercise price of $0.08434 per share for total proceeds of approximately $0.2 million.

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Some of our directors and officers are associated with our principal stockholders as indicated in the table below:

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| | |
|:---|:---|
| **Director / Officer** | **Principal Stockholder** |
| Matthew Ahearn | Entities affiliated with cultivate(MD) |
| Robert Ball | Entities affiliated with cultivate(MD) |
| David L. Blue | Entities affiliated with cultivate(MD) |
| Michael Carusi | Entities affiliated with Lightstone Ventures |
| Geoff Pardo | Coöperatieve Gilde Healthcare V U.A. |
| Casey Tansey | Entities affiliated with U.S. Venture Partners |

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**Agreements with Stockholders** 

***Fourth Amended and Restated Investor Rights Agreement***

We entered into a Fourth Amended and Restated Investors' Rights Agreement (the "Investor Rights Agreement") on March 6, 2025 with the holders of our preferred stock, including entities with which certain of our directors are related. The agreement provides, among other things, for certain rights relating to the registration of such holders' common stock, including shares issuable upon conversion of preferred stock. Certain investor rights contained in the Investor Rights Agreement will terminate upon the consummation of this offering. See the section titled "Description of Capital Stock—Registration Rights" for additional information.

***Fourth Amended and Restated Voting Agreement***

We entered into a Fourth Amended and Restated Voting Agreement (the "Voting Agreement") on March 6, 2025, with the holders of our preferred stock, including entities with which certain of our directors are related. Pursuant to the Voting Agreement, the signatories thereto have agreed to vote their respective shares to elect (i) one person designated by Cultivate MD Capital Fund II, LP as the Series Seed/A/B director, which is currently Matthew Ahearn, (ii) one person designated by each of U.S. Venture Partners XII, L.P. and Lightstone Ventures II, L.P. as the Series C directors, which are currently Casey Tansey and Michael Carusi, respectively, (iii) one person designated by Coöperatieve Gilde Healthcare V U.A. and its affiliates as the Series D director, which is currently Geoff Pardo and (iv) two joint directors and the CEO director, which are currently Paul Buckman, Kevin Sidow and Robert Ball, respectively.

The Fourth Amended Voting Agreement will terminate upon the completion of this offering and none of our stockholders will have any continuing voting rights, including special rights regarding the election or designation of members of our board of directors, following this offering. Members previously elected to our board of directors pursuant to this agreement will continue to serve as directors until they resign, are removed, or their successors are duly elected by the holders of our common stock. The composition of our board of directors after this offering is described in more detail in the section titled "Management—Board Composition."

***Fourth Right of First Refusal and Co-Sale Agreement***

We entered into a Fourth Amended and Restated Right of First Refusal and Co-Sale Agreement on March 6, 2025 with certain holders of our preferred stock, including entities with which certain of our directors are related. This agreement provides for rights of first refusal and co-sale relating to the shares of our common stock held by the parties to the agreement. This agreement will terminate upon the completion of this offering.

***Consulting Arrangement with Genesis Innovation***

On April 30, 2015, we entered into a consulting agreement (the "Genesis Consulting Agreement") with Genesis Innovation pursuant to which Genesis Innovation agreed to provide consulting services for concept development, intellectual property creation, surgeon relationship management and large-scale project management. Any such services to be provided are set out and delivered pursuant to specified work plans at the agreed-upon hourly chargeable rate then in effect. The Genesis Consulting Agreement was subsequently amended to increase the hourly chargeable rate on January 1, 2022 and January 1, 2025. Either party may terminate the Genesis Consulting

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Agreement upon 60 days written notice, and the agreement will terminate on December 31, 2025. Robert Ball, our Chief Executive Officer and Executive Chairman, is a co-founder and director of Genesis Innovation. For each of the years ended December 31, 2024 and 2023, we paid Genesis Innovation $3.6 million and $2.8 million pursuant to the Genesis Consulting Agreement. For the three months ended March 31, 2025 we paid Genesis Innovation $1.2 million pursuant to the Genesis Consulting Agreement.

***Software License Agreement with Genesis Software Innovations***

On October 22, 2020, we entered into a software license agreement with Genesis Software which was amended and restated on January 1, 2023. Please see the section titled "Business—Intellectual Property—Software License Agreement with Genesis Software" for more information. Robert Ball, our Chief Executive Officer and Executive Chairman, is a co-founder and director of Genesis Software. Mr. Ball and Matthew Ahearn, our Chief Operating Officer and a member of our board of directors, are directors of Genesis Investment Holdings, which has an ownership interest in Genesis Software and is an entity affiliated with cultivate(MD). In addition, entities affiliated with cultivate(MD), a beneficial owner of more than 5% of our capital stock, are investors in Genesis Software. For each of the years ended December 31, 2024 and 2023, we paid Genesis Software $3.1 million and $3.2 million pursuant to the License Agreement, including royalties of $1.2 million and $0.6 million in the years ended December 31, 2024 and 2023, respectively. For the three months ended March 31, 2025 we paid Genesis Software $0.9 million pursuant to the License Agreement, including royalties of $0.3 million.

***Supply Agreement with RMD***

On June 3, 2024, we entered into a new supply agreement (the "RMD Supply Agreement") with RMD, pursuant to which RMD manufactures the surgical instruments used during procedures involving our implant systems. During such periods, Robert Ball, our Chief Executive Officer and Executive Chairman, was an investor in RMD. As of the date of this prospectus, Mr. Ball is no longer an investor in RMD. For each of the years ended December 31, 2024 and 2023, we paid RMD $0.9 million and $2.3 million pursuant to the RMD Supply Agreement. There were no payments to RMD during the three months ended March 31, 2025.

**Directed Share Program**

At our request, the underwriters have reserved for sale, at the initial public offering price, up to approximately shares of our common stock being offered to our directors, officers and employees as part of a directed share program. The directed share program will not limit the ability of our directors, officers or holders of more than 5% of our common stock, to purchase more than $120,000 in value of our common stock. We do not currently know the extent to which these related persons will participate in our directed share program, if at all, or the extent to which they will purchase more than $120,000 in value of our common stock.

**Director and Officer Indemnification Agreements** 

We will enter into indemnification agreements with each of our directors and executive officers. These agreements, among other things, will require us to indemnify each director and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys' fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the person's services as a director or executive officer. For further information, see the section titled "Description of Capital Stock—Limitations on Liability and Indemnification Matters."

**Policies and Procedures for Related Person Transactions** 

Our board of directors will adopt a written related person transaction policy, to be effective upon the completion of this offering, setting forth the policies and procedures for the review and approval or ratification of related person transactions. This policy will cover, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 in any fiscal year, or, for so long as we qualify as a smaller reporting company, the lesser of $120,000 or one percent of the

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average of our total assets at year-end for the last two completed fiscal years, and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee will be tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm's length transaction and the extent of the related person's interest in the transaction. All of the transactions described in this section will have occurred prior to the adoption of this policy.

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**PRINCIPAL STOCKHOLDERS**

The following table sets forth, as of June 30, 2025, information regarding beneficial ownership of our capital stock by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each of our named executive officers;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• each of our directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• all of our executive officers and directors as a group.

The number of shares beneficially owned by each stockholder is determined under rules issued by the SEC. Under these rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power. Applicable percentage ownership is based on&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock outstanding as of June 30, 2025, assuming the conversion of all outstanding shares of our convertible preferred stock into shares of our common stock. In computing the number of shares beneficially owned by an individual or entity and the percentage ownership of that person, shares of common stock subject to options, warrants or other rights held by such person that are currently exercisable or will become exercisable within 60 days of June 30, 2025 are considered outstanding, although these shares are not considered outstanding for purposes of computing the percentage ownership of any other person. The following table does not reflect any shares of our common stock that may be purchased pursuant to our directed share program described under "Underwriting—Directed Share Program." Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.

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Unless otherwise noted below, the address for each beneficial owner listed in the table below is c/o Shoulder Innovations, Inc., 1535 Steele Avenue SW, Suite B, Grand Rapids, MI 49507.

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| | | | |
|:---|:---|:---|:---|
| | | **Percentage of Common Stock Beneficially Owned** | **Percentage of Common Stock Beneficially Owned** |
| <br>**Name of Beneficial Owner**  |<br>**Shares of Common Stock Beneficially Owned** | **Before Offering** | **After Offering** |
| **5% and Greater Stockholders**  | | | |
| Coöperatieve Gilde Healthcare V U.A.<sup>(1)</sup> |  | % | % |
| Entities affiliated with U.S. Venture Partners<sup>(2)</sup> |  | % | % |
| Entities affiliated with Lightstone Ventures<sup>(3)</sup> |  | % | % |
| Entities affiliated with cultivate(MD)<sup>(4)</sup>  |  | % | % |
| Gilmartin Capital Fund I L.P.<sup>(5)</sup>  |  | % | % |
| Arboretum Ventures VI, LP<sup>(6)</sup> |  | % | % |
| **Named Executive Officers, Directors and Director Nominee** |  |  |  |
| Robert Ball<sup>(7)</sup>  |  | % | % |
| Matthew Ahearn<sup>(8)</sup>  |  | % | % |
| David L. Blue<sup>(9)</sup>  |  | % | % |
| Jeffrey Points<sup>(10)</sup>  |  | % | % |
| Kevin Sidow<sup>(11)</sup>  |  | % | % |
| Paul Buckman<sup>(12)</sup>  |  | % | % |
| Michael Carusi<sup>(13)</sup>  |  | % | % |
| Geoff Pardo<sup>(1)</sup>  |  | % | % |
| Casey Tansey<sup>(2)</sup>  |  | % | % |
| Richard J. Buchholz |  |  |  |
| All current directors and executive officers as a group (10 persons)<sup>(12)</sup>  |  | % | % |

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__________________

\*Indicates beneficial ownership of less than 1% of the total outstanding common stock.

(1)Consists of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series D Preferred Stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series E Preferred Stock held directly by Coöperatieve Gilde Healthcare V U.A. ("Gilde"). Gilde Healthcare V Management B.V. is the managing director of Gilde and has sole voting and dispositive power with respect to the shares held by Gilde. Gilde Healthcare V Management B.V. is managed by Marc Perret, Edwin de Graaf and Pieter van der Meer, who share voting and dispositive power with respect to the shares held of record by Gilde. Geoff Pardo (a member of our board of directors) is a partner at Gilde and may be deemed to share voting and dispositive power with respect to the shares held of record by Gilde. Each of Mr. Perret, Mr. de Graaf, Mr. van der Meer and Mr. Pardo disclaims beneficial ownership of such holdings, except to the extent of their pecuniary interest in the shares. The address of Gilde is 222 Third Street, Suite 1321, Cambridge, Massachusetts 02142, c/o Gilde Healthcare Partners.

(2)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series C Preferred Stock,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series D Preferred Stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series E Preferred Stock held by U.S. Venture Partners XII, L.P. ("USVP XII"); (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series C Preferred stock,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series D Preferred Stock, and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series E Preferred Stock held by U.S. Venture Partners XII-A, L.P ("USVP XII-A"); and (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series E Preferred Stock held by U.S. Venture Partners Select Fund I, L.P. on its own behalf and as a nominee for U.S. Venture Partners Select Fund I-A, L.P. ("USVP Select"). Presidio Management Group XII, L.L.C. ("PMG XII") is the general partner of USVP XII and USVP XII-A and has sole voting and dispositive power with respect to the shares held by USVP XII and USVP XII-A. Steven M. Krausz, Richard W. Lewis, Jonathan D. Root, Casey M. Tansey (a member of our board of directors) and Dafina Toncheva are the managing members of PMG XII, and share voting and dispositive power with respect to the shares held by USVP XII and USVP XII-A. Presidio Management Group Select Fund I, L.L.C. ("PMG Select") is the general partner of USVP Select and has sole voting and dispositive power with respect to the shares held by USVP Select. Richard W. Lewis, Jonathan D. Root, Casey M. Tansey (a member of our board of directors) and Dafina Toncheva are the managing members of PMG Select, and share voting and dispositive power with respect to the shares held by USVP Select. Each of the managing members of PMG XII and PMG Select disclaims beneficial ownership of such holdings, except to the extent of their pecuniary interest in the shares. The address for each of these entities is 1460 El Camino Real, Suite 100, Menlo Park, California 94025.

(3)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series C Preferred Stock, and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series D Preferred Stock held by Lightstone Ventures II, L.P. ("LSV II"); and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series C Preferred Stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series D Preferred Stock held by Lightstone Ventures II (A), L.P. ("LSV II (A)"). LSV Associates II, LLC is the general partner of LSV II and LSV II (A) and has sole voting and dispositive power with respect to the shares held by LSV II and LSV II (A). Jean George, Michael A. Carusi (a member of our board of directors) and

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Henry A. Plain, Jr. are the managing directors of LSV Associates II, LLC, and share voting and dispositive power with respect to the shares held of record by LSV II and LSV II (A). Mr. Carusi disclaims beneficial ownership of such holdings, except to the extent of his pecuniary interest in the shares. The address of each of LSV II and LSV II (A) is 420 Boylston St., Suite 602, Boston, MA 02116.

(4)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series A Preferred Stock held by Cultivate MD Capital Fund I, LLC ("CMD I"); (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series A Preferred stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series B Preferred Stock held by Cultivate MD Capital Fund II, LP ("CMD II"); (iii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series Seed,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series A Preferred stock and&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series B Preferred Stock held by Genesis Investment Holdings; and (iv)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series D Preferred Stock held by cultivate(MD) Capital Accelerator Fund, L.P. ("CMD Accelerator"). cultivate(MD) Holdings, LLC is the general partner or manager of CMD I, CMD II, Genesis Investment Holdings and CMD Accelerator and has sole voting and dispositive power with respect to the shares held by CMD I, CMD II, Genesis Investment Holdings and CMD Accelerator. Each of David Blue (one of our executive officers), Matthew Ahearn (one of our executive officers and a member of our board of directors) and Robert Ball (one of our executive officers and a member of our board of directors) are directors, and R. Sean Churchill is a managing director, of cultivate(MD) Holdings, LLC and share voting and dispositive power with respect to the shares held of record by CMD I, CMD II, Genesis Investment Holdings and CMD Accelerator. Each of such directors and the managing director disclaims beneficial ownership of such holdings, except to the extent of his pecuniary interest in the shares. The address of cultivate(MD) Holdings, LLC is 2851 Charlevoix Drive SE, Suite 327, Grand Rapids, MI 49546.

(5)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of Series E Preferred Stock held by Gilmartin Capital Fund I L.P. ("Gilmartin Fund I"). Gilmartin Capital GP I LLC is the general partner and Gilmartin Capital LLC is the investment manager of Gilmartin Fund I and have shared voting and dispositive power with respect to the shares held by Gilmartin Fund I. David R. Lewis is the manager of Gilmartin Capital GP I LLC and Gilmartin Capital LLC, and shares voting and dispositive power with respect to the shares held of record by Gilmartin Fund I. The address of each of Gilmartin Fund I, Gilmartin Capital GP I LLC and Gilmartin Capital LLC is 60 E. Sir Francis Drake Blvd., Suite 208, Larkspur, CA 94939.

(6)Consists of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of Series E Preferred Stock held by Arboretum Ventures VI, LP ("AV VI"). Arboretum Investment Manager VI, LLC ("AIM VI") serves as the general partner of AV VI. Thomas M. Shehab, Jan L. Garfinkle and Daniel M. Kidle are managing members of AIM VI and share voting and dispositive power with regards to the shares held by AV VI. The address of the principal place of business of each of the entities and individuals is 303 Detroit Street, Suite 301, Ann Arbor, Michigan 48104.

(7)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(8)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(9)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(10)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii) &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(11)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(12)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

(13)Consists of (i)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock and (ii)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock subject to options exercisable upon conversion within 60 days of June 30, 2025.

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**DESCRIPTION OF CAPITAL STOCK**

*The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated bylaws are summaries. You should also refer to the amended and restated certificate of incorporation, the amended and restated bylaws, and the amended and restated investors' rights agreement, which are filed as exhibits to the registration statement of which this prospectus is a part.* 

**General** 

Upon the completion of this offering and the filing of our amended and restated certificate of incorporation, our authorized capital stock will consist of 750,000,000 shares, all with a par value of $0.001 per share, of which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 730,000,000 shares are designated as common stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 20,000,000 shares are designated as preferred stock.

**Common Stock** 

***Outstanding Shares***

As of March 31, 2025, we had&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock outstanding, held of record by&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; stockholders, after giving effect to the conversion of all outstanding shares of our convertible preferred stock (including 29,319,143 shares of our Series E convertible preferred stock issued in June 2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock.

***Voting Rights***

Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders, including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of a majority of the voting shares are able to elect all of the directors. In addition, the affirmative vote of holders of 66-2/3% of the voting power of all of the then outstanding voting stock will be required to take certain actions, including amending certain provisions of our amended and restated certificate of incorporation, including the provisions relating to amending our amended and restated bylaws, the classified board and director liability.

***Dividends***

Subject to preferences that may be applicable to any then outstanding preferred stock, holders of our common stock are entitled to receive ratably any dividends that our board of directors may declare out of funds legally available.

***Liquidation***

In the event of our liquidation, dissolution, or winding up, holders of our common stock will be entitled to share ratably in the net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities, subject to the satisfaction of any liquidation preference granted to the holders of any then outstanding shares of preferred stock.

***Rights, Preferences and Privileges***

Holders of our common stock have no preemptive, conversion, or subscription rights, and there are no redemption or sinking-fund provisions applicable to our common stock. The rights, preferences, and privileges of the holders of our common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of our preferred stock that we may designate and issue in the future.

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**Preferred Stock** 

Immediately prior to the completion of this offering, all of our currently outstanding shares of convertible preferred stock will convert into common stock, and we will not have any preferred shares outstanding. Immediately prior to the completion of this offering, our certificate of incorporation will be amended and restated to delete all references to such shares of convertible preferred stock. Under the amended and restated certificate of incorporation, our board of directors will have the authority, without further action by the stockholders, to issue up to shares of preferred stock in one or more series, to establish from time to time the number of shares to be included in each such series, to fix the rights, preferences, and privileges of the shares of each wholly unissued series and any qualifications, limitations, or restrictions thereon, and to increase or decrease the number of shares of any such series, but not below the number of shares of such series then outstanding.

Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring, or preventing a change in control of our company that may otherwise benefit holders of our common stock and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock. We have no current plans to issue any shares of preferred stock.

**Stock Options** 

As of March 31, 2025,&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of common stock were issuable upon the exercise of outstanding stock options, at a weighted-average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share. For additional information regarding terms of our equity incentive plans, see the section titled "Executive and Director Compensation—Equity Incentive Plans."

**Common Stock Warrant**

As of March 31, 2025, we had a warrant to purchase an aggregate of 340,140 shares of our common stock, with an exercise price of $0.11 per share. Unless exercised earlier, the warrant will expire in April 2031. The warrant contains provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications and consolidations. The warrant has a net exercise provision under which its holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the shares at the time of exercise of the warrant after deduction of the aggregate exercise price.

**Preferred Stock Warrants**

As of March 31, 2025, we had warrants to purchase an aggregate of up to 875,000 shares of our Series B convertible preferred stock outstanding, with an exercise price of $0.372 per share. The warrants were issued in connection with our Series B convertible preferred stock financing. Unless exercised earlier, these warrants will expire in January 2030; provided that the warrants are subject to early termination immediately prior to the completion of this offering if such warrants are not exercised prior to such time. The warrants contain provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications and consolidations. The warrants have a net exercise provision under which the respective holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the shares at the time of exercise of the warrant after deduction of the aggregate exercise price.

As of March 31, 2025, we had a warrant to purchase an aggregate of up to 2,494,457 shares of our Series D convertible preferred stock outstanding, with an exercise price of $0.5412 per share. The warrant was issued in connection with the Trinity Loan Agreement. Unless exercised earlier, the warrant will expire in August 2033. The warrant vests and becomes exercisable in three equal installments upon the drawing of each of the three tranches under the Trinity Loan Agreement. See the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Indebtedness." The warrant contains provisions for the adjustment of the exercise price and the number of shares issuable upon the exercise of the

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warrant in the event of certain stock dividends, stock splits, reorganizations, reclassifications and consolidations. The warrant has a net exercise provision under which its holder may, in lieu of payment of the exercise price in cash, surrender the warrant and receive a net amount of shares based on the fair market value of the shares at the time of exercise of the warrant after deduction of the aggregate exercise price. Immediately prior to the completion of this offering, the warrant will automatically convert into a warrant to purchase&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock with an average exercise price of $&nbsp;&nbsp;&nbsp;&nbsp; per share.

**Registration Rights**

The fourth amended and restated investor rights agreement grants the parties thereto certain registration rights in respect of the "registrable securities" held by them, which securities include (i) the shares of our common stock issued or issuable upon the conversion of shares of our convertible preferred stock (ii) shares of our common stock issued or issuable upon conversion or exercise of any other company securities, and (iii) any common stock issued as a dividend or other distribution to or in exchange for or in replacement of the shares referenced in clauses (i) or (ii). The registration of shares of our common stock pursuant to the exercise of these registration rights would enable the holders thereof to sell such shares without restriction under the Securities Act when the applicable registration statement is declared effective. Under the fourth amended and restated investor rights agreement, we will pay expenses relating to such registrations, including up to $35,000 of the reasonable fees of one special counsel for the participating holders, and the holders will pay all underwriting discounts and commissions relating to the sale of their shares. The fourth amended and restated investor rights agreement also includes customary indemnification and procedural terms.

***Demand Registration Rights***

Upon the completion of this offering, holders of up to approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million shares of our common stock issuable upon conversion of our outstanding convertible preferred stock will be entitled to certain demand registration rights. Beginning on the earlier of (i) March 6, 2029 and (ii) six months following the effectiveness of the registration statement of which this prospectus is a part, investors holding, collectively, not less than 30% of registrable securities may, on not more than two occasions, request that we register all or a portion of their shares, subject to certain specified exceptions. Such request for registration must cover securities the anticipated aggregate offering price of which is at least $20.0 million. Following such a request, we will as soon as practicable, but in any event no more than 90 days, use good faith commercially reasonable best efforts to effect such registration.

***Piggyback Registration Rights***

In connection with this offering, holders of up to approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million shares of our common stock issuable upon conversion of our outstanding convertible preferred stock are entitled to their rights to notice of this offering and to include their shares of registrable securities in this offering. The requisite percentage of these stockholders have waived all such stockholders' rights to notice of this offering and to include their shares of registrable securities in this offering. In the event that we propose to register any of our securities under the Securities Act in another offering, either for our own account or for the account of other security holders, the holders of registrable securities will be entitled to certain "piggyback" registration rights allowing them to include their shares in such registration, subject to specified conditions and limitations.

***S-3 Registration Rights***

Upon the completion of this offering, the holders of up to approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; million shares of our common stock issuable upon conversion of our outstanding convertible preferred stock will initially be entitled to certain Form S-3 registration rights. Any holder or holders of registrable securities may, with respect to not more than two such registrations within any 12-month period, request that we register all or a portion of their shares on Form S-3 if we are qualified to file a registration statement on Form S-3, subject to specified exceptions. Such request for registration on Form S-3 must cover securities with aggregate proceeds, net of underwriting discounts and expenses related to the issuance, which equal or exceed $2.0 million. The right to have such shares registered on Form S-3 is further subject to other specified conditions and limitations.

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**Anti-Takeover Provisions of Delaware Law and Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws** 

Some provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws could make the following transactions more difficult: an acquisition of us by means of a tender offer; an acquisition of us by means of a proxy contest or otherwise; or the removal of our incumbent officers and directors. It is possible that these provisions could make it more difficult to accomplish or could deter transactions that stockholders may otherwise consider to be in their best interest or in our best interests, including transactions which provide for payment of a premium over the market price for our shares.

These provisions, summarized below, are intended to discourage coercive takeover practices and inadequate takeover bids. These provisions are also designed to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of the increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging these proposals because negotiation of these proposals could result in an improvement of their terms.

***Undesignated Preferred Stock***

The ability of our board of directors, without action by the stockholders, to issue up to 20,000,000 shares of undesignated preferred stock with voting or other rights or preferences as designated by our board of directors could impede the success of any attempt to change control of us. These and other provisions may have the effect of deferring hostile takeovers or delaying changes in control or management of our company.

***Stockholder Meetings***

Our amended and restated bylaws provide that a special meeting of stockholders may be called only by our chairman of the board, chief executive officer or president (in the absence of a chief executive officer), or by a resolution adopted by a majority of our board of directors.

***Requirements for Advance Notification of Stockholder Nominations and Proposals***

Our amended and restated bylaws establish advance notice procedures with respect to stockholder proposals to be brought before a stockholder meeting and the nomination of candidates for election as directors, other than nominations made by or at the direction of the board of directors or a committee of the board of directors.

***Elimination of Stockholder Action by Written Consent***

Our amended and restated certificate of incorporation eliminates the right of stockholders to act by written consent without a meeting.

***Staggered Board***

Our board of directors is divided into three classes. The directors in each class will serve for a three-year term, one class being elected each year by our stockholders. For more information on the classified board, see the section titled "Management—Board Composition." This system of electing and removing directors may tend to discourage a third-party from making a tender offer or otherwise attempting to obtain control of us, because it generally makes it more difficult for stockholders to replace a majority of the directors.

***Removal of Directors***

Our amended and restated certificate of incorporation provides that no member of our board of directors may be removed from office by our stockholders except for cause and, in addition to any other vote required by law, upon the approval of the holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote in the election of directors.

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***Stockholders Not Entitled to Cumulative Voting***

Our amended and restated certificate of incorporation does not permit stockholders to cumulate their votes in the election of directors. Accordingly, the holders of a majority of the outstanding shares of our common stock entitled to vote in any election of directors can elect all of the directors standing for election, if they choose, other than any directors that holders of our preferred stock may be entitled to elect.

***Section 203 of the Delaware General Corporation Law***

We are subject to Section 203 of the Delaware General Corporation Law, which prohibits persons deemed to be "interested stockholders" from engaging in a "business combination" with a publicly held Delaware corporation for three years following the date these persons become interested stockholders unless the business combination is, or the transaction in which the person became an interested stockholder was, approved in a prescribed manner or another prescribed exception applies. Generally, an "interested stockholder" is a person who, together with affiliates and associates, owns, or within three years prior to the determination of interested stockholder status did own, 15% or more of a corporation's voting stock. Generally, a "business combination" includes a merger, asset or stock sale, or other transaction resulting in a financial benefit to the interested stockholder. The existence of this provision may have an anti-takeover effect with respect to transactions not approved in advance by the board of directors.

***Choice of Forum***

***Amendment of Charter Provisions***

The amendment of any of the above provisions, except for the provision making it possible for our board of directors to issue preferred stock and the provision prohibiting cumulative voting, would require approval by holders of at least two-thirds in voting power of the outstanding shares of stock entitled to vote thereon.

The provisions of Delaware law, our amended and restated certificate of incorporation and our amended and restated bylaws could have the effect of discouraging others from attempting hostile takeovers and, as a consequence, they may also inhibit temporary fluctuations in the market price of our common stock that often result from actual or rumored hostile takeover attempts. These provisions may also have the effect of preventing changes in the composition of our board and management. It is possible that these provisions could make it more difficult to accomplish transactions that stockholders may otherwise deem to be in their best interests.

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**Limitations on Liability and Indemnification Matters** 

Our amended and restated certificate of incorporation provides that no director will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except as required by applicable law, as in effect from time to time. Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any breach of the director's duty of loyalty to our company or our stockholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any act or omission not in good faith or which involved intentional misconduct or a knowing violation of law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• any transaction from which the director derived an improper personal benefit.

As a result, neither we nor our stockholders have the right, through stockholders' derivative suits on our behalf, to recover monetary damages against a director for breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the situations described above.

Our amended and restated certificate of incorporation also provides that, to the fullest extent permitted by law, we will indemnify any officer or director of our company against all damages, claims and liabilities arising out of the fact that the person is or was our director or officer, or served any other enterprise at our request as a director or officer. Amending this provision will not reduce our indemnification obligations relating to actions taken before an amendment.

**Listing** 

We have applied to list our common stock on the New York Stock Exchange under the trading symbol "SI," and this offering is contingent upon obtaining approval of such listing.

**Transfer Agent and Registrar** 

Upon completion of this offering, the transfer agent and registrar for our common stock will be Broadridge Corporate Issuer Solutions, LLC. The transfer agent and registrar's address is 51 Mercedes Way, Edgewood, New York 11717.

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**SHARES ELIGIBLE FOR FUTURE SALE**

Prior to this offering, there has been no public market for our common stock, and a liquid trading market for our common stock may not develop or be sustained after this offering. Future sales of our common stock, including shares issued upon the exercise of outstanding options or warrants, in the public market after the completion of this offering, or the perception that those sales may occur, could adversely affect the prevailing market price for our common stock from time to time or impair our ability to raise equity capital in the future.

As described below, only a limited number of shares of our common stock will be available for sale in the public market for a period of several months after the completion of this offering due to contractual and legal restrictions on resale described below. Future sales of our common stock in the public market either before or after restrictions lapse, or the perception that those sales may occur, could adversely affect the prevailing market price of our common stock at such time and our ability to raise equity capital at a time and price we deem appropriate.

**Sale of Restricted Shares** 

Upon the completion of this offering, we will have outstanding an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;shares of common stock, based on the number of shares outstanding as of March 31, 2025, assuming (i) the conversion of all outstanding shares of our convertible preferred stock (including 29,319,143 shares of our Series E convertible preferred stock issued in June 2025) into an aggregate of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock, (ii) no exercise of the underwriters' over-allotment option, and (iii) no exercise of outstanding options or warrants.

Of these shares, all of the shares of common stock to be sold in this offering will be freely tradable in the public market without restriction or further registration under the Securities Act, unless the shares are held by any of our "affiliates" as such term is defined in Rule 144 and any shares purchased by our directors or officers pursuant to our directed share program will be subject to the lock-up agreements described below. All remaining shares of common stock held by existing stockholders will be "restricted securities," as such term is defined in Rule 144. These restricted securities are eligible for public sale only if they are registered under the Securities Act or if they qualify for an exemption from registration under Rules 144 or 701 under the Securities Act, which are summarized below. We expect that substantially all of these shares will be subject to the 180-day lock-up period under the lock-up agreements described below. Upon expiration of the lock-up period, we estimate that substantially all of such remaining shares will be available for sale in the public market, subject in some cases to applicable volume limitations under Rule 144.

These restricted securities were issued and sold by us in private transactions and are eligible for public sale only if registered under the Securities Act or if they qualify for an exemption from registration under the Securities Act, including the exemptions provided by Rule 144 or Rule 701. These rules are summarized below.

In addition, the shares of common stock reserved for future issuance under the 2025 Plan will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, lock-up agreements, market standoff restrictions, a registration statement under the Securities Act, or an exemption from registration, including Rule 144 and Rule 701.

**Rule 144** 

***Affiliate Resales of Restricted Securities***

In general, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person who is an affiliate of ours, or who was an affiliate at any time during the 90 days before a sale, who has beneficially owned shares of our common stock for at least six months would be entitled to sell in "broker's transactions" or certain "riskless principal transactions" or to market makers, a number of shares within any three-month period that does not exceed the greater of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 1% of the number of shares of our common stock then outstanding, which will equal approximately&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares immediately after this offering; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the average weekly trading volume in our common stock on the New York Stock Exchange&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; during the four calendar weeks preceding the filing of a notice on Form 144 with respect to such sale.

Affiliate resales under Rule 144 are also subject to the availability of current public information about us. In addition, if the number of shares being sold under Rule 144 by an affiliate during any three-month period exceeds 5,000 shares or has an aggregate sale price in excess of $50,000, the seller must file a notice on Form 144 with the SEC and the New York Stock Exchange concurrently with either the placing of a sale order with the broker or the execution directly with a market maker.

***Non-Affiliate Resales of Restricted Securities***

In general, beginning 90 days after the effective date of the registration statement of which this prospectus is a part, a person who is not an affiliate of ours at the time of sale, and has not been an affiliate at any time during the three months preceding a sale, and who has beneficially owned shares of our common stock for at least six months but less than a year, is entitled to sell such shares subject only to the availability of current public information about us. If such person has held our shares for at least one year, such person can resell under Rule 144(b)(1) without regard to any Rule 144 restrictions, including the 90-day public company requirement and the current public information requirement.

Non-affiliate resales are not subject to the manner of sale, volume limitation or notice filing provisions of Rule 144.

**Rule 701** 

In general, under Rule 701, any of an issuer's employees, directors, officers, consultants or advisors who purchases shares from the issuer in connection with a compensatory stock or option plan or other written agreement before the effective date of a registration statement under the Securities Act is entitled to sell such shares 90 days after such effective date in reliance on Rule 144. An affiliate of the issuer can resell shares in reliance on Rule 144 without having to comply with the holding period requirement, and non-affiliates of the issuer can resell shares in reliance on Rule 144 without having to comply with the current public information and holding period requirements.

The SEC has indicated that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Exchange Act, along with the shares acquired upon exercise of such options, including exercises after an issuer becomes subject to the reporting requirements of the Exchange Act.

**Lock-Up Agreements and Market Standoff Restrictions**

We and each of our directors and executive officers and holders of substantially all of our outstanding capital stock, have agreed that, without the prior written consent of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co., and subject to certain exceptions, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus, 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 any securities convertible into or exercisable or exchangeable for shares of common stock; file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; 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; or 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.

Upon the expiration of the applicable lock-up periods, substantially all of the shares subject to such lock-up restrictions will become eligible for sale, subject to the limitations discussed above. Any shares purchased by our directors or officers pursuant to our directed share program shall also be subject to the lock-up agreements described above. For a further description of these lock-up agreements, see the section titled "Underwriting."

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**Registration Rights** 

Upon the completion of this offering, the holders of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; shares of our common stock, which includes all of the shares of common stock issuable upon the conversion of our convertible preferred stock immediately prior to the completion of this offering, or their transferees will be entitled to various rights with respect to the registration of these shares under the Securities Act. Registration of these shares under the Securities Act would result in these shares becoming fully tradable without restriction under the Securities Act immediately upon the effectiveness of the registration, except for shares purchased by affiliates. See the section titled "Description of Capital Stock—Registration Rights" for additional information. Shares covered by a registration statement will be eligible for sale in the public market upon the expiration or release from the terms of the lock-up agreement described above.

**Equity Incentive Plans** 

We intend to file with the SEC a registration statement on Form S-8 under the Securities Act covering the shares of common stock subject to issuance upon the exercise of outstanding stock options under the Stock Option Plan and reserved for issuance under the 2025 Plan and the ESPP. Such registration statement is expected to be filed and become effective as soon as practicable after the completion of this offering. Accordingly, shares registered under such registration statement will be available for sale in the open market following its effective date, subject to Rule 144 volume limitations, vesting restrictions, and the lock-up agreements and market standoff restrictions described above, if applicable.

**Rule 10b5-1 Trading Plans**

Certain of our employees, directors, and stockholders may adopt written plans, known as Rule 10b5-1 trading plans, in which they will contract with a broker to buy or sell shares of our common stock on a periodic basis to diversify their assets and investments. Under these Rule 10b5-1 trading plans, a broker may execute trades pursuant to parameters established by the employee, director, or stockholder when entering into the plan, without further direction from such employee, director, or stockholder. Such sales would not commence until the expiration of the applicable market standoff restrictions or lock-up agreements entered into by such employee, director, or stockholder in connection with this offering.

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**MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO NON-U.S. HOLDERS**

The following discussion is a summary of the material U.S. federal income tax consequences to Non-U.S. Holders (as defined below) of the ownership and disposition of our common stock issued pursuant to this offering, but does not purport to be a complete analysis of all potential tax effects. The effects of other U.S. federal tax laws, such as estate and gift tax laws, and any applicable state, local, or non-U.S. tax laws are not discussed. This discussion is based on the Code, Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the IRS, in each case in effect as of the date hereof. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a Non-U.S. Holder. We have not sought and will not seek any rulings from the IRS regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the ownership and disposition of our common stock.

This discussion is limited to Non-U.S. Holders that hold our common stock as a "capital asset" within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to a Non-U.S. Holder's particular circumstances, including the impact of the Medicare contribution tax on net investment income, the alternative minimum tax or the special tax accounting rules under Section 451(b) of the Code. In addition, it does not address consequences relevant to Non-U.S. Holders subject to special rules, including, without limitation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• U.S. expatriates and former citizens or long-term residents of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• persons holding our common stock as part of a hedge, straddle, or other risk reduction strategy or as part of a conversion transaction or other integrated investment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• banks, insurance companies, and other financial institutions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• brokers, dealers, or traders in securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "controlled foreign corporations," "passive foreign investment companies," and corporations that accumulate earnings to avoid U.S. federal income tax;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• partnerships or other entities or arrangements treated as partnerships for U.S. federal income tax purposes (and investors therein);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tax-exempt organizations or governmental organizations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• persons deemed to sell our common stock under the constructive sale provisions of the Code;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• persons who hold or receive our common stock pursuant to the exercise of an employee stock option or otherwise as compensation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• tax-qualified retirement plans; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• "qualified foreign pension funds" as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held by qualified foreign pension funds.

If an entity or arrangement treated as a partnership for U.S. federal income tax purposes holds our common stock, the tax treatment of a partner in the partnership will depend on the status of the partner, the activities of the partnership, and certain determinations made at the partner level. Accordingly, partnerships holding our common stock and the partners in such partnerships should consult their tax advisors regarding the U.S. federal income tax consequences to them of the purchase, ownership and disposition of our common stock.

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**THIS DISCUSSION IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT TAX ADVICE. PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.** 

**Definition of a Non-U.S. Holder** 

For purposes of this discussion, a "Non-U.S. Holder" is any beneficial owner of our common stock that is neither a "U.S. person" nor an entity or arrangement treated as a partnership for U.S. federal income tax purposes. A U.S. person is any person that, for U.S. federal income tax purposes, is or is treated as any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an individual who is a citizen or resident of the United States;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a corporation created or organized under the laws of the United States, any state thereof, or the District of Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• a trust that (i) is subject to the primary supervision of a U.S. court and the control of one or more "United States persons" (within the meaning of Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income tax purposes.

**Distributions** 

As described in the section titled "Dividend Policy," we do not anticipate declaring or paying dividends to holders of our common stock in the foreseeable future. However, if we do make distributions of cash or property on our common stock, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Amounts not treated as dividends for U.S. federal income tax purposes will constitute a return of capital and first be applied against and reduce a Non-U.S. Holder's adjusted tax basis in its common stock, but not below zero. Any excess will be treated as capital gain and will be treated as described below under "—Sale or Other Taxable Disposition."

Subject to the discussion below on effectively connected income, dividends paid to a Non-U.S. Holder will be subject to U.S. federal withholding tax at a rate of 30% of the gross amount of the dividends (or such lower rate specified by an applicable income tax treaty, provided the Non-U.S. Holder furnishes a valid IRS Form W-8BEN or W-8BEN-E (or other applicable documentation) certifying qualification for the lower treaty rate). A Non-U.S. Holder that does not timely furnish the required documentation, but that qualifies for a reduced treaty rate, may obtain a refund of any excess amounts withheld by timely filing an appropriate claim for refund with the IRS. Non-U.S. Holders should consult their tax advisors regarding their entitlement to benefits under any applicable income tax treaty.

If dividends paid to a Non-U.S. Holder are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such dividends are attributable), the Non-U.S. Holder will be exempt from the U.S. federal withholding tax described above. To claim the exemption, the Non-U.S. Holder must furnish to the applicable withholding agent a valid IRS Form W-8ECI, certifying that the dividends are effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States.

Any such effectively connected dividends generally will be subject to U.S. federal income tax on a net income basis at the regular rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such

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effectively connected dividends, as adjusted for certain items. Non-U.S. Holders should consult their tax advisors regarding any applicable tax treaties that may provide for different rules.

**Sale or Other Taxable Disposition** 

A Non-U.S. Holder will not be subject to U.S. federal income tax on any gain realized upon the sale or other taxable disposition of our common stock unless:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the gain is effectively connected with the Non-U.S. Holder's conduct of a trade or business within the United States (and, if required by an applicable income tax treaty, the Non-U.S. Holder maintains a permanent establishment in the United States to which such gain is attributable);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• the Non-U.S. Holder is a nonresident alien individual present in the United States for 183 days or more during the taxable year of the disposition and certain other conditions are met; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• our common stock constitutes a U.S. real property interest ("USRPI") by reason of our status as a U.S. real property holding corporation ("USRPHC") for U.S. federal income tax purposes.

Gain described in the first bullet point above generally will be subject to U.S. federal income tax on a net income basis at the regular rates applicable to U.S. persons. A Non-U.S. Holder that is a corporation also may be subject to a branch profits tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on such effectively connected gain, as adjusted for certain items.

A Non-U.S. Holder described in the second bullet point above will be subject to U.S. federal income tax at a rate of 30% (or such lower rate specified by an applicable income tax treaty) on gain realized upon the sale or other taxable disposition of our common stock, which may be offset by U.S. source capital losses of the Non-U.S. Holder (even though the individual is not considered a resident of the United States), provided the Non-U.S. Holder has timely filed U.S. federal income tax returns with respect to such losses.

With respect to the third bullet point above, we believe we currently are not, and do not anticipate becoming, a USRPHC. Because the determination of whether we are a USRPHC depends, however, on the fair market value of our USRPIs relative to the fair market value of our non-U.S. real property interests and our other business assets, there can be no assurance we currently are not a USRPHC or will not become one in the future. Even if we are or were to become a USRPHC, gain arising from the sale or other taxable disposition of our common stock by a Non-U.S. Holder will not be subject to U.S. federal income tax if our common stock is "regularly traded," as defined by applicable Treasury Regulations, on an established securities market and such Non-U.S. Holder owned, actually and constructively, 5% or less of our common stock throughout the shorter of the five-year period ending on the date of the sale or other taxable disposition or the Non-U.S. Holder's holding period.

Non-U.S. Holders should consult their tax advisors regarding potentially applicable income tax treaties that may provide for different rules.

**Information Reporting and Backup Withholding** 

Payments of dividends on our common stock to a Non-U.S. Holder will not be subject to backup withholding, provided the holder either certifies its non-U.S. status, such as by furnishing a valid IRS Form W-8BEN, W-8BEN-E, or W-8ECI, or otherwise establishes an exemption and the applicable withholding agent does not have actual knowledge or reason to know the holder is a United States person. However, information returns are required to be filed with the IRS in connection with any distributions on our common stock paid to the Non-U.S. Holder, regardless of whether such distributions constitute dividends or whether any tax was actually withheld. In addition, proceeds of the sale or other taxable disposition of our common stock within the United States or conducted through certain U.S.-related brokers generally will not be subject to backup withholding or information reporting if the applicable withholding agent receives the certification described above and does not have actual knowledge or reason to know that such holder is a United States person or the holder otherwise establishes an exemption. Proceeds of a disposition of our common stock conducted through a non-U.S. office of a non-U.S. broker generally will not be subject to backup withholding or information reporting.

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Copies of information returns that are filed with the IRS may also be made available under the provisions of an applicable treaty or agreement to the tax authorities of the country in which the Non-U.S. Holder resides or is established.

Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a credit against a Non-U.S. Holder's U.S. federal income tax liability, if any, or refunded, provided the required information is timely furnished to the IRS. Non-U.S. Holders should consult their tax advisors regarding the application of the information reporting and backup withholding rules to them.

**Additional Withholding Tax on Payments Made to Foreign Accounts** 

Withholding taxes may be imposed under Sections 1471 to 1474 of the Code (such Sections commonly referred to as the Foreign Account Tax Compliance Act ("FATCA")) on certain types of payments made to non-U.S. financial institutions and certain other non-U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations discussed below) gross proceeds from the sale or other disposition of, our common stock paid to a "foreign financial institution" or a "non-financial foreign entity" (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non-financial foreign entity either certifies it does not have any "substantial United States owners" (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non-financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain "specified United States persons" or "United States owned foreign entities" (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non-compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.

Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of dividends on our common stock. While withholding under FATCA would have applied also to payments of gross proceeds from the sale or other disposition of stock, proposed Treasury Regulations eliminate FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury Regulations are issued.

Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.

**PROSPECTIVE INVESTORS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP, AND DISPOSITION OF OUR COMMON STOCK ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL, OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.**

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**UNDERWRITING**

Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co. are acting as representatives, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:

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| | |
|:---|:---|
| **Name** | **Number of Shares** |
| Morgan Stanley & Co. LLC |  |
| Goldman Sachs & Co. LLC |  |
| Piper Sandler & Co. |  |
| Jefferies LLC |  |
| BTIG, LLC |  |
| Total |  |

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The underwriters and the representatives are collectively referred to as the "underwriters" and the "representatives," respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters' over-allotment option described below. The offering of the shares of common stock by the underwriters is subject to receipt and acceptance and subject to the underwriters' right to reject any order in whole or in part.

The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; per share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representatives.

We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering over-allotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter's name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.

The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters' over-allotment option.

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| | | | |
|:---|:---|:---|:---|
| | | **Total** | **Total** |
| |<br>**Per** <br>**Share** | **No Exercise** | **Full Exercise** |
| Public offering price | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| Underwriting discounts and commissions to be paid by us | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |
| Proceeds, before expenses, to us | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; |

---

The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; . We have also agreed to reimburse the underwriters for expenses relating to clearance of this offering with the Financial Industry Regulatory Authority ("FINRA") up to $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; .

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The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

We have applied to list our common stock on the New York Stock Exchange under the trading symbol "SI," and this offering is contingent upon obtaining approval of such listing.

We and all of our directors and executive officers and the holders of substantially all of our outstanding securities have agreed that, without the prior written consent of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co. on behalf of the underwriters, we and they will not, and will not publicly disclose an intention to, during the period ending 180 days after the date of this prospectus (the "restricted period"):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 any securities convertible into or exercisable or exchangeable for shares of common stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• submit or file any registration statement with the SEC relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;• 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 above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person have agreed that, without the prior written consent of Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co. on behalf of the underwriters, we or such other person will not, during the restricted period, 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.

With respect to us, the restrictions described in the immediately preceding paragraph do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)the shares to be sold in this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)the issuance by us of shares of common stock upon the exercise of an option or warrant or the conversion of a security outstanding on the date of this prospectus as described in the registration statement and this prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)grants of compensatory equity-based awards, and/or the issuance of shares of common stock or securities with respect thereto, made pursuant to compensatory equity-based plans as described in this prospectus; provided each recipient of such grant shall enter into a lock-up agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)shares of common stock or any securities convertible into, or exercisable or exchangeable for, shares of common stock, or the entrance into an agreement to issue shares of common stock or any securities convertible into, or exercisable or exchangeable for, shares of common stock, in connection with any merger, joint venture, strategic alliances, commercial or other collaborative transaction or the acquisition or licenses of the business, property, technology or other assets of another individual or entity or the assumption of an employee benefit plan in connection with a merger or acquisition; provided that the aggregate number of shares of common stock or any other securities convertible into, or exercisable or exchangeable for, shares of common stock that we may issue or agree to issue pursuant to this clause (iv) shall not exceed % of our total outstanding share capital immediately following the issuance of such common stock; and provided further, that the recipients of any such shares of common stock and securities issued pursuant to this clause (iv) during the restricted period shall enter into a lock-up agreement on or prior to such issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)facilitating the establishment of a trading plan on behalf of any of our stockholders, officers or directors pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of our common stock, provided that (A) such plan does not provide for the transfer of common stock during the restricted period and (B) to

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the extent a public announcement or filing under the Exchange Act, if any, is required of or voluntarily made by us regarding the establishment of such plan, such announcement or filing shall include a statement to the effect that no transfer of common stock may be made under such plan during the restricted period; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)the filing of a registration statement on Form S-8 to register shares of common stock issuable pursuant to any employee benefit plans, qualified stock option plans or other employee compensation plans, described in this prospectus.

With respect to our directors, executive officers and securityholders, the restrictions described above do not apply to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)transactions relating to shares of common stock or other securities acquired in open market transactions after the completion of this offering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)transfers of shares of common stock or any security convertible into or exercisable or exchangeable for common stock (i) as a bona fide gift, or for bona fide estate planning purposes, (ii) upon death or by will, testamentary document or intestate succession, (iii) to any immediate family member or to any trust for the direct or indirect benefit of such person or member of their immediate family, if such person is a trust, to a trustor or beneficiary of the trust or the estate of a beneficiary of such trust, (iv) to a corporation, partnership, limited liability company or other entity of which such person and their immediate family are the legal and beneficial owner of all of the outstanding equity securities or similar interests, or (v) to a nominee or custodian of a person or entity to whom a disposition or transfer would be permissible under clauses (b)(i) through (iv) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)if such person is a corporation, partnership, limited liability company or other business entity, any transfers (i) to another corporation, partnership, limited liability company or other business entity that is an affiliate (as defined in Rule 405 under the Securities Act of 1933, as amended) of such person, or to any investment fund or other entity which fund or entity is controlled or managed by such person or affiliates of such person, or (ii) as part of a distribution to its stockholders, partners, members or other equityholders or to the estate of any such stockholders, partners, members or other equityholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)any transfers by operation of law, such as pursuant to a qualified domestic order, divorce settlement, divorce decree or separation agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)any transfers to us from an employee upon death, disability or termination of employment, in each case, of such employee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)any transfers to us in connection with the vesting, settlement or exercise of restricted stock units, options, warrants or other rights to purchase shares of common stock (including, in each case, by way of "net" or "cashless" exercise), including any transfer to us for the payment of tax withholdings or remittance payments due as a result of the vesting, settlement or exercise of such restricted stock units, options, warrants or other rights, or in connection with the conversion of convertible securities, in all such cases pursuant to equity awards granted under a stock incentive plan or other equity award plan, or pursuant to the terms of convertible securities, each as described in this prospectus;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)distributions of shares of common stock or any security convertible into common stock to limited partners or stockholders of such person;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)the entry or amendment of a trading plan on behalf of a shareholder, officer or director pursuant to Rule 10b5-1 under the Exchange Act for the transfer of shares of common stock, provided that such plan does not provide for the transfer of common stock during the restricted period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)transfers of securities to us pursuant to an agreement under which we have the option to repurchase shares or a right of first refusal with respect to transfer of such shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)conversions of outstanding preferred stock into shares of common stock, provided that any such shares received upon such conversion shall remain subject to the provisions of a lock-up agreement;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)conversions or reclassifications of a class or series of common stock into another class or series of common stock (including the conversion of shares of non-voting common stock into shares of voting common stock and vice versa), it being understood that any such shares received upon such conversion shall be subject to the provisions of a lock-up agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)transfers of common stock or other security in connection with a bona fide third-party tender offer, merger, consolidation or other similar transaction that is approved by our board of directors and made to all holders of our capital stock involving a change of control in one transaction or a series of related transactions, to a person or group of affiliated persons, of shares of capital stock if, after such transfer, such person or group of affiliated persons would hold at least a majority of our outstanding voting securities (or the surviving entity); provided that in the event that such tender offer, merger, consolidation or other similar transaction is not completed, such common stock or other security shall remain subject to the provisions of a lock-up agreement;

provided that (1) in the case of clauses (b)(i), (ii), (iii), (iv) and (v) and (c) above, such transfer or distribution shall not involve a disposition for value, (2) in the case of clauses (b)(i), (ii), (iii), (iv) and (v), (c), (d) and (g) above, it shall be a condition to the transfer or distribution that the donee, devisee, transferee or distributee, as the case may be, shall sign and deliver a lock-up agreement, (3) in the case of clauses (b)(ii), (iii), (iv), and (v) and (c) and (g) above, no filing by any party (including, without limitation, any donor, donee, devisee, transferor, transferee, distributor or distributee) under the Exchange Act, or other public filing, report or announcement reporting a reduction in beneficial ownership of lock-up securities shall be required or shall be voluntarily made in connection with such transfer or distribution, and (4) in the case of clauses (a), (b)(i), (d), (e), (f), (h) and (i) above, no filing under the Exchange Act or other public filing, report or announcement shall be voluntarily made, and if any such filing, report or announcement shall be legally required during the restricted period, such filing, report or announcement shall clearly indicate in the footnotes thereto (1) the circumstances of such transfer or distribution and (2) in the case of a transfer or distribution pursuant to clauses (b)(i) or (d) above, that the donee, devisee, transferee or distributee has agreed to be bound by a lock-up agreement.

Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC and Piper Sandler & Co., in their sole discretion, may release the common stock and other securities subject to the lock-up agreements described above in whole or in part at any time.

In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the over-allotment option. The underwriters can close out a covered short sale by exercising the over-allotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the over-allotment option. The underwriters may also sell shares in excess of the over-allotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.

We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.

A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representatives may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions

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will be allocated by the representatives to underwriters that may make Internet distributions on the same basis as other allocations.

**Directed Share Program**

At our request, the underwriters have reserved up to % of the shares of common stock to be issued by us and offered by this prospectus for sale, at the initial public offering price, to certain of our directors, officers, and employees. The sales will be made at our direction by Morgan Stanley & Co. LLC and its affiliates through a directed share program. Any shares sold in the directed share program to our directors or officers who have entered into lock-up agreements described above will be subject to the provisions of such lock-up agreements. The number of shares of common stock available for sale to the general public will be reduced to the extent such persons purchase such reserved shares. Any reserved shares that are not so purchased will be offered by the underwriters to the general public on the same basis as the other shares offered by this prospectus.

**Other Relationships**

The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.

In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.

**Pricing of the Offering**

Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representatives. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the price-earnings ratios, price-sales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

**Selling Restrictions**

***Canada***

The shares may be sold only to purchasers purchasing, or deemed to be purchasing, as principal that are accredited investors, as defined in National Instrument 45-106 *Prospectus Exemptions* or subsection 73.3(1) of the *Securities Act* (Ontario), and are permitted clients, as defined in National Instrument 31-103 *Registration Requirements, Exemptions and Ongoing Registrant Obligations*. Any resale of the shares must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws.

Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions

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of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor.

Pursuant to section 3A.3 of National Instrument 33-105 *Underwriting Conflicts* (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

***European Economic Area***

In relation to each Member State of the European Economic Area (each, a "Relevant State"), no shares have been offered or will be offered pursuant to the offering to the public in that Relevant State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant State or, where appropriate, approved in another Relevant State and notified to the competent authority in that Relevant State, all in accordance with the Prospectus Regulation (as defined below), except that offers of securities may be made to the public in that Relevant State at any time under the following exemptions under the Prospectus Regulation:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)to any legal entity which is a qualified investor as defined under the Prospectus Regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the representatives; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)in any other circumstances falling within Article 1(4) of the Prospectus Regulation;

provided that no such offer of the shares shall require us or any of the representatives to publish a prospectus pursuant to Article 3 of the Prospectus Regulation or supplement a prospectus pursuant to Article 23 of the Prospectus Regulation.

For the purposes of this provision, the expression an "offer to the public" in relation to the shares in any Relevant State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase any shares, and the expression "Prospectus Regulation" means Regulation (EU) 2017/1129 (as amended).

***United Kingdom***

Each underwriter has represented and agreed that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000(the "FSMA")) received by it in connection with the issue or sale of the shares in circumstances in which Section 21(1) of the FSMA does not apply to us; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

No shares have been offered or will be offered pursuant to the offering to the public in the United Kingdom prior to the publication of a prospectus in relation to the shares which has been approved by the Financial Conduct Authority, except that the shares may be offered to the public in the United Kingdom at any time:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)to any legal entity which is a qualified investor as defined under Article 2 of the UK Prospectus Regulation (as defined below);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)to fewer than 150 natural or legal persons (other than qualified investors as defined under Article 2 of the UK Prospectus Regulation), subject to obtaining the prior consent of the representatives for any such offer; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)in any other circumstances falling within Section 86 of the FSMA;

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provided that no such offer of the shares shall require us or any of the representatives to publish a prospectus pursuant to Section 85 of the FSMA or supplement a prospectus pursuant to Article 23 of the UK Prospectus Regulation.

For the purposes of this provision, the expression an "offer to the public" in relation to the shares in the United Kingdom means the communication in any form and by any means of sufficient information on the terms of the offer and any shares to be offered so as to enable an investor to decide to purchase or subscribe for any shares and the expression "UK Prospectus Regulation" means Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018.

This prospectus is only for distribution to and directed at: (i) in the United Kingdom, persons having professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005, as amended, or the Order, and high net worth entities falling within Article 49(2)(a) to (d) of the Order; (ii) persons who are outside the United Kingdom; and (iii) any other person to whom it can otherwise be lawfully distributed (all such persons together, "Relevant Persons"). Any investment or investment activity to which this prospectus relates is available only to and will be engaged in only with Relevant Persons, and any person who is not a Relevant Person should not rely on it.

***Hong Kong***

The securities have not been offered or sold and will not be offered or sold in Hong Kong, by means of any document, other than (a) to "professional investors" as defined in the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made under that Ordinance or (b) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance (Cap. 32) of Hong Kong or which do not constitute an offer to the public within the meaning of that Ordinance. No advertisement, invitation or document relating to the securities has been or may be issued or has been or may be in the possession of any person for the purposes of issue, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to securities which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" as defined in the Securities and Futures Ordinance and any rules made under that Ordinance.

***Japan***

The securities have not been and will not be registered under the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948, as amended) and, accordingly, will not be offered or sold, directly or indirectly, in Japan, or for the benefit of any Japanese Person or to others for re-offering or resale, directly or indirectly, in Japan or to any Japanese Person, except in compliance with all applicable laws, regulations and ministerial guidelines promulgated by relevant Japanese governmental or regulatory authorities in effect at the relevant time. For the purposes of this paragraph, "Japanese Person" means any person resident in Japan, including any corporation or other entity organized under the laws of Japan.

***Singapore***

This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, the securities were not offered or sold or caused to be made the subject of an invitation for subscription or purchase and will not be offered or sold or caused to be made the subject of an invitation for subscription or purchase, and this prospectus or any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of the securities, has not been circulated or distributed, nor will it be circulated or distributed, whether directly or indirectly, to any person in Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289) of Singapore, as modified or amended from time to time, (the "SFA") pursuant to Section 274 of the SFA, (ii) to a relevant person (as defined in Section 275(2) of the SFA) pursuant to Section 275(1) of the SFA, or any person pursuant to Section 275(1A) of the SFA, and in accordance with the conditions specified in Section 275 of the SFA, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA.

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Where the securities are subscribed or purchased under Section 275 of the SFA by a relevant person which is:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor;

securities or securities-based derivatives contracts (each term as defined in Section 2(1) of the SFA) of that corporation or the beneficiaries' rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the securities pursuant to an offer made under Section 275 of the SFA except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)to an institutional investor or to a relevant person, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)where no consideration is or will be given for the transfer;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)where the transfer is by operation of law; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)as specified in Section 276(7) of the SFA.

***Switzerland***

The shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (the "SIX"), or on any other stock exchange or regulated trading facility in Switzerland. This prospectus has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this prospectus nor any other offering or marketing material relating to the shares or the offering may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this prospectus nor any other offering or marketing material relating to us, the offering, or the shares have been or will be filed with or approved by any Swiss regulatory authority. In particular, this prospectus will not be filed with, and the offering of shares will not be supervised by, the Swiss Financial Market Supervisory Authority ("FINMA", or the "FINMA"), and the offering of shares has not been and will not be authorized under the Swiss Federal Act on Collective Investment Schemes (the "CISA"). The investor protection afforded to acquirers of interests in collective investment schemes under the CISA does not extend to acquirers of the shares.

***Dubai International Financial Centre***

This prospectus relates to an Exempt Offer in accordance with the Offered Securities Rules of the Dubai Financial Services Authority (the "DFSA"). This prospectus is intended for distribution only to persons of a type specified in the Offered Securities Rules of the DFSA. It must not be delivered to, or relied on by, any other person. The DFSA has no responsibility for reviewing or verifying any documents in connection with Exempt Offers. The DFSA has not approved this prospectus nor taken steps to verify the information set forth herein and has no responsibility for the prospectus. The shares to which this prospectus relates may be illiquid and/or subject to restrictions on their resale. Prospective purchasers of the shares offered should conduct their own due diligence on the shares. If you do not understand the contents of this prospectus you should consult an authorized financial advisor.

***Australia***

No placement document, prospectus, product disclosure statement or other disclosure document has been lodged with the Australian Securities and Investments Commission, in relation to the offering. This prospectus does not constitute a prospectus, product disclosure statement or other disclosure document under the Corporations Act

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2001, or the Corporations Act, and does not purport to include the information required for a prospectus, product disclosure statement or other disclosure document under the Corporations Act.

Any offer in Australia of the shares may only be made to persons, or Exempt Investors, who are "sophisticated investors" (within the meaning of section 708(8) of the Corporations Act), "professional investors" (within the meaning of section 708(11) of the Corporations Act) or otherwise pursuant to one or more exemptions contained in section 708 of the Corporations Act so that it is lawful to offer the shares without disclosure to investors under Chapter 6D of the Corporations Act.

The shares applied for by Exempt Investors in Australia must not be offered for sale in Australia in the period of 12 months after the date of allotment under the offering, except in circumstances where disclosure to investors under Chapter 6D of the Corporations Act would not be required pursuant to an exemption under section 708 of the Corporations Act or otherwise or where the offer is pursuant to a disclosure document which complies with Chapter 6D of the Corporations Act. Any person acquiring the shares must observe such Australian on-sale restrictions.

This prospectus contains general information only and does not take account of the investment objectives, financial situation or particular needs of any particular person. It does not contain any securities recommendations or financial product advice. Before making an investment decision, investors need to consider whether the information in this prospectus is appropriate to their needs, objectives and circumstances, and, if necessary, seek expert advice on those matters.

***Israel***

In the State of Israel this prospectus shall not be regarded as an offer to the public to purchase shares of common stock under the Israeli Securities Law, 5728 - 1968, which requires a prospectus to be published and authorized by the Israel Securities Authority, if it complies with certain provisions of Section 15 of the Israeli Securities Law, 5728 - 1968, including, inter alia, if: (i) the offer is made, distributed or directed to not more than 35 investors, subject to certain conditions, or the Addressed Investors; or (ii) the offer is made, distributed or directed to certain qualified investors defined in the First Addendum of the Israeli Securities Law, 5728 - 1968, subject to certain conditions (the "Qualified Investors"). The Qualified Investors shall not be taken into account in the count of the Addressed Investors and may be offered to purchase securities in addition to the 35 Addressed Investors. The company has not and will not take any action that would require it to publish a prospectus in accordance with and subject to the Israeli Securities Law, 5728 - 1968. We have not and will not distribute this prospectus or make, distribute or direct an offer to subscribe for our common stock to any person within the State of Israel, other than to Qualified Investors and up to 35 Addressed Investors.

Qualified Investors may have to submit written evidence that they meet the definitions set out in of the First Addendum to the Israeli Securities Law, 5728 - 1968. In particular, we may request, as a condition to be offered common stock, that Qualified Investors will each represent, warrant and certify to us and/or to anyone acting on our behalf: (i) that it is an investor falling within one of the categories listed in the First Addendum to the Israeli Securities Law, 5728 - 1968; (ii) which of the categories listed in the First Addendum to the Israeli Securities Law, 5728 - 1968 regarding Qualified Investors is applicable to it; (iii) that it will abide by all provisions set forth in the Israeli Securities Law, 5728 - 1968 and the regulations promulgated thereunder in connection with the offer to be issued common stock; (iv) that the shares of common stock that it will be issued are, subject to exemptions available under the Israeli Securities Law, 5728 - 1968: (a) for its own account; (b) for investment purposes only; and (c) not issued with a view to resale within the State of Israel, other than in accordance with the provisions of the Israeli Securities Law, 5728 - 1968; and (d) that it is willing to provide further evidence of its Qualified Investor status. Addressed Investors may have to submit written evidence in respect of their identity and may have to sign and submit a declaration containing, inter alia, the Addressed Investor's name, address and passport number or Israeli identification number.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**LEGAL MATTERS**

The validity of the issuance of our common stock offered in this prospectus will be passed upon for us by Latham & Watkins LLP. Certain legal matters in connection with this offering will be passed upon for the underwriters by Cooley LLP.

**EXPERTS**

The financial statements of Shoulder Innovations, Inc. as of December 31, 2024 and 2023 and for each of the two years in the period ended December 31, 2024, included in this prospectus have been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. Such financial statements are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

**WHERE YOU CAN FIND ADDITIONAL INFORMATION**

We have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act, with respect to the shares of common stock being offered by this prospectus. This prospectus, which constitutes part of the registration statement, does not contain all of the information in the registration statement and its exhibits. For further information with respect to us and the common stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained in this prospectus as to the contents of any contract or any other document referred to are summary in nature and not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by reference to the full text of such contract or other document.

You may read our SEC filings, including this registration statement, over the internet at the SEC's website at www.sec.gov. Upon the completion of this offering, we will be subject to the information reporting requirements of the Exchange Act, and we will file reports, proxy statements, and other information with the SEC. These reports, proxy statements, and other information will be available for review at the SEC's website referred to above. We also maintain a website at www.shoulderinnovations.com, at which, following the completion of this offering, you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on or accessible through our website is not a part of this prospectus or the registration statement of which it forms a part, and the inclusion of our website address in this prospectus is an inactive textual reference only. You should not consider the contents of our website in making an investment decision with respect to our common stock.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Contents**

**INDEX TO FINANCIAL STATEMENTS**

**For the Quarterly Period Ended March 31, 2025**

---

| | |
|:---|:---|
| **Unaudited Financial Statements** | |
| &nbsp;&nbsp;&nbsp;<u>[Condensed](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[Balance She](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[ets as of](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[March 31, 2025 and Dece](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[mber 3](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[1, 2024 (Una](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[udited)](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)</u> | <u>[F](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[-](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)[2](#i59180bdb0f1c4bbb8d8197dc900517b5_1856)</u> |
| &nbsp;&nbsp;&nbsp;<u>[C](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[ondensed Statements of Operations an](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[d Comprehensive](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[L](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[oss for the Quarters Ended March 31, 2025 and 2024](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[(Unaudited)](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)</u> | <u>[F](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[-](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)[4](#i59180bdb0f1c4bbb8d8197dc900517b5_51127290693449)</u> |
| &nbsp;&nbsp;&nbsp;<u>[C](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)[ondensed Statements of Changes in Convertible Preferred Stock and Stockholders](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)['](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)[Deficit for the](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)[Quarters Ended March 31, 2025 and 2024 (Unaudited)](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)</u> | <u>[F](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)[-](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)[5](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321245)</u> |
| &nbsp;&nbsp;&nbsp;<u>[C](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)[ondensed Statem](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)[ents of Cash Flows for the](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)[Quarters Ended March 31, 2025 and 2024 (Unaudited)](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)</u> | <u>[F](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)[-](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)[6](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321266)</u> |
| &nbsp;&nbsp;&nbsp;<u>[N](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[otes to](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[Condensed](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[Unaudited Financial Stateme](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[nts](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)</u> | <u>[F](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[-](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)[7](#i59180bdb0f1c4bbb8d8197dc900517b5_52226802321286)</u> |

---

**For the Annual Period Ended December 31, 2024**

---

| | |
|:---|:---|
| <u>[Independent Auditor's Report](#i59180bdb0f1c4bbb8d8197dc900517b5_1535)</u>  | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1535)[14](#i59180bdb0f1c4bbb8d8197dc900517b5_1535)</u> |
| **Audited Financial Statements** |  |
| &nbsp;&nbsp;&nbsp;<u>[Balance Sheets as of December 31, 2024 and 2023](#i59180bdb0f1c4bbb8d8197dc900517b5_1515)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1515)[15](#i59180bdb0f1c4bbb8d8197dc900517b5_1515)</u> |
| &nbsp;&nbsp;&nbsp;<u>[Statements of Operations and Comprehensive Loss for the Years Ended December 31, 2024 and 2023](#i59180bdb0f1c4bbb8d8197dc900517b5_1494)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1494)[17](#i59180bdb0f1c4bbb8d8197dc900517b5_1494)</u> |
| &nbsp;&nbsp;&nbsp;<u>[Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit for the Years Ended December 31, 2024 and 2023](#i59180bdb0f1c4bbb8d8197dc900517b5_1472)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1472)[18](#i59180bdb0f1c4bbb8d8197dc900517b5_1472)</u> |
| &nbsp;&nbsp;&nbsp;<u>[Statements of Cash Flows for the Years Ended December 31, 2024 and 2023](#i59180bdb0f1c4bbb8d8197dc900517b5_1453)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1453)[19](#i59180bdb0f1c4bbb8d8197dc900517b5_1453)</u> |
| &nbsp;&nbsp;&nbsp;<u>[Notes to Financial Statements](#i59180bdb0f1c4bbb8d8197dc900517b5_1737)</u> | <u>[F-](#i59180bdb0f1c4bbb8d8197dc900517b5_1737)[20](#i59180bdb0f1c4bbb8d8197dc900517b5_1737)</u> |

---

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Condensed Balance Sheets**

**(Unaudited)**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| | **March 31, 2025** | **December 31, 2024** |
| **Assets** | | |
| **Current Assets** | | |
| Cash and cash equivalents | $6370 | $6123 |
| Marketable securities | 21194 | 8921 |
| Trade accounts receivable, net of allowance for credit losses | 6581 | 5122 |
| Inventories, net | 13103 | 13955 |
| Prepaid expenses | 981 | 431 |
| Other current assets | 1381 | 573 |
| **Total Current Assets**  | 49610 | 35125 |
| Property and equipment, net | 7532 | 7487 |
| Operating lease right-of-use asset | 57 | 68 |
| Intangible assets, net | 325 | 400 |
| **Total Assets**  | 57524 | 43080 |
| **Liabilities, Convertible Preferred Stock, and Stockholders' Deficit** |  |  |
| **Current Liabilities** |  |  |
| Accounts payable ($595 and $813 to related parties, respectively) | 2546 | 4860 |
| Current operating lease obligations | 48 | 47 |
| Accrued liabilities | 4394 | 2740 |
| **Total Current Liabilities**  | 6988 | 7647 |
| **Long-Term Liabilities** |  |  |
| Long-term debt | 14721 | 14658 |
| Other long-term liabilities | 982 | 995 |
| **Total Long-Term Liabilities**  | 15703 | 15653 |
| **Total Liabilities**  | 22691 | 23300 |
| **Commitments and contingencies (note 8)** |  |  |
| **Convertible Preferred Stock** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Series Seed, $0.001 par value, 16,840,400 shares authorized, and 16,840,400 and 15,851,401 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 1420 | 1337 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series A, $0.001 par value, 22,399,370 shares authorized, issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 5600 | 5600 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series B, $0.001 par value, 6,913,964 shares authorized, and 6,038,964 and 5,913,964 issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 2247 | 2200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series C, $0.001 par value, 50,116,284 shares authorized, issued, and outstanding as of March 31, 2025 and December 31, 2024, respectively | 21550 | 21550 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series D, $0.001 par value, 83,403,626 shares authorized, and 80,909,169 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 43788 | 43788 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series E, $0.001 par value, 58,774,332 shares authorized, and 29,455,169 and 0 shares issued and outstanding as of March 31, 2025 and December 31, 2024, respectively | 19542 |  |
| **Total Convertible Preferred Stock**  | 94147 | 74475 |
| **Stockholders' Deficit** |  |  |

---

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Condensed Balance Sheets**

**(Unaudited)**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| | **March 31, 2025** | **December 31, 2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.001 par value, 280,986,575 shares authorized, and 1,961,142 issued and outstanding as of March 31, 2025 and 212,366,763 shares authorized and 1,600,475 issued and outstanding as of December 31, 2024 | 1 | 1 |
| Additional paid-in capital | 2307 | 2148 |
| Accumulated deficit | (61703) | (57041) |
| Accumulated other comprehensive income | 81 | 197 |
| **Total Stockholders' Deficit**  | (59314) | (54695) |
| **Total Liabilities, Convertible Preferred Stock, and Stockholders' Deficit**  | $57524 | $43080 |

---

*See accompanying notes to financial statements.*

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Condensed Statements of Operations and Comprehensive Loss**

**(Unaudited)**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| *Three Months Ended March 31,* | **2025** | **2024** |
| **Net Revenue**  | $10132 | $7184 |
| **Cost of Goods Sold**  | 2341 | 1666 |
| **Gross Profit**  | 7791 | 5518 |
| **Selling, General, and Administrative Expenses**  | 10502 | 7704 |
| (Includes $849 and $781 to related parties, respectively) |  |  |
| **Research and Development**  | 1583 | 1070 |
| (Includes $1,235 and $942 to related parties, respectively) |  |  |
| **Operating Loss**  | (4294) | (3256) |
| **Other Expense** |  |  |
| &nbsp;&nbsp;Interest expense, net | 367 | 317 |
| &nbsp;&nbsp;Other expense, net | 1 | 27 |
| **Total Other Expense**  | 368 | 344 |
| **Loss before income tax expense**  | (4662) | (3600) |
| **Income Tax Expense** |  |  |
| **Net Loss**  | $(4662) | $(3600) |
| **Other Comprehensive (loss), net** |  |  |
| &nbsp;&nbsp;Unrealized (loss) on marketable securities | (116) | (42) |
| **Total Other Comprehensive (loss), net**  | (116) | (42) |
| **Comprehensive loss**  | $(4778) | $(3642) |
| **Net loss per share attributed to common stock – basic and diluted:** |  |  |
| Net loss per share | $(2.73) | $(3.29) |
| **Weighted average shares outstanding:** |  |  |
| Weighted average common shares outstanding – basic and diluted | 1706470 | 1094314 |

---

*See accompanying notes to financial statements.*

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Condensed Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit**

**(Unaudited)**

(in thousands, except shares and per share amounts)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Preferred Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Income** | **Accumulated Deficit** | **Total Stockholders' Deficit** |
| **Balance, December 31, 2023**  | $74475 | $1 | $1328 | $356 | $(41422) | $(39737) |
| Issuance of common stock |  |  |  |  |  |  |
| Stock compensation expense |  |  | 168 |  |  | 168 |
| Net loss |  |  |  |  | (3600) | (3600) |
| Comprehensive income |  |  |  | 42 |  | 42 |
| **Balance, March 31, 2024**  | $74475 | $1 | $1496 | $398 | $(45022) | $(43127) |
| **Balance, December 31, 2024**  | $74475 | $1 | $2148 | $197 | $(57041) | $(54695) |
| Issuance of preferred stock in private placement, net of issuance cost of $352 | 19542 |  |  |  |  |  |
| Exercise of preferred stock warrant | 130 |  |  |  |  |  |
| Issuance of common stock |  |  | 32 |  |  | 32 |
| Stock compensation expense |  |  | 127 |  |  | 127 |
| Net Loss |  |  |  |  | (4662) | (4662) |
| Comprehensive (loss) |  |  |  | (116) |  | (116) |
| **Balance, March 31, 2025**  | $94147 | $1 | $2307 | $81 | $(61703) | $(59314) |

---

*See accompanying notes to financial statements.*

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Condensed Statements of Cash Flows**

**(Unaudited)**

(amounts in thousands)

---

| | | |
|:---|:---|:---|
| *Three Months Ended March 31,* | **2025** | **2024** |
| **Cash Flows from Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(4662) | $(3600) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Adjustments to reconcile net loss to net cash used in operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 668 | 498 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discounts | 63 | 95 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation expense | 127 | 168 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized gain (loss) on marketable securities | (162) | 117 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Change in Operating Assets and Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable | (1459) | 431 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | 851 | (544) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | (550) | 26 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | (2122) | (46) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 769 | (620) |
| **Net Cash Used in Operating Activities**  | (6477) | (3475) |
| **Cash Flows from Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fixed asset purchases | (843) | (1307) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of marketable securities | (20060) | (2815) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of marketable securities | 7833 | 3107 |
| **Net Cash Provided (Used) in Investing Activities**  | (13070) | (1015) |
| **Cash Flows from Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of common stock options | 32 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of preferred stock warrants | 130 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from series E convertible preferred stock, net of issuance cost | 19632 |  |
| **Net Cash Provided in Financing Activities**  | 19794 |  |
| **Net Change in Cash for Period**  | 247 | (4490) |
| **Cash and Cash Equivalents, beginning of year**  | 6123 | 6236 |
| **Cash and Cash Equivalents, end of year**  | 6370 | $1746 |
| **Supplemental Cash Flows information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $431 | $450 |
| **Non-Cash Investing and Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Series E convertible preferred stock issuance cost in other current liabilities | $90 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures included in accounts payable | $263 | $322 |

---

*See accompanying notes to financial statements.*

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

**1. Summary of Significant Accounting Policies**

***Business Activity***

Shoulder Innovations, Inc. (the "Company") is principally involved in developing next generation shoulder replacement implants, utilizing contract manufacturing partners, and distributing them nationwide for surgeries through a network of employed and contracted sales representatives. The Company is headquartered in Grand Rapids, Michigan and markets and sells its products throughout the United States.

***Basis of Presentation***

The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") for interim reporting. Certain information and note disclosures included in the Company's annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. These unaudited condensed financial statements should be read in conjunction with the audited annual financial statements for the year ended December 31, 2024. There have been no material changes in our significant accounting policies as described in our audited annual financial statements for the year ended December 31, 2024. In the opinion of management, these unaudited condensed financial statements reflect all adjustments, including those of a normal and recurring nature, which are necessary for a fair presentation of the results for the interim period presented.

***New Accounting Pronouncements***

In December 2023, the FASB issued ASU 2023-09*, Income Taxes (Topic 740) ("ASC 740")*. The update requires all public business entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold and an explanation, if not otherwise evident, of the individual reconciling items disclosed, such as the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items. In addition, the update requires certain new disclosures of the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid (net of refunds received). Other new disclosures required include income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The new guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments are to be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact of the new standard on its financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses requires additional, disaggregated disclosure around certain income statement expense line items. This ASU mandates that entities, at each interim and annual period, disclose the amounts of (a) inventory purchases, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depletion, depreciation, and amortization for oil and gas activities included within each relevant expense caption presented on the income statement within continuing operations. Entities are also required to (1) combine certain disclosures already mandated under GAAP with these new requirements, (2) provide qualitative descriptions of expenses that are not disaggregated quantitatively, and (3) disclose total selling expenses and, annually, the definition of selling expenses. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the Company's financial statements and related disclosures.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

**2. Fair Value Measurements**

The fair value of marketable securities as of March 31, 2025 and December 31, 2024 are summarized below:

---

| | | | |
|:---|:---|:---|:---|
| | **March 31, 2025** | **March 31, 2025** | **March 31, 2025** |
| | **Level 1** | **Level 2** | **Level 3** |
| **Assets:**  | | | |
| Cash Equivalents |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $2173 | $— | $— |
| **Short-term marketable securities at fair value**  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury and government agencies | 14222 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and international bonds |  | 6972 |  |
| **Total assets**  | $16395 | $6972 | $— |
| **Liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock warrant liability |  |  | $970 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series E purchase option |  |  | 218 |
| **Total liabilities**  |  |  | $1188 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| | **Level 1** | **Level 2** | **Level 3** |
| **Assets:**  | | | |
| Cash Equivalents |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $85 | $— | $— |
| **Short-term marketable securities at fair value**  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury and government agencies | 6053 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and international bonds |  | 2868 |  |
| **Total assets**  | $6138 | $2868 | $— |
| **Liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock warrant liability |  |  | $970 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series E purchase option |  |  |  |
| **Total liabilities**  |  |  | $970 |

---

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

**3. Accrued Liabilities and Other Current Liabilities**

Accrued liabilities and other current liabilities consist of the following:

---

| | | |
|:---|:---|:---|
| | **March 31, 2025** | **December 31, 2024** |
| Commissions payable | $988 | $836 |
| Accrued payroll | 902 | 738 |
| Accrued royalties | 734 | 612 |
| Other | 1680 | 554 |
| **Accrued liabilities and other liabilities**  | $4304 | $2740 |

---

**4. Related Party Transactions**

On October 22, 2020, the Company entered into a software license agreement with Genesis Software which was amended and restated on January 1, 2023. Robert Ball, the Company's Chief Executive Officer and Executive Chairman, is a co-founder and director of Genesis Software. Mr. Ball and Matthew Ahearn, the Company's Chief Operating Officer and a director, are directors of Genesis Investment Holdings, LLC, which has an ownership interest in Genesis Software. In addition, cultivate(MD) Capital Accelerator Fund L.P. and Genesis Investment Holdings, LLC, each beneficial owners of more than 5% of our capital stock, are investors in Genesis Software. The software licensing agreement is a 5-year term. The agreement required an upfront payment of $1,000, an incremental $500 payment when FDA clearance was obtained, and quarterly payments of royalties equal to 4% of the net sales price of each licensed product sold. For each of the three months ended March 31, 2025 and 2024, the Company paid Genesis Software $343 and $270, respectively, pursuant to the license agreement.

For the three months ended March 31, 2025 and 2024, the Company paid $571 and $454, respectively for software development to Genesis Software. Amounts payable of $150 and $276 are included in accounts payable on the balance sheets at March 31, 2025 and December 31, 2024, respectively.

The Company has entered into a consulting agreement with an entity under common ownership. The consulting agreement is currently on a year-to-year basis. The agreement requires compensation for services performed. If services performed are on an hourly basis, the Company shall be responsible to pay for hours actually worked by the consultant's employees. The Company will reimburse the consultant for all reasonable expenses incurred in connection with performing services for the Company. For each of the three months ended March 31, 2025 and 2024, the Company paid Genesis Innovation Group $1,235 and $942, respectively. Amounts payable of $445 and $537 are included in accounts payable on the balance sheets at March 31, 2025 and December 31, 2024, respectively.

During the first three months of 2024, Robert Ball, the Company's Chief Executive Officer and Executive Chairman, was an investor in RMD. Mr. Ball is no longer an investor in RMD. For the three months ended March 31, 2025 and 2024, the Company paid RMD $0 and $859, respectively, pursuant to the RMD Supply Agreement.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

**5. Convertible Preferred Stock**

On March 6, 2025, the Company entered into a Series E Preferred Stock Purchase Agreement pursuant to the Series E Preferred Stock Financing, whereby it received a total commitment amount of $40,130 for the issuance and sale of 58,774,332 shares of Series E Preferred Stock pursuant to two separate closing tranches, the first of which closed on March 6, 2025 whereby the Company issued 29,455,169 shares of series E preferred stock resulting in total net proceeds to the Company of $20,111. The second tranche can occur any time prior to September 15, 2025, for the issuance and sale of 29,319,143 shares of Series E Preferred Stock for an aggregate purchase price of $20,019. The Company determined that the second tranche constitutes a free standing financial instrument and allocated $218 of the Series E proceeds to the purchase option, which is included in accrued liabilities in the Condensed Balance Sheets.

On March 4, 2025, Genesis Investment Holdings, LLC exercised 988,999 series Seed warrants resulting in proceeds of $83.

On March 17, 2025, 125,000 Series B warrants were exercised resulting in proceeds of $47.

***Issued and Outstanding Preferred Shares***

Authorized, issued, and outstanding Preferred Stock were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *March 31, 2025* |  |  |  |  |  |
| **Series** | **Par Value** | **Authorized** | **Issued and Outstanding** | **Issuance Price Per Share** | **Liquidation Value** |
| Seed | $0.001 | 16840400 | 16840400 | $0.0843 | $1420 |
| A | 0.001 | 22399370 | 22399370 | 0.2500 | 5600 |
| B | 0.001 | 6913964 | 6038964 | 0.3720 | 2247 |
| C | 0.001 | 50116284 | 50116284 | 0.4300 | 21550 |
| D | 0.001 | 83403626 | 80909169 | 0.5412 | 43788 |
| E | 0.001 | 58774332 | 29455169 | 0.6828 | $20111 |
| **Total**  |  | 238447976 | 205759356 |  | 94716 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *December 31, 2024* |  |  |  |  |  |
| **Series** | **Par Value** | **Authorized** | **Issued and Outstanding** | **Issuance Price Per Share** | **Liquidation Value** |
| Seed | $0.001 | 16840400 | 15851401 | $0.0843 | $1337 |
| A | 0.001 | 22399370 | 22399370 | 0.2500 | 5600 |
| B | 0.001 | 6913964 | 5913964 | 0.3720 | 2200 |
| C | 0.001 | 50116284 | 50116284 | 0.4300 | 21550 |
| D | 0.001 | 83403626 | 80909169 | 0.5412 | 43788 |
| **Total**  |  | 179673644 | 175190188 |  | $74475 |

---

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

**6. Loss Per Share**

Basic loss per share is computed by dividing the net loss after tax attributable to common stockholders by the weighted average shares outstanding during the period. Diluted loss per share is computed by including potentially dilutive securities outstanding during the period in the calculation of weighted average shares outstanding. The Company did not have any dilutive securities during the periods presented; therefore, diluted loss per share is equal to basic loss per share.

Presented in the table below is a reconciliation of the numerator and denominator for the basic and diluted loss per share ("LPS") calculations for the three months ended March 31:

---

| | | |
|:---|:---|:---|
| *March 31,* | **2025** | **2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss**  | $(4662) | $(3600) |
| **Basic and diluted weighted average shares outstanding**  | 1706470 | 1094314 |
| **Net loss attributable to common shareholders, basic and diluted**  | $(2.73) | $(3.29) |

---

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:

---

| | | |
|:---|:---|:---|
| | **March 31, 2025** | **March 31, 2024** |
| Series Seed | 16840400 | 15851401 |
| Series A | 22399370 | 22399370 |
| Series B | 6038964 | 5913964 |
| Series C | 50116284 | 50116284 |
| Series D | 80909169 | 80909169 |
| Series E | 29455169 |  |
| Common Options | 25020489 | 22203225 |
| Common Warrants | 340140 | 340140 |
| Series Seed Warrants |  | 988999 |
| Series B Warrants | 875000 | 1000000 |
| Series D Warrants | 2494457 | 2494457 |
| Total | 234489442 | 202217009 |

---

**7. Segment Information**

The Company reports segment information based on how the Company's chief operating decision maker ("CODM") is the Chief Executive Officer, regularly reviews operating results, allocates resources and makes decisions regarding business operations. For segment reporting purposes the Company's business structure is comprised of one operating and reportable segment. The CODM uses segment gross margin and net loss for determining the allocation of resources (including employees, financial, or capital resources) to the segment to achieve the Company's strategic plan and to assess the performance of the segment by monitoring actual results against performance targets established in the Company's annual budget and forecasting process.

All revenue for the three months ended March 31, 2025 and 2024 was generated from customers located in the United States. No customers represent 10% or more of the Company's total revenue for the three months ended March 31, 2025 and 2024. The measure of segment assets is reported on the balance sheets as total assets.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

The table below is a summary of the segment net loss, including significant segment expenses:

---

| | | |
|:---|:---|:---|
| *March 31,* | **2025** | **2024** |
| Total Revenue | $10132 | $7184 |
| Cost of goods Sold | 2341 | 1666 |
| Gross margin | 7791 | 5518 |
| Operating expenses: |  |  |
| General and administrative | 5213 | 3325 |
| Sales and marketing | 4733 | 3501 |
| Medical education | 556 | 878 |
| Research and development | 1583 | 1070 |
| Interest/other expense | 368 | 344 |
| **Segment net loss and total net loss**  | $(4662) | (3600) |

---

Depreciation expense for the three months ended March 31, 2025 and 2024 totaled $593 and $423, respectively. Depreciation expense of $575 and $415 for instruments is in sales and marketing and $18 and $8 for computer equipment, furniture and fixtures, and leasehold improvements are included in general, and administrative expenses in the statements of operations and comprehensive loss for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense related to the Company's software license for the three months ended March 31 2025 and 2024 totaled $75 for both periods, and is included in general and administrative expense.

**8. Commitments and Contingencies**

***Litigation***

The Company from time to time is involved in legal matters incidental to the conduct of its business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses the need to record a liability for litigation and contingencies. Accrual estimates are recorded when and if it is determinable that such a liability for litigation and contingencies are both probable and reasonably estimable.

In February 2024, the Company filed a complaint against Catalyst Orthoscience Inc. ("Catalyst") claiming patent infringement through Catalyst's making, using, selling, offering for sale in the United States, and/or importing into the United States, reverse shoulder systems. In response to the Company's suit, Catalyst filed a counterclaim claiming patent infringement of certain of the Company's products. The Company believes that it has substantial and meritorious defenses to Catalyst's claims and intend to vigorously defend its position, including through the trial and appellate stages if necessary. As the counterclaim is ongoing, the Company is unable to determine the likelihood of an outcome or estimate a range of reasonably possible settlement, if any. Accordingly, the Company has not made an accrual for any possible loss. The outcome of any litigation, however, is inherently uncertain, and an adverse judgment or settlement in the counterclaim proceeding, if any, could have a material and adverse effect the Company's business, financial position, results of operations or cash flows.

**9. Subsequent Events**

The Company evaluated subsequent events from March 31, 2025, the date of these financial statements, through May 23, 2025, which represents the date the financial statements were issued, and through July 7, 2025, the date the financial statements were reissued, for events requiring recording or disclosure in the financial statements for the three months ended March 31, 2025.

On April 23, 2025, the Company granted 8,660,375 common stock options to certain employees and officers of the Company with an exercise price of $0.15. Common stock options vest over a four year period. The Company estimates it will recognize $0.8 million in stock compensation expense over the vesting period.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Unaudited Condensed Financial Statements

(in thousands, except share, per share data and percentages)

In June 2025 the Company called the second tranche of its Series E Preferred Stock for the issuance of 29,319,143 shares of Series E Preferred Stock resulting in total net proceeds to the Company of $20.0 million.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Stockholders and Board of Directors of Shoulder Innovations, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying balance sheets of Shoulder Innovations, Inc. (the "Company") as of December 31, 2024 and 2023, the related statements of operations and comprehensive loss, changes in convertible preferred stock and stockholders' deficit, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Deloitte & Touche LLP

Grand Rapids, Michigan

April 17, 2025

We have served as the Company's auditor since 2023.

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Balance Sheets**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| **Assets** |  |  |
| **Current Assets** |  |  |
| Cash and cash equivalents | $6123 | $6236 |
| Marketable securities | 8921 | 26577 |
| Trade accounts receivable, net of allowance for credit losses | 5122 | 4693 |
| Inventories, net | 13955 | 9923 |
| Prepaid expenses | 431 | 419 |
| Other current assets | 573 |  |
| **Total Current Assets**  | 35125 | 47848 |
| Property and equipment, net | 7487 | 5635 |
| Operating lease right-of-use asset | 68 | 111 |
| Intangible assets, net | 400 | 700 |
| **Total Assets**  | 43080 | 54294 |
| **Liabilities, Convertible Preferred Stock, and Stockholders' Deficit** |  |  |
| **Current Liabilities** |  |  |
| Accounts payable ($813 and $966 to related parties, respectively) | 4860 | 1959 |
| Current operating lease obligations | 47 | 43 |
| Accrued liabilities | 2740 | 2281 |
| **Total Current Liabilities**  | 7647 | 4283 |
| **Long-Term Liabilities** |  |  |
| Preferred stock warrant liability | 970 | 851 |
| Long-term debt | 14658 | 14351 |
| Long-term operating lease obligations | 25 | 71 |
| **Total Long-Term Liabilities**  | 15653 | 15273 |
| **Total Liabilities**  | 23300 | 19556 |
| **Commitments and contingencies (note 13)** |  |  |
| **Convertible Preferred Stock** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Series Seed, $0.001 par value, 16,840,000 shares authorized, and 15,851,401 issued and outstanding as of December 31, 2024 and 2023, respectively | 1337 | 1337 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series A, $0.001 par value, 22,399,370 shares authorized, issued, and outstanding as of December 31, 2024 and 2023 | 5600 | 5600 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series B, $0.001 par value, 6,913,964 shares authorized, and 5,913,964 issued and outstanding as of December 31, 2024 and 2023, respectively | 2200 | 2200 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series C, $0.001 par value, 50,116,284 shares authorized, issued, and outstanding as of December 31, 2024 and 2023, respectively | 21550 | 21550 |
| &nbsp;&nbsp;&nbsp;&nbsp;Series D, $0.001 par value, 83,403,626 shares authorized, and 80,909,169 shares issued, and outstanding as of December 31, 2024 and 2023, respectively | 43788 | 43788 |
| **Total Convertible Preferred Stock**  | 74475 | 74475 |
| **Stockholders' Deficit** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Common stock, $0.001 par value, 212,366,763 shares authorized, and 1,600,475 issued and outstanding as of December 31, 2024 and 204,958,600 shares authorized and 1,094,314 issued and outstanding as of December 31, 2023 | 1 | 1 |

---

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Balance Sheets**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| Additional paid-in capital | 2148 | 1328 |
| Accumulated deficit | (57041) | (41422) |
| Accumulated other comprehensive income | 197 | 356 |
| **Total Stockholders' Deficit**  | (54695) | (39737) |
| **Total Liabilities, Convertible Preferred Stock, and Stockholders' Deficit**  | $43080 | $54294 |

---

*See accompanying notes to financial statements.*

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Statements of Operations and Comprehensive Loss**

(in thousands, except share and per share amounts)

---

| | | |
|:---|:---|:---|
| *Year Ended December 31,* | **2024** | **2023** |
| **Net Revenue**  | $31623 | $19274 |
| **Cost of Goods Sold**  | 7282 | 4004 |
| **Gross Profit**  | 24341 | 15270 |
| **Selling, General, and Administrative Expenses**  | 34505 | 23113 |
| (Includes $3,325 and $3,161 to related parties, respectively) |  |  |
| **Research and Development**  | 4489 | 3021 |
| (Includes $3,574 and $3,112 to related parties, respectively) |  |  |
| **Operating Loss**  | (14653) | (10864) |
| **Other Expense** |  |  |
| &nbsp;&nbsp;Interest expense, net | 1316 | 761 |
| &nbsp;&nbsp;Loss on extinguishment of convertible promissory notes |  | 1127 |
| &nbsp;&nbsp;Other (income) expense, net | (350) | (97) |
| **Total Other Expense**  | 966 | 1791 |
| **Loss before income tax expense**  | (15619) | (12655) |
| **Income Tax Expense** |  |  |
| **Net Loss**  | $(15619) | $(12655) |
| **Other Comprehensive (loss) income, net** |  |  |
| &nbsp;&nbsp;Unrealized (loss) gain on marketable securities | (159) | 356 |
| **Total Other Comprehensive (loss) Income, net**  | (159) | 356 |
| **Comprehensive loss**  | $(15778) | $(12299) |
| **Net loss per share attributed to common stock – basic and diluted:** |  |  |
| Net loss per share | $(12.69) | $(11.56) |
| **Weighted average shares outstanding:** |  |  |
| Weighted average common shares outstanding – basic and diluted | 1231226 | 1094314 |

---

*See accompanying notes to financial statements.*

------

<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Statements of Changes in Convertible Preferred Stock and Stockholders' Deficit**

(in thousands, except shares and per share amounts)

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Preferred Stock** | **Common Stock** | **Additional Paid-in Capital** | **Accumulated Other Comprehensive Income** | **Accumulated Deficit** | **Total Stockholders' Deficit** |
| **Balance, December 31, 2022**  | $30687 | $1 | $877 | $— | $(28767) | $(27889) |
| Issuance of preferred stock in private placement | 34877 |  |  |  |  |  |
| Conversion of convertible notes payable into preferred stock | 8911 |  |  |  |  |  |
| Stock compensation expense |  |  | 451 |  |  | 451 |
| Net loss |  |  |  |  | (12655) | (12655) |
| Comprehensive income (loss) |  |  |  | 356 |  | 356 |
| **Balance, December 31, 2023**  | $74475 | $1 | $1328 | $356 | $(41422) | $(39737) |
| Issuance of common stock |  |  | 66 |  |  | 66 |
| Stock compensation expense |  |  | 754 |  |  | 754 |
| Net Loss |  |  |  |  | (15619) | (15619) |
| Comprehensive (loss) income |  |  |  | (159) |  | (159) |
| **Balance, December 31, 2024**  | $74475 | $1 | $2148 | $197 | $(57041) | $(54695) |

---

*See accompanying notes to financial statements.*

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

**Statements of Cash Flows**

(amounts in thousands)

---

| | | |
|:---|:---|:---|
| *Year Ended December 31,* | **2024** | **2023** |
| **Cash Flows from Operating Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net loss | $(15619) | $(12655) |
| &nbsp;&nbsp;&nbsp;&nbsp;**Adjustments to reconcile net loss to net cash used in operating activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 2196 | 1641 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discounts | 307 | 249 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Credit losses, net of recoveries | 146 | 67 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on disposal of long-lived assets | 44 | 129 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock compensation expense | 754 | 451 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Realized gain on marketable securities | (482) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in derivative liability |  | 78 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liabilities | 119 | (80) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of convertible promissory notes |  | 1127 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other | (571) | 614 |
| &nbsp;&nbsp;&nbsp;&nbsp;**Change in Operating Assets and Liabilities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Trade accounts receivable | (575) | (2693) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventory | (4032) | (2413) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses | (12) | (314) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 3124 | (737) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other current liabilities | 458 | 1392 |
| **Net Cash Used in Operating Activities**  | (14143) | (13144) |
| **Cash Flows from Investing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Fixed asset purchases | (4015) | (2748) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of marketable securities | (5281) | (29250) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of marketable securities | 23260 | 3025 |
| **Net Cash Provided (Used) in Investing Activities**  | 13964 | (28973) |
| **Cash Flows from Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of common stock options | 66 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from series D convertible preferred stock |  | 34877 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from borrowings on debt |  | 15000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Debt issuance costs, net |  | (149) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments on debt |  | (5000) |
| **Net Cash Provided in Financing Activities**  | 66 | 44728 |
| **Net Change in Cash for Period**  | (113) | 2611 |
| **Cash and Cash Equivalents, beginning of year**  | 6236 | 3625 |
| **Cash and Cash Equivalents, end of year**  | 6123 | $6236 |
| **Supplemental Cash Flows information** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest | $1785 | $901 |
| **Non-Cash Investing and Financing Activities** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capital expenditures included in accounts payable | $455 | $678 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Conversion of convertible notes payable into preferred stock | $— | $8911 |

---

*See accompanying notes to financial statements.*

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

**1. Summary of Significant Accounting Policies**

***Business Activity***

Shoulder Innovations, Inc. (the Company) is principally involved in developing next generation shoulder replacement implants, utilizing contract manufacturing partners, and distributing them nationwide for surgeries through a network of employed and contracted sales representatives. The Company is headquartered in Grand Rapids, Michigan and markets and sells its products throughout the United States.

***Emerging Growth Company***

The Company is an "emerging growth company," as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the "JOBS Act"), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company's financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

***Use of Estimates***

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

***Concentrations of Credit Risk***

Financial instruments, which potentially subject us to concentrations of credit risk, are primarily marketable securities and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the number of entities comprising our customer base. We perform ongoing credit evaluations of our customers and generally do not require collateral.

There was no customer that accounted for 10% or more of revenue, or accounts receivable for the years ended December 31, 2024 and 2023.

***Cash and Cash Equivalents***

The Company considers all highly liquid funds with an original contractual maturity on the date of purchase of three months or less to be classified and presented as cash equivalents. The Company maintains cash balances in

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

bank checking accounts. From time to time during the year, cash deposited in these accounts may be in excess of the federally insured limit.

***Marketable Securities***

The Company's marketable securities consist predominately of investment-grade, U.S. dollar-denominated fixed and floating-rate debt, which are classified as available-for-sale and are valued in accordance with the fair value measurement guidance. Available-for-sale securities are carried at fair value with unrealized gains and losses reported in the statements of operations and comprehensive loss as other comprehensive income, net of tax. Realized gains and losses, if any, are calculated on the specific identification method and are included in the statements of operations and comprehensive loss.

Available-for-sale debt securities are recorded at fair value. When the fair value of the securities declines below the amortized cost basis, impairment is indicated and it must be determined whether it is other than temporary. Impairment is considered to be other than temporary if the Company: (i) intends to sell the security, (ii) will more likely than not be forced to sell the security before recovering its cost, or (iii) does not expect to recover the security's amortized cost basis. If the decline in fair value is considered other than temporary, the cost basis of the security is adjusted to its fair market value and the realized loss is reported in other (income) expense, net. Subsequent increases or decreases in fair value are reported as a component of stockholders' equity in accumulated other comprehensive income.

***Trade Accounts Receivable***

Trade accounts receivable are stated at the amount management expects to collect from outstanding customer obligations due under normal trade terms. Generally, management provides for probable uncollectible amounts through a charge to the allowance for credit losses on accounts receivable based on its evaluation of the status of individual accounts, past credit history with customers, and the customers' current financial condition. A rollforward of the allowance for credit loss is as follows:

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| **Beginning Balance**  | $50 | $10 |
| Provision | 146 | 52 |
| Write-offs | (33) | (12) |
| **Ending Balance**  | $163 | $50 |

---

***Inventories***

Inventories are stated at the lower of average cost or net realizable value. Inventories consist of finished goods purchased from third-party suppliers. Two suppliers provide substantially all of the Company's finished goods. The Company records inventory reserves for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based upon the age of specific inventory on hand and assumptions about future demand and market conditions. The Company had an inventory reserve of $287 and $119 as of December 31, 2024 and 2023, respectively.

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| **Finished Goods**  | $14242 | $10042 |
| Inventory reserve | (287) | (119) |
| **Inventories, net**  | $13955 | $9923 |

---

***Property and Equipment and Depreciation***

Property and equipment are stated at cost, less accumulated depreciation. Property and equipment are depreciated using straight-line methods over the estimated useful lives of the related assets. Leasehold

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

improvements are amortized over the shorter of the remaining lease term or the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred.

When items of property or equipment are sold or retired, the related costs and accumulated depreciation are removed from the accounts and any gain or loss is included in the results of operations.

Surgical instruments are provided to surgeons and hospitals by the Company and its distributors to facilitate the use of the Company's products. The Company does not receive additional or separate consideration for the use of its surgical instruments by surgeons and hospital staff. No customer or distributor agreements convey the transfer of ownership of the Company's instrument sets.

The Company has the ability to transfer surgical instruments amongst hospitals, ambulatory surgery centers, or distributors at our discretion. The Company recovers the instruments after each surgery for decontamination and sterilization, and may transfer the instruments based on anticipated demand. The Company performs physical counts of the surgical instruments along with a confirmation process to validate the existence of the surgical instruments. Surgical instruments are owned and controlled by the Company and are used to generate long term economic benefits. The Company has concluded that surgical instruments meet the criteria under ASC 360 - Property, Plant and Equipment and that appropriate expense recognition is through depreciation over the useful life of the surgical instruments. Surgical instruments have been assigned a five-year useful life based on the Company's historical experience and future expected frequency of use.

Estimated useful lives for financial reporting purposes are as follows:

---

| | |
|:---|:---|
| **Asset Category** | **Useful Life (Years)** |
| Machinery and equipment | 5 |
| Instruments | 5 |
| Computer equipment | 5 |
| Furniture and Fixtures | 7 |
| Leasehold Improvements | 10 |

---

***Long-Lived Assets***

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Impairment is determined by comparing the carrying value of the assets to their estimated future undiscounted cash flows. If the sum of the estimated future undiscounted cash flows expected to result from the use and eventual disposition of an asset is less than the carrying amount of the asset, an impairment loss is recognized. If it is determined that an impairment has occurred, the asset is written down to its estimated fair value and a charge to income is recognized. The Company has not recorded any impairment losses on long-lived assets during the years ended December 31, 2024 and 2023. As of December 31, 2024 and 2023, all long-lived assets were located in the U.S.

***Intangible Assets***

The Company's intangible assets relate to an acquired software license agreement. Intangible assets are amortized on a straight-line basis over their estimated useful lives. As of May 1, 2021, upon FDA clearance of the licensed materials, the software license agreement was considered to be in service and amortization began being recognized. Amortization expense is included in selling, general, and administrative expenses in the statements of operations and comprehensive loss. The Company did not identify any triggering events and determined there was

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

no impairment to recognize as of December 31, 2024 and 2023. The useful life, gross carrying amount, accumulated amortization, and net carrying value of the intangible asset is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *December 31, 2024* | **Useful Life** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** |
| Software License | 5 | $1500 | $1100 | $400 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| *December 31, 2023* | **Useful Life** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Value** |
| Software License | 5 | $1500 | $800 | $700 |

---

Amortization expense in each of the next three years is expected to be the following:

---

| | |
|:---|:---|
| *Year ending December 31* |  |
| 2025 | $300 |
| 2026 | 100 |
| **Total**  | $400 |

---

***Advertising Costs***

The Company has elected to expense advertising costs as incurred. Total advertising costs were $865 and $594, for the years ended December 31, 2024 and 2023, respectively.

***Research and Development Costs***

Research and development costs are expensed in the period in which they are incurred and totaled $4,489 and $3,021 for the years ended December 31, 2024 and 2023, respectively. Research and development expenses may include costs incurred in performing research and development activities, including clinical trial costs, manufacturing costs for both clinical and pre-clinical materials as well as other contracted services, and other external costs. Non-refundable advance payments for goods and services that will be used in future research and development activities are expensed when the activity is performed or when the goods have been received, rather than when payment is made, in accordance with ASC 730, *Research and Development*.

***Presentation of Sales Taxes***

Various states impose a sales or similar tax on certain of the Company's sales to non-exempt customers. The Company collects that tax from customers and remits the entire amount to the state. The Company's accounting policy is to exclude the tax collected and remitted to the state from sales revenue and cost of goods sold.

***Income Taxes***

Provision for income taxes is based on amounts reported in the statements of operations and comprehensive loss and include deferred taxes on temporary differences for tax and financial statement purposes. Temporary differences arise from differences between methods used for tax purposes and book purposes. Deferred taxes are computed using the liability method as prescribed by ASC 740, *Income Taxes*. The Company recorded a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.

The Company follows the provisions of ASC 740-10-25, *Accounting for Uncertainty in Income Taxes*, which seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. Under ASC 740-10-25, an organization must recognize the tax benefit associated with tax positions taken for tax return purposes when it is more likely than not that the position will be sustained. The Company recognizes any corresponding interest and penalties associated with its income tax positions in income tax expense. The Company records liabilities in which it believes the position is not more likely than not sustainable.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

There are no uncertain tax positions to recognize as of December 31, 2024 and 2023. The net operating losses for prior years are subject to adjustment under examination to the extent they remain unutilized in an open year.

***Convertible Preferred Stock Warrants***

The Company accounts for its freestanding warrants on its convertible preferred stock as liabilities, as the instruments underlying the warrants are classified outside of permanent equity. The underlying shares of convertible preferred stock are classified as mezzanine equity due to contingent redemption provisions outside of the Company's control. Such warrants are measured and recognized at fair value and subject to re-measurement at each balance sheet date. At the end of each reporting period, changes in fair value during the period are recognized as a component of other expense in the accompanying statements of operations and comprehensive loss until the warrants are exercised or expire.

***Revenue Recognition***

Revenue is recognized as the performance obligation to deliver products is satisfied and are recorded based on the amount of consideration the Company expects to receive in exchange for satisfying the performance obligations. Our sales are recognized primarily when the Company transfers control to the customer, which is generally when the Company has received a purchase order and appropriate notification that the product has been used or implanted. Products are primarily transferred to customers at a point in time.

Revenue represents the amount of consideration the Company expects to receive from customers in exchange for transferring products. Net revenue exclude sales taxes the Company collects from customers. Other costs to obtain and fulfill contracts are generally expensed as incurred due to the short-term nature of most of our sales. The Company extends terms of payment to our customers based on commercially reasonable terms for the markets of our customers, while also considering their credit quality. Shipping and handling costs charged to customers are included in net sales. Total shipping and handling costs for the years ended December 31, 2024 and 2023 were $456 and $275, respectively.

The Company's payment terms with customers are customary and vary by customer but typically range from 30 to 60 days. The Company has evaluated the terms of its arrangements and determined that they do not contain significant financing components.

The Company does not provide any warranty on their products other than for implied use. The Company has not experienced any warranty claims and does not carry a reserve.

***Employee Benefit Plan***

The Company maintains a defined-contribution plan, which covers all employees, and was established during 2021. All employees are eligible as of the first of the month following their hire date. The Company's policy is to provide a discretionary match, which for the year ended December 31, 2024 was 100% of the first 3% contributed, and a 50% match of the next 2% contributed, which results in an overall 4% Company contribution that is vested immediately. The amount of expense recognized for the years ended December 31, 2024, and 2023 was $273 and $166, respectively.

***New Accounting Pronouncements***

In June 2016, the FASB issued ASU 2016-13: *Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.* ASU 2016-13 was issued to provide financial statement users with more useful information regarding the expected credit losses on financial instruments held as assets. Under current GAAP, financial statement recognition for credit losses on financial instruments is generally delayed until the occurrence of the loss was probable. The amendments of ASU 2016-13 eliminate the probable initial recognition threshold and instead reflect an entity's current estimate of all expected credit losses. The amendments also broaden the information that an entity must consider in developing its expected credit loss estimates for those assets measured at amortized cost by using forecasted information instead of the current methodology which only considered past

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

events and current conditions. Under ASU 2016-13, credit losses on certain types of financial instruments will be measured in a manner similar to current GAAP; however, the amendments require that credit losses be presented as an allowance against the financial instrument, rather than as a write-down. The amendments also allow the entity to record reversals of credit losses in current period net income, which is prohibited under current GAAP. The Company adopted the new standard on January 1, 2023. There was not a significant impact to the financial statements as a result of this pronouncement.

In August 2020, the FASB issued ASU 2020-06, *Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40)*, which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. ASU 2020-06 is effective for private companies for fiscal years beginning after December 15, 2023, and interim periods within those fiscal years, with early adoption permitted in years beginning after December 15, 2020. ASU 2020-06 permits adoption on a retrospective basis to financial instruments outstanding as of the beginning of the first comparative reporting period presented. The Company adopted the new standard on January 1, 2024. There was not a significant impact to the financial statements as a result of this pronouncement.

In November 2023, the FASB issued ASU 2023-07—Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures was designed to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted the new standard on January 1, 2024. The impact to the Company's financial statements is disclosed in Note 12.

In December 2023, the FASB issued ASU 2023-09*, Income Taxes (Topic 740) ("ASC 740")*. The update requires all public business entities on an annual basis to (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold and an explanation, if not otherwise evident, of the individual reconciling items disclosed, such as the nature, effect, and underlying causes of the reconciling items and the judgment used in categorizing the reconciling items. In addition, the update requires certain new disclosures of the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes and the amount of income taxes paid (net of refunds received) disaggregated by individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid (net of refunds received). Other new disclosures required include income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign and income tax expense (or benefit) from continuing operations disaggregated by federal, state, and foreign. The new guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted. The amendments are to be applied on a prospective basis, with retrospective application permitted. The Company is currently evaluating the impact of the new standard on its financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses requires additional, disaggregated disclosure around certain income statement expense line items. This ASU mandates that entities, at each interim and annual period, disclose the amounts of (a) inventory purchases, (b) employee compensation, (c) depreciation, (d) intangible asset amortization, and (e) depletion, depreciation, and amortization for oil and gas activities included within each relevant expense caption presented on the income statement within continuing operations. Entities are also required to (1) combine certain disclosures already mandated under GAAP with these new requirements, (2) provide qualitative descriptions of expenses that are not disaggregated quantitatively, and (3) disclose total selling expenses and, annually, the definition of selling expenses. The guidance is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on the Company's financial statements and related disclosures.

***Change in Accounting Policies and Reclassifications***

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

The Company has made certain reclassifications to the previously issued financial statement to conform to current period presentation, including reclassification of depreciation expense on surgical instruments on the statement of operations and comprehensive loss, resulting in a decrease of $1,311 of cost of goods sold, and an increase in gross margin along with selling, general, and administrative expense by the same amount for the year ended December 31, 2023. Operating and Net loss for the year ended December 31, 2023 were not impacted by the change in presentation.

**2. Fair Value Measurements**

The Company utilizes fair value measurement guidance prescribed by accounting standards to value its financial instruments. The guidance establishes a fair value hierarchy for financial instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's own assumptions (unobservable inputs). Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company's assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances.

Fair value is defined as the exchange price, or exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, in accordance with ASC 820, *Fair Value Measurement*, of which the first two are considered observable and the last is considered unobservable. These levels are as follows:

*Level 1* – Inputs at this level include unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

*Level 2* – Inputs at this level include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability.

*Level 3* – Inputs at this level include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques, as well as significant management judgment or estimation.

To the extent the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgement. Accordingly, the degree of judgement exercised by the Company in determining fair value is greatest for instruments categorized in Level 3. A financial instrument's level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

The recorded amounts of certain financial instruments, including cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their relatively short maturities.

The fair value of marketable securities as of December 31, 2024 and 2023 are summarized below:

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| | **Level 1** | **Level 2** | **Level 3** |
| **Assets:**  | | | |
| Cash Equivalents |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $85 | $— | $— |
| **Short-term marketable securities at fair value**  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury and government agencies | 6053 |  |  |

---

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and international bonds |  | 2868 |  |
| **Total assets**  | $6138 | $2868 | $— |
| **Liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock warrant liability |  |  | $970 |

---

---

| | | | |
|:---|:---|:---|:---|
| | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
| | **Level 1** | **Level 2** | **Level 3** |
| **Assets:**  | | | |
| Cash Equivalents |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Money market funds | $151 | $— | $— |
| **Short-term marketable securities at fair value**  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;U.S. treasury and government agencies | 18933 |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Corporate and international bonds |  | 7493 |  |
| **Total assets**  | $19084 | $7493 | $— |
| **Liabilities:** |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Preferred stock warrant liability |  |  | $851 |

---

***Warrants***

Liabilities related to stock warrants are remeasured at fair value on a recurring basis using the Black-Scholes option pricing model. The following table presents the change in fair value of the stock warrants which are classified in Level 3 of the fair value hierarchy for the years ended December 31, 2024 and 2023:

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| **Balance, January 1**  | $851 | $484 |
| Fair value of warrants issued |  | 447 |
| Change in fair value | 119 | (80) |
| **Balance, December 31**  | $970 | $851 |

---

The stock warrants were valued under the option pricing model, which considers the estimated volatility of the Company's common stock at the date of measurement based on selected metrics of applicable volatility calculations from guideline public companies. The remeasurement of the convertible preferred stock warrant liability resulted in $119 and $80 recognized as other (income) expense, net for the years ended December 31, 2024 and 2023, respectively.

The fair value of the warrants were estimated as of December 31, 2024 and 2023 using an option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
| *December 31,* |  |  |
| &nbsp;&nbsp;**Description** | **2024** | **2023** |
| **Weighted average volatility**  | 55.0% | 50.0% |
| **Weighted average risk-free rate**  | 4.26% | 4.94% |
| **Expected dividend yield**  | 0.00% | 0.00% |

---

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

***Derivative Liability***

The derivative liability associated with the Convertible Promissory Notes is remeasured at fair value on a recurring basis using a scenario-based analysis by performing a probability-weighted present value assessment of the Convertible Promissory Notes payoff under possible outcomes available to noteholders and certain bifurcated features within the Convertible Promissory Notes. The derivative liability was extinguished in 2023 as a result of the conversion of the convertible promissory notes. The following table presents the change in fair value of the derivative liability which is classified in Level 3 of the fair value hierarchy:

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| **Balance, January 1**  | $**—** | $1890 |
| Fair value at issuance | **—** | **—** |
| Change in fair value |  | 78 |
| Fair value at extinguishment of derivative |  | (1968) |
| **Balance, December 31**  | $— | $— |

---

**3. Accrued Liabilities and Other Current Liabilities**

Accrued liabilities and other current liabilities consist of the following:

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| Commissions payable | $836 | $619 |
| Accrued payroll | 738 | 977 |
| Accrued royalties | 612 | 457 |
| Other | 554 | 229 |
| **Accrued liabilities and other liabilities**  | $2740 | $2282 |

---

**4. Property and Equipment, Net**

Net property and equipment consist of the following:

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| Instruments | $11223 | $8011 |
| Machinery and equipment | 94 | 57 |
| Computer equipment | 190 | 47 |
| Furniture and fixtures | 70 | 54 |
| Leasehold improvements | 150 | 146 |
| Total property and equipment | 11727 | 8315 |
| Less: Accumulated depreciation | (4240) | (2680) |
| **Property and Equipment, Net**  | $7487 | $5635 |

---

Depreciation expense for the years ended December 31, 2024 and 2023 totaled $1,896 and $1,341, respectively. Depreciation expense of $1,842 and $1,311 for instruments is included in selling, general, and administrative expense in the statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023 respectively. Depreciation expense of $37 and $30 for computer equipment, furniture and fixtures, and leasehold improvements are included in selling, general, and administrative expenses in the statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023, respectively.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

**5. Debt**

On August 7, 2023, the Company entered into a loan and security agreement (the "Trinity Loan Agreement") with Trinity Capital Inc. as lender, administrative agent, and collateral agent.

The Trinity Loan Agreement provides a term loan commitment of $45,000 in three potential tranches: (i) a $15,000 term loan facility funded on August 7, 2023, (ii) a $15,000 term loan facility available at the Company's request on or before December 31, 2024, if the Company achieves certain revenue milestones, and (iii) a $15,000 term loan facility available at the Company's request on or before December 31, 2025, if the Company achieves certain additional revenue milestones. All three of these term loans have a maturity date of September 1, 2028. Borrowings under all three term loan facilities bear interest at a variable annual rate equal to the greater of (i) 11.50% and (ii) the Prime Rate plus 3.50%. The second tranche expired on December 31, 2024, prior to Company drawing on the tranche.

In connection with the closing of the Trinity Loan Agreement, the Company issued a warrant to the Lender to purchase shares of the Company's Series D convertible preferred stock ("Trinity Warrant"). The Trinity Warrant has an exercise price of $0.5412 per share and expires ten years from the issue date of the Trinity Loan Agreement; refer to Note 9. Upon the advance of the tranche A loan, 831,486 shares vested, and an additional 831,486 shares will vest upon the funding of the second and third term tranche loans.

The Trinity Loan Agreement provides that the Company can at any time prepay the term loans, in whole or in part, subject to a prepayment premium equal to: (a) 2.50% of the then-outstanding principal amount of the term loans, if such prepayment occurs on or prior to the first anniversary of the Trinity Loan Agreement; (b) 1.50% of the then-outstanding principal amount of the advance, if such prepayment occurs after the first anniversary of the Trinity Loan Agreement and on or prior to the second anniversary of the Trinity Loan Agreement; and (c) 1.00% of the then-outstanding principal amount of the advance, if such prepayment occurs after the second anniversary of the Trinity Loan Agreement and prior to the Maturity Date. We are required to make an end of term payment equal to 3.00% of the aggregate principal amount of the term loans funded on the earlier of (i) the Maturity Date, (ii) the date that the Company prepays all of the outstanding principal in full or (iii) the date of acceleration of the balance of the outstanding term loans by the Agent. The term loans are secured by substantially all our assets, including intellectual property.

Proceeds related to the Trinity Loan Agreement were $14,850, net of issuance costs of $250 and return of deposit of $100. As of December 31, 2023, the Company recorded long-term debt related to the Trinity Loan Agreement of $14,351, which includes a principal amount of $15,000 and unamortized discount and debt issuance costs of $649, based on an imputed interest rate of 13%. As of December 31, 2024, the Company recorded long-term debt related to the Trinity Loan Agreement of $14,658, which included principal amount of $15,000 and unamortized debt discount, issuance cost and deferred interest of $623, based on an imputed interest rate of 14%.

**6. Leases**

**Month-to-Month Lease**

The Company leases a facility in Michigan from a related party. The lease is on a month-to-month basis. Total rent expense under this agreement for the years ended December 31, 2024 and 2023, was $33 and $33, respectively. There are no future minimum lease payments associated with the operating lease. The Company has elected to apply the short-term lease exception guidance and therefore has not recorded a right-of-use asset or liability related to this lease.

***Lease Obligations***

The Company leases office space in Michigan under a five-year lease agreement, which commenced in July 2021. The Company has determined this lease agreement qualifies as an operating lease arrangement. The Company's remaining operating lease term is approximately 1.5 years at December 31, 2024.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

As the lease contract does not provide an implicit discount rate, the Company used 5.25% representing its incremental borrowing rate based on information available at the commencement date, to determine the present value of lease payments. The incremental borrowing rate is based on a borrowing with a term similar to that of the associated lease. The Company does not include renewal, termination, or purchase options that are not reasonably certain of exercise when determining the term of the borrowing.

At December 31, 2024, the right-of-use asset and lease liability relating to the operating lease were $68 and $72, respectively. The lease expense for the year ended December 31, 2024 was $65.

At December 31, 2024, the commitment for operation lease liabilities for future annual periods was as follows:

---

| | |
|:---|:---|
| *Year Ending December 31* |  |
| 2025 | $47 |
| 2026 | 24 |
| Total Lease Payments | 71 |
| Less imputed interest | (6) |
| **Present Value of Lease Liabilities**  | $65 |

---

**7. Income Taxes**

***Provision Expense for Income Taxes***

The Company had no current or deferred tax expense recorded as of December 31, 2024 and 2023.

Income tax expense differs from the statutory rate due primarily to the impact of the valuation allowance against the Company's deferred tax assets.

***Deferred Income Tax Assets and Liabilities***

The components of deferred income tax assets and liabilities are as follows:

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| **Deferred Tax Assets** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net operating loss carryforwards | $9512 | $6960 |
| &nbsp;&nbsp;&nbsp;&nbsp;Tax credits and other carryforwards | 464 | 466 |
| &nbsp;&nbsp;&nbsp;&nbsp;Section 174 expenditures | 1993 | 1454 |
| &nbsp;&nbsp;&nbsp;&nbsp;Accrued liabilities and other items | 332 | 219 |
| **Deferred Tax Assets**  | 12301 | 9099 |
| **Deferred Tax Liability**  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | (1338) | (1213) |
| **Deferred Tax Liability**  | (1338) | (1213) |
| **Deferred Tax Assets, Net**  | 10963 | 7886 |
| Valuation Allowance | (10963) | (7886) |
| **Net Deferred Tax Asset**  | $— | $— |

---

A reconciliation of the Company's provision for income taxes at the federal statutory rate of 21% to the reported income tax provision for the years ended December 31, 2024 and 2023 is as follows:

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| Computed "expected" tax benefit | $(3267) | $(2658) |
| Permanent differences | 33 | 24 |

---

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| General Business tax credits |  | 145 |
| Other | 157 | 677 |
| Change in valuation allowance | 3077 | 1812 |
| **Income Tax expense (benefit)**  | $— | $— |

---

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. The Company has determined for the years ended December 31, 2024 and 2023, based on all available evidence analyzed on a more likely than not basis, a valuation allowance should be established on all of the net deferred tax asset in its U.S. jurisdiction since there is not enough positive evidence to support the more likely than not position for the future realization in the U.S. jurisdiction.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the Tax Act). The Tax Act allows for the indefinite carryforward of net operating losses (NOLs) arising in a taxable year ending after December 31, 2017, which would be considered an indefinite lived asset. The amendments limit the future usage of such NOLs to 80% of taxable income in a single year and disallow the carryback of NOLs to prior years with taxable income.

As of December 31, 2024 and 2023, the Company has federal net operating loss carryforwards of $45,295 and $33,144, respectively. The Company has federal tax credit carryforwards of $464 and $464 for the years ended December 31, 2024 and 2023, respectively. The NOLs and tax credit carryforwards recorded are subject to limitations under Section 382 and 383. However, the Section 382 limitation did not limit the usage of the net operating loss carryforwards in 2024 or 2023 for federal tax purposes. In addition, the Company's ability to utilize the current NOL carryforwards might be further limited by future equity issuances. The federal net operating loss carryforwards originated after 2016 and have an indefinite life which may be used to offset 80% of a future year's taxable income. The Company has various state net operating loss carryforwards with carryforward periods ranging from 15 -20 years and will begin to expire in 2034.

The Company operates in various states within the United States and files income tax returns in these various jurisdictions and has generated various net operating loss carryforwards in these jurisdictions to date. The Company does not believe a material uncertain tax position exists as of December 31, 2024 and 2023. Based on the Company's assessment of many factors, including past experience and complex judgements about future events, the Company does not currently anticipate significant changes in its uncertain tax positions over the next 12 months. In connection with the adoption of the referenced provision, the Company recognizes interest and penalties accrued related to unrecognized tax benefits in income tax expense. As of December 31, 2023 and 2024, the Company had no accrued interest and penalties.

The Company's federal and state tax returns are open for review going back to the 2019 tax year.

**8. Related Party Transactions**

On October 22, 2020, the Company entered into a software license agreement with Genesis Software which was amended and restated on January 1, 2023. Robert Ball, the Company's Chief Executive Officer and Executive Chairman, is a co-founder and director of Genesis Software. Mr. Ball and Matthew Ahearn, the Company's Chief Operating Officer and a director, are directors of Genesis Investment Holdings, LLC, which has an ownership interest in Genesis Software. In addition, cultivate(MD) Capital Accelerator Fund L.P. and Genesis Investment Holdings, LLC, each beneficial owners of more than 5% of our capital stock, are investors in Genesis Software. The software licensing agreement is a 5 year term. The agreement required an upfront payment of $1,000, an incremental $500 payment when FDA clearance was obtained, and quarterly payments of royalties equal to 4% of the net sales

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

price of each licensed product sold. For each of the years ended December 31, 2024 and 2023, the Company paid Genesis Software $1,169 and $634, respectively, pursuant to the license agreement.

The Company has entered into a consulting agreement with an entity under common ownership. The consulting agreement is currently on a year-to-year basis. The agreement requires compensation for services performed. If services performed are on an hourly basis, the Company shall be responsible to pay for hours actually worked by the consultant's employees. The Company will reimburse the consultant for all reasonable expenses incurred in connection with performing services for the Company. For the years ended December 31, 2024 and 2023, the Company paid $3,589 and $2,761, respectively. Amounts payable of $537 and $552 are included in accounts payable on the balance sheets at December 31, 2024, and 2023, respectively.

In 2024 and 2023, the Company paid $1,925 and $2,585, respectively for software development, to parties related through common ownership and board member ownership. Amounts payable of $276 and $134 are included in accounts payable on the balance sheets at December 31, 2024 and 2023.

On June 3, 2024, the Company entered into a new supply agreement (the "RMD Supply Agreement") with RMD, pursuant to which RMD manufactures substantially all the surgical instruments used during procedures involving the Company's implant systems. During such periods, Robert Ball, the Company's Chief Executive Officer and Executive Chairman, was an investor in RMD. Mr. Ball is no longer an investor in RMD. For each of the years ended December 31, 2024 and 2023, the Company paid RMD $859 and $2,262, respectively, pursuant to the RMD Supply Agreement.

**9. Convertible Preferred Stock**

On February 10, 2023, the Company held the initial closing of the sale and issuance of shares of its newly authorized Series D Preferred Stock, par value $0.001 per share, at which the Company sold and issued 46,706,316 Series D Preferred shares at a per share price of $0.5412 resulting in aggregate new money proceeds to the Company of $25,277 and, in connection therewith, converted its outstanding convertible promissory notes into 16,464,493 shares of Series D Preferred Stock at a conversion price of $8,911. The conversion resulted in a loss of $1,127, which is recorded in other expense. On March 3, 2023, the Company held a subsequent closing of the sale and issuance of shares of its Series D Preferred Stock, at which the Company sold and issued 17,738,360 Series D Preferred shares at a per share price of $0.5412, resulting in additional aggregate new money proceeds to the Company of $9,600.

A summary of preferred stock is as follows:

---

| | | | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **Series Seed Convertible<br>Preferred Stock** | **Series Seed Convertible<br>Preferred Stock** | **Series A Convertible Preferred Stock** | **Series A Convertible Preferred Stock** | **Series B Convertible Preferred Stock** | **Series B Convertible Preferred Stock** | **Series C Convertible Preferred Stock** | **Series C Convertible Preferred Stock** | **Series D Convertible Preferred Stock** | **Series D Convertible Preferred Stock** | **Total** | **Total** |
| | **Number of Shares** | **Amount** | **Number of Shares** | **Amount** | **Number of Shares** | **Amount** | **Number of Shares** | **Amount** | **Number of Shares** | **Amount** | **Number of Shares** | **Amount** |
| Balance at December 31, 2022 | 15851401 | $1337 | 22399370 | $5600 | 5913964 | $2200 | 50116284 | $21550 |  | $— | 94281019 | $30687 |
| Issuance of Series D |  |  |  |  |  |  |  |  | 80909169 | 43788 | 80909169 | 43788 |
| Balance at December 31, 2023 | 15851401 | 1337 | 22399370 | 5600 | 5913964 | 2200 | 50116284 | 21550 | 80909169 | 43788 | 175190188 | 74475 |
| Balance at December 31, 2024 | 15851401 | $1337 | 22399370 | $5600 | 5913964 | $2200 | 50116284 | $21550 | 80909169 | $43788 | 175190188 | $74475 |

---

***Issued and Outstanding Preferred Shares***

Authorized, issued, and outstanding Preferred Stock were as follows:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *December 31, 2024* |  |  |  |  |  |
| **Series** | **Par Value** | **Authorized** | **Issued and Outstanding** | **Issuance Price Per Share** | **Liquidation Value** |
| Seed | $0.001 | 16840400 | 15851401 | $0.0843 | $1337 |
| A | 0.001 | 22399370 | 22399370 | 0.2500 | 5600 |
| B | 0.001 | 6913964 | 5913964 | 0.3720 | 2200 |

---

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *December 31, 2024* |  |  |  |  |  |
| **Series** | **Par Value** | **Authorized** | **Issued and Outstanding** | **Issuance Price Per Share** | **Liquidation Value** |
| C | 0.001 | 50116284 | 50116284 | 0.4300 | 21550 |
| D | 0.001 | 83403626 | 80909169 | 0.5412 | 43788 |
| **Total**  |  | 179673644 | 175190188 |  | $74475 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *December 31, 2023* |  |  |  |  |  |
| **Series** | **Par Value** | **Authorized** | **Issued and Outstanding** | **Issuance Price Per Share** | **Liquidation Value** |
| Seed | $0.001 | 16840400 | 15851401 | $0.0843 | $1337 |
| A | 0.001 | 22399370 | 22399370 | 0.2500 | 5600 |
| B | 0.001 | 6913964 | 5913964 | 0.3720 | 2200 |
| C | 0.001 | 50116284 | 50116284 | 0.4300 | 21550 |
| D | 0.001 | 83403626 | 80909169 | 0.5412 | 43788 |
| **Total**  |  | 179673644 | 175190188 |  | $74475 |

---

***Preferred Stock Provisions***

*Conversion of Convertible Preferred Stock to Equity*

Preferred Stock contains a provision at the option of the holder, at any time and from time to time, and without the payment of additional consideration by the holder thereof, to be converted into Common Stock. The number of shares of Common Stock to which a holder of Preferred Stock shall be entitled upon conversion shall be the product obtained by multiplying the applicable conversion prices then in effect by the number of shares of Preferred Stock being converted. The conversion price of Preferred Stock shall be subject to adjustment in the event of any stock split, stock dividend, combination, subdivision, recapitalization, or the like. All Preferred Stock shall be automatically converted into Common Stock at their then respective conversion prices: (i) in the event of an underwritten public offering of shares of the Common Stock at an aggregate offering price (prior to underwriting discounts, commissions, and expenses) of at least $50,000 or (ii) the date upon which the Company obtains the vote or consent of the Preferred Majority and the vote or consent of the holders of at least 65% of the Series D Preferred Stock. Convertible preferred stock is presented as temporary equity in the mezzanine section of the balance sheets, as conversion of the preferred stock is not within the control of the Company. The purpose of this classification is to convey that such a security may not be permanently a part of equity and could result in a demand for cash, securities, or other assets of the entity in the future. All series of preferred stock conversion price equals their original issuance price per share at December 31, 2024 and 2023.

*Dividends*

The Company's Preferred Stock Series Seed, A, B, C and D pay non-cumulative dividends, at the rate of 8% per annum, whenever funds are legally available and when, as and if declared by the Company's Board of Directors (Board) prior and in preference to dividends on any other equity of the Company. Dividends, when, as, and if declared, will first be paid in full to the holders of Series D Preferred Stock, then Series C Preferred Stock, then Series B Preferred Stock, then Series A Preferred Stock, then Series Seed Preferred Stock, then to holders of Common Stock. In the event that any dividends are declared to the then-outstanding shares of Common Stock (other than dividends payable in Common Stock for which adjustment to the conversion price of the Preferred Stock is made) an additional dividend shall be declared with respect to the then-outstanding shares of Preferred Stock, in an amount equal to the amount of dividends per share that would have been payable on the number of shares of the Common Stock that the Preferred Stock would have been converted into on an as-converted basis. No dividends were declared by the Board of Directors in 2024 or 2023.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

*Voting Rights*

The holders of Preferred Stock shall be entitled to the number of votes equal to the whole number of shares of the Common Stock into which such shares of the Preferred Stock are then convertible to. Additionally, separate vote of all series of preferred stock requires, in addition to any other vote or consent, the vote or consent of at least a majority of each series of preferred stock then-outstanding votes for certain significant actions. Further, as long as at least 20% of the authorized shares of the Series C Preferred Stock or Series D Preferred Stock remain outstanding, certain significant actions require the vote or consent of at least 60% of the then-outstanding Series C Preferred Stock or Series D Preferred Stock, respectively.

*Liquidation Rights*

In the event of a deemed liquidation event of the Company, voluntary or involuntary liquidation, dissolution or winding up of the Company, all holders of Preferred Stock are entitled to full payment under their liquidation preferences out of the assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Common Stock. After payment in full to the Series D liquidation preference, the remaining proceeds shall be pursuantly distributed to the holders of existing Series C, followed by Series B, Series A, and Series Seed Preferred Stock and common stock, in an amount equal to their original issue price plus any declared and unpaid dividends.

All remaining legally available assets of the Company that are not payable to the holders of shares of Preferred Stock shall be distributed among the holders of shares of common stock, pro rata based on the number of shares held by each such holder.

*Anti-Dilution and Downround Protections*

The conversion price is subject to adjustment for certain dilutive events, including certain types of (i) stock splits and combinations, (ii) common stock dividends and distributions, (iii) reclassification, exchange, and substitutions, (iv) reorganizations, mergers, or consolidations, or (v) sale of shares below conversion price.

***Stock Warrants***

In 2020, in connection with its issuance of Series B Preferred Stock, the Company issued 1,000,000 of Series B Stock Warrants. The Series B Preferred Stock issuable upon exercise of the Series B Stock Warrants is convertible into shares of common stock in the same manner as each respective underlying series of outstanding Series B Preferred Stock and will be entitled to the same dividend rights as each respective series.

In August 2023, in connection with the closing of the Trinity Loan Agreement, the Company issued a warrant to the Lender to purchase 2,494,457 shares of the Company's Series D convertible preferred stock ("Trinity Warrant"). The Trinity Warrant has an exercise price of $0.5412 per share, and expires ten years from the issue date of the Trinity Loan Agreement. Upon the advance of the tranche A loan, 831,486 shares vested, and an additional 831,486 shares will vest upon the funding of the second and third term tranche loans.

The following tables summarize the Company's outstanding warrants:

---

| | | | | |
|:---|:---|:---|:---|:---|
| *December 31, 2024* |  |  |  |  |
| **Description** | **Outstanding** | **Exercise Price per share** | **Expiration Date** | **Fair Value** |
| Common | 340140 | $0.11000 | April 1, 2031 | $41 |
| Series Seed | 988999 | 0.08434 | April 24, 2025 | 205 |
| Series B | 1000000 | 0.37200 | January 28, 2030 | 207 |
| Series D | 2494457 | 0.54120 | August 7, 2033 | 517 |
| **Total**  | 4823596 |  |  | $970 |

---

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

---

| | | | | |
|:---|:---|:---|:---|:---|
| *December 31, 2023* |  |  |  |  |
| **Description** | **Outstanding** | **Exercise Price per share** | **Expiration Date** | **Fair Value** |
| Common | 340140 | $0.11000 | April 1, 2031 | $48 |
| Series Seed | 988999 | 0.08434 | April 24, 2025 | 177 |
| Series B | 1000000 | 0.37200 | January 28, 2030 | 179 |
| Series D | 2494457 | 0.54120 | August 7, 2033 | 447 |
| **Total**  | 4823596 |  |  | $851 |

---

**10. Stock Compensation**

***Common Stock***

The Company increased the authorized capital from 114,000,000 to 204,958,600 shares of common stock in 2023, and from 204,958,600 to 212,366,763 shares of common stock in 2024.

***Stock Options***

In 2017, the Company adopted a stock compensation plan (the "Plan") pursuant to which the Company's Board of Directors may grant stock options or nonvested shares to its full-time employees, directors, and advisors to purchase common stock of the Company. The Plan was amended in 2023 to authorize 24,446,852 shares issuable. The Plan was subsequently amended in 2024 to authorize grants to purchase up to 31,855,015 shares. Stock options can be granted with an exercise price equal to or greater than the stock's fair value at the date of grant. All awards have 10-year terms and vest based on terms defined in each individual grant agreement, and the expense is recognized on a straight-line basis over the vesting period, which is generally the service period.

Because the Company's shares are not publicly traded and its shares are rarely traded privately, expected volatility is estimated based on the average historical volatility of similar entities with publicly traded shares. The risk-free rate for the expected term of the option is based on the U.S. Treasury yield curve at the date of grant.

The Company uses a simplified method to determine the expected term for the valuation of employee options. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to options with service conditions.

The Company utilizes a third-party valuation firm to assist in the estimation of the fair value of the underlying shares of the Company utilizing option pricing models (OPM). Under the OPM, shares are valued by creating a series of call options with exercise prices based on the liquidation preferences and conversion terms of each equity class. The estimated fair values of the convertible preferred stock and common stock are inferred by analyzing these options. This method is appropriate to use when the range of possible future outcomes is so difficult to predict that estimates would be highly speculative, and dissolution or liquidation is not imminent. The Company accounts for forfeitures as they occur. Shares of the Company's common stock granted under the stock option plan in the form of stock options are counted against the share reserve on a one for one basis.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

The following tables summarize the Company's outstanding stock options:

---

| | | | |
|:---|:---|:---|:---|
| | **Options** | **Weighted Average Exercise Price** | **Weighted Average Remaining Contractual Life (in years)** |
| Outstanding as of December 31, 2022 | 10193002 | $0.10 | 7.54 |
| Granted | 12800562 | $0.13 |  |
| Exercised |  |  |  |
| Forfeited |  |  |  |
| **Options Outstanding December 31, 2023**  | 22993564 | $0.11 | 8.03 |
| Granted | 4017963 | $0.13 |  |
| Exercised | (506161) | 0.13 |  |
| Forfeited | (1037321) | 0.04 |  |
| **Options Outstanding December 31, 2024**  | 25468045 | $0.12 | 7.47 |
| **Options Exercisable, December 31, 2024**  | 15104843 | $0.11 | $6.50 |

---

The aggregate intrinsic value of stock options is calculated as the pre-tax difference between the weighted-average exercise price of the stock options and the valuation of the Company's common shares of $0.15 and $0.13 as of December 31, 2024 and 2023 respectively. The calculation excludes any stock options with an exercise price higher than the valuation of shares of the Company's common stock, if any. The stock options were valued under an option pricing model, which considers the estimated volatility of the Company's common stock at the date of measurement based on selected metrics of applicable volatility calculations from guideline public companies. Stock compensation expense related to the stock options issued totaled $754 in 2024, and $451 in 2023 and is recognized as selling, general, and administrative expenses in the statements of operations and comprehensive loss. The total intrinsic value of options exercised was $15 and $0 for the years ended December 31, 2024 and 2023, respectively.

As of December 31, 2024, the Company had unrecognized stock-based compensation of $1,381 that is to be recognized over a weighted average period of 2.55 years.

The fair value of the stock options granted were estimated as of the grant date using an option pricing model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| Weighted average volatility | 101.50% | 50.00% |
| Weighted average risk-free rate | 3.90% | 4.94% |
| Expected dividend yield | 0.00 | 0.00 |
| Expected term (in years) | 6.0 | 2.8 |

---

**11. Loss Per Share**

Basic loss per share is computed by dividing the net loss after tax attributable to common stockholders by the weighted average shares outstanding during the period. Diluted loss per share is computed by including potentially dilutive securities outstanding during the period in the calculation of weighted average shares outstanding. The Company did not have any dilutive securities during the periods presented; therefore, diluted loss per share is equal to basic loss per share.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

Presented in the table below is a reconciliation of the numerator and denominator for the basic and diluted loss per share ("LPS") calculations for the years ended December 31:

---

| | | |
|:---|:---|:---|
| *December 31,* |  |  |
|  | **2024** | **2023** |
| &nbsp;&nbsp;&nbsp;&nbsp;**Net loss**  | $(15619) | $(12655) |
| **Basic and diluted weighted average shares outstanding**  | 1231226 | 1094314 |
| **Net loss attributable to common shareholders, basic and diluted**  | $(12.69) | $(11.56) |

---

The following securities were not included in the computation of diluted shares outstanding because the effect would be anti-dilutive:

---

| | | |
|:---|:---|:---|
| | **2024** | **2023** |
| Series Seed | 15851401 | 15851401 |
| Series A | 22399370 | 22399370 |
| Series B | 5913964 | 5913964 |
| Series C | 50116284 | 50116284 |
| Series D | 80909169 | 80909169 |
| Common Options | 25468045 | 22993564 |
| Common Warrants | 340140 | 340140 |
| Series Seed Warrants | 988999 | 988999 |
| Series B Warrants | 1000000 | 1000000 |
| Series D Warrants | 2494457 | 2494457 |
| Total | 205481829 | 203007348 |

---

**12. Segment Information**

The Company reports segment information based on how the Company's chief operating decision maker ("CODM") is the Chief Executive Officer, regularly reviews operating results, allocates resources and makes decisions regarding business operations. For segment reporting purposes the Company's business structure is comprised of one operating and reportable segment. The CODM uses segment gross margin and net loss for determining the allocation of resources (including employees, financial, or capital resources) to the segment to achieve the Company's strategic plan and to assess the performance of the segment by monitoring actual results against performance targets established in the Company's annual budget and forecasting process.

All revenue for the years ended December 31, 2024 and 2023 was generated from customers located in the United States. No customers represent 10% or more of the Company's total revenue for the years ended December 31, 2024 and 2023. The measure of segment assets is reported on the balance sheets as total assets.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

The table below is a summary of the segment net loss, including significant segment expenses:

---

| | | |
|:---|:---|:---|
| *December 31,* | **2024** | **2023** |
| Total Revenue | $31623 | $19274 |
| Cost of goods Sold | 7282 | 4004 |
| Gross margin | 24341 | 15270 |
| Operating expenses: |  |  |
| General and administrative | 13975 | 10705 |
| Sales and marketing | 17140 | 12288 |
| Medical education | 3391 | 120 |
| Research and development | 4489 | 3021 |
| Interest/other expense | 966 | 1791 |
| **Segment net loss and total net loss**  | $(15619) | (12655) |

---

Depreciation expense for the years ended December 31, 2024 and 2023 totaled $1,896 and $1,341, respectively. Depreciation expense of $1,842 and $1,311 for instruments is in sales and marketing and $37 and $30 for computer equipment, furniture and fixtures, and leasehold improvements are included in general, and administrative expenses in the statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023, respectively.

Amortization expense related to the Company's software license for the years ended December 31 2024 and 2023 totaled $300 for both years, and is included in general and administrative expense.

**13. Commitments and Contingencies**

***Litigation***

The Company from time to time is involved in legal matters incidental to the conduct of its business. Legal fees and other costs associated with such actions are expensed as incurred. The Company assesses the need to record a liability for litigation and contingencies. Accrual estimates are recorded when and if it is determinable that such a liability for litigation and contingencies are both probable and reasonably estimable.

In February 2024, the Company filed a complaint against Catalyst Orthoscience Inc. ("Catalyst") claiming patent infringement through Catalyst's making, using, selling, offering for sale in the United States, and/or importing into the United States, reverse shoulder systems. In response to the Company's suit, Catalyst filed a counterclaim claiming patent infringement of certain of the Company's products. The Company believes that it has substantial and meritorious defenses to Catalyst's claims and intend to vigorously defend its position, including through the trial and appellate stages if necessary. As the counterclaim is ongoing, the Company is unable to determine the likelihood of an outcome or estimate a range of reasonably possible settlement, if any. Accordingly, the Company has not made an accrual for any possible loss. The outcome of any litigation, however, is inherently uncertain, and an adverse judgment or settlement in the counterclaim proceeding, if any, could have a material and adverse effect the Company's business, financial position, results of operations or cash flows.

**14. Subsequent Events**

On March 6, 2025, the Company entered into a Series E Preferred Stock Purchase Agreement pursuant to the Series E Preferred Stock Financing, whereby it received a total commitment amount of $40,130 for the issuance and sale of 58,774,332 shares of Series E Preferred Stock pursuant to two separate closing trances, the first of which closed on March 6, 2025 whereby the Company issued 29,455,169 shares of series E preferred stock resulting in total net proceeds to the Company of $20,111 and the second tranche can occur any time prior to September 15, 2025, for the issuance and sale of 29,319,143 shares of Series E Preferred Stock for an aggregate purchase price of $20,019.

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<u>[**Table of Contents**](#i59180bdb0f1c4bbb8d8197dc900517b5_125)</u>

**Shoulder Innovations, Inc.**

Notes to the Financial Statements

(in thousands, except share, per share data and percentages)

In conjunction with entering into the Series E Preferred Stock Purchase Agreement, the Company increased the number of shares reserved under the Plan by 9,845,480 to a total of 41,700,495.

The Company evaluated subsequent events from December 31, 2024, the date of these financial statements, through April 17, 2025, which represents the date the financial statements were issued, for events requiring recording or disclosure in the financial statements for the year ended December 31, 2024.

------

**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Shares**

![prospectuscover.jpg](prospectuscover.jpg)

**Common Stock**

**Prospectus**

---

| | | |
|:---|:---|:---|
| **Morgan Stanley** | **Goldman Sachs & Co. LLC** | **Piper Sandler** |

---

**Jefferies**

**BTIG**

**&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025**

**Through and including&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; , 2025 (the 25th day after the date of this prospectus), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.**

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**PART II**

**INFORMATION NOT REQUIRED IN PROSPECTUS**

**Item 13. Other Expenses of Issuance and Distribution.** 

The following table sets forth the costs and expenses to be incurred in connection with the offering described in this registration statement, other than the underwriting discounts and commissions, all of which will be paid by us. All amounts are estimates except for the Securities and Exchange Commission registration fee, the Financial Industry Regulatory Authority ("FINRA") filing fee, and the New York Stock Exchange listing fee.

---

| | |
|:---|:---|
| | **Amount Paid or to Be Paid** |
| Securities and Exchange Commission registration fee | $15310 |
| FINRA filing fee | 15500 |
| New York Stock Exchange listing fee | 325000 |
| Transfer agent's fees and expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |
| Printing and engraving expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |
| Legal fees and expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |
| Accounting fees and expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |
| Miscellaneous expenses | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |
| Total | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; \* |

---

__________________

\*To be provided by amendment.

**Item 14. Indemnification of Directors and Officers.** 

Section 102 of the Delaware General Corporation Law permits a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our amended and restated certificate of incorporation provides that no director of the registrant shall be personally liable to it or its stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the Delaware General Corporation Law prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.

Section 145 of the Delaware General Corporation Law provides that a corporation has the power to indemnify a director, officer, employee, or agent of the corporation, or a person serving at the request of the corporation for another corporation, partnership, joint venture, trust or other enterprise in related capacities against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he was or is a party or is threatened to be made a party to any threatened, ending or completed action, suit or proceeding by reason of such position, if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper.

Our amended and restated certificate of incorporation provides that we will indemnify each person who was or is a party or threatened to be made a party to any threatened, pending or completed action, suit or proceeding (other

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than an action by or in the right of us) by reason of the fact that he or she is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, all such persons being referred to as an indemnitee, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding and any appeal therefrom, if such indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, and, with respect to any criminal action or proceeding, he or she had no reasonable cause to believe his or her conduct was unlawful. Our amended and restated certificate of incorporation provides that we will indemnify any indemnitee who was or is a party to an action or suit by or in the right of us to procure a judgment in our favor by reason of the fact that the indemnitee is or was, or has agreed to become, a director or officer, or is or was serving, or has agreed to serve, at our request as a director, officer, partner, employee or trustee of, or in a similar capacity with, another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against all expenses (including attorneys' fees) and, to the extent permitted by law, amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding, and any appeal therefrom, if the indemnitee acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, our best interests, except that no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to us, unless a court determines that, despite such adjudication but in view of all of the circumstances, he or she is entitled to indemnification of such expenses. Notwithstanding the foregoing, to the extent that any indemnitee has been successful, on the merits or otherwise, he or she will be indemnified by us against all expenses (including attorneys' fees) actually and reasonably incurred in connection therewith. Expenses must be advanced to an indemnitee under certain circumstances.

We have entered into indemnification agreements with each of our directors and officers. These indemnification agreements may require us, among other things, to indemnify our directors and officers for some expenses, including attorneys' fees, judgments, fines and settlement amounts incurred by a director or officer in any action or proceeding arising out of his or her service as one of our directors or officers, or any of our subsidiaries or any other company or enterprise to which the person provides services at our request.

We maintain a general liability insurance policy that covers certain liabilities of directors and officers of our corporation arising out of claims based on acts or omissions in their capacities as directors or officers.

In any underwriting agreement we enter into in connection with the sale of common stock being registered hereby, the underwriters will agree to indemnify, under certain conditions, us, our directors, our officers and persons who control us within the meaning of the Securities Act of 1933, as amended, or the Securities Act, against certain liabilities.

**Item 15. Recent Sales of Unregistered Securities.**

During the three years preceding the filing of this registration statement, we have issued the following securities which were not registered under the Securities Act of 1933, as amended:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.In March and June 2025, we issued and sold to certain investors in a private placement an aggregate of 29,455,169 and 29,319,143 shares of our Series E convertible preferred stock, respectively, at a purchase price of $0.68 per share, for aggregate consideration of approximately $40.1 million. All of our shares of Series E convertible preferred stock will convert into shares of our common stock immediately prior to the closing of our initial public offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.From February 2023 through March 2023, we issued and sold to certain investors in private placements an aggregate of 80,909,169 shares of our Series D convertible preferred stock at a purchase price of $0.54 per share, for aggregate consideration of approximately $43.8 million, inclusive of the issuance of 16,464,493 shares of our Series D convertible preferred stock in connection with the conversion of the convertible promissory notes as described below at an aggregate conversion price of $8.9 million. All of our shares of

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Series D convertible preferred stock will convert into shares of our common stock immediately prior to the closing of our initial public offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.From September 2022 to November 2022, we issued and sold to certain investors in private placements an aggregate principal amount of $6.9 million of convertible promissory notes. In connection with the closing of our Series D convertible preferred stock financing in February 2023, the aggregate principal amount and accrued interest on the convertible promissory notes were converted into 16,464,493 shares of our Series D convertible preferred stock at an aggregate conversion price of $8.9 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.In August 2023, we issued a warrant to purchase an aggregate of up to 2,494,457 shares of our Series D convertible preferred stock, with an exercise price of $0.5412, to Trinity Capital in connection with our entry into a loan and security agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.From January 2022 through the date of this registration statement, we issued options to purchase an aggregate of 24,579,597 shares of common stock under our Stock Option Plan at exercise prices ranging from $0.13 to $0.15 per share. From January 2022 through the date of this registration statement, we have issued an aggregate of 1,744,859 shares of our common stock upon exercise of stock options for an approximate aggregate consideration of $0.2 million.

Unless otherwise stated, the issuances of the above were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder, or Rule 701 promulgated under the Securities Act, as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. Individuals who purchased securities as described above represented their intentions to acquire the securities for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions or any public offering.

**Item 16. Exhibits and financial statement schedules.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)***Exhibits*.**

The following documents are filed as exhibits to this registration statement.

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---

| | |
|:---|:---|
| **Exhibit<br>Number** | **Exhibit Description** |
| 1.1\* | Form of Underwriting Agreement. |
| 3.1 | <u>[Fourth Amended and Restated Certificate of Incorporation, currently in effect.](exhibit31-sx1.htm)</u> |
| 3.2\* | Form of Amended and Restated Certificate of Incorporation, to be in effect upon completion of this offering. |
| 3.3 | <u>[Second Amended and Restated Bylaws, currently in effect.](exhibit33-sx1.htm)</u> |
| 3.4\* | Form of Amended and Restated Bylaws, to be in effect upon completion of this offering. |
| 4.1\* | Form of Common Stock Certificate. |
| 4.2^ | <u>[Fourth Amended and Restated Investors' Rights Agreement, dated as of March 6, 2025, by and among the](exhibit42-sx1.htm)[r](exhibit42-sx1.htm)[egistrant and certain of its stockholders.](exhibit42-sx1.htm)</u> |
| 5.1\* | Opinion of Latham & Watkins LLP. |
| 10.1^ | <u>[Lease Agreement, dated as of January 13, 2021, by and between the registrant and Steele Ave LLC.](exhibit101-sx1.htm)</u> |
| 10.2† | <u>[Supply Agreement, dated as of June 3, 2024, by and between the registrant and Revelation Medical Devices.](exhibit102-sx1.htm)</u> |
| 10.3† | <u>[Consulting Agreement, dated as of April 30, 2015, by and between the registrant and Genesis Innovation Group, Inc. (formerly known as Genesis Innovation Group, LLC), as amended.](exhibit103-sx1.htm)</u> |
| 10.4†^ | <u>[Second Restated and](exhibit104-sx1.htm)[Amended](exhibit104-sx1.htm)[Software License Agreement](exhibit104-sx1.htm)[, dated as of](exhibit104-sx1.htm)[June 10, 2025](exhibit104-sx1.htm)[,](exhibit104-sx1.htm)[by and between the](exhibit104-sx1.htm)[r](exhibit104-sx1.htm)[egistrant and Genesis Software Innovations, LLC.](exhibit104-sx1.htm)</u> |
| 10.5^ | <u>[Loan and Security Agreement, dated as of August 7, 2023, by and among the registrant, the lenders party thereto and Trinity Capital](exhibit105-sx1.htm)[Inc., as amended by the First Amendment to the Loan and Security Agreement, dated as of April 23, 2024.](exhibit105-sx1.htm)</u> |
| 10.6 | <u>[Warrant to Purchase Stock, dated as of August 7, 2023 by and between the registrant and Trinity Capital Inc.](exhibit106-sx1.htm)</u> |
| 10.7† | <u>[Supplier Agreement, dated as of February 24, 2024, by and between the registrant and Avalign Technologies, Inc.](exhibit107-sx1a.htm)</u> |
| 10.8^ | <u>[Warrant to Purchase Stock, dated as of April 1, 2021, by and between the registrant and Silicon Valley Bank, as amended.](exhibit108-sx1.htm)</u> |
| 10.9# | <u>[Amended and Restated Stock Option Plan.](exhibit109-sx1.htm)</u> |
| 10.9(a)# | <u>[Form of Option Award Agreement under Amended and Restated Stock Option Plan.](exhibit109a-sx1.htm)</u> |
| 10.10# | <u>[Change in Control Option Vesting Acceleration Policy.](exhibit1010-sx1.htm)</u> |
| 10.11(a)#\* | 2025 Incentive Award Plan. |
| 10.11(b)# | <u>[Form](exhibit1011b-sx1.htm)[of](exhibit1011b-sx1.htm)[Option Agreement under](exhibit1011b-sx1.htm)[2025](exhibit1011b-sx1.htm)[Incentive Award Plan.](exhibit1011b-sx1.htm)</u> |
| 10.11(c)# | <u>[Form](exhibit1011c-sx1.htm)[of](exhibit1011c-sx1.htm)[Restricted Stock Unit Award Agreement under](exhibit1011c-sx1.htm)[2025](exhibit1011c-sx1.htm)[Incentive Award Plan.](exhibit1011c-sx1.htm)</u> |
| 10.12#\* | 2025 Employee Stock Purchase Plan. |
| 10.13# | <u>[Non-Employee Director Compensation Program.](exhibit1013-sx1.htm)</u> |
| 10.14#\* | Form of Indemnification Agreement for Directors and Officers. |
| 10.15# | <u>[Employment Agreement,](exhiibt1015-sx1.htm)[by and between](exhiibt1015-sx1.htm)[the](exhiibt1015-sx1.htm)[r](exhiibt1015-sx1.htm)[egistrant](exhiibt1015-sx1.htm)[and Robert Ball.](exhiibt1015-sx1.htm)</u> |
| 10.16# | <u>[Employment Agreement, by and between the registrant and](exhibit1016-sx1.htm)[Jeffrey Points.](exhibit1016-sx1.htm)</u> |
| 10. 17# | <u>[Employment Agreement,](exhibit1017-sx1.htm)[by and between](exhibit1017-sx1.htm)[the](exhibit1017-sx1.htm)[r](exhibit1017-sx1.htm)[egistrant](exhibit1017-sx1.htm)[and David Blue.](exhibit1017-sx1.htm)</u> |
| 23.1 | <u>[Consent of Independent Registered Public Accounting Firm.](exhibit231-sx1.htm)</u> |
| 23.2\* | Consent of Latham & Watkins LLP (included in Exhibit 5.1). |
| 24.1 | <u>[Power of Attorney (reference is made to the signature page to the registration statement).](#i59180bdb0f1c4bbb8d8197dc900517b5_955)</u> |
| 99.1 | <u>[Consent of Richard](exhibit991-sx1.htm)[J.](exhibit991-sx1.htm)[Buchholz to be Named as](exhibit991-sx1.htm)[Director Nominee.](exhibit991-sx1.htm)</u> |
| 107.1 | <u>[Filing Fee Table.](exhibit1071-sx1.htm)</u> |

---

__________________

\*&nbsp;&nbsp;&nbsp;&nbsp;To be filed by amendment.

#&nbsp;&nbsp;&nbsp;&nbsp;Indicates management contract or compensatory plan.

^&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Item 601(a)(5) of Regulation S-K, the registrant has omitted schedules (or similar attachments) to this exhibit. The registrant agrees to furnish supplementally a copy of the omitted schedules (or similar attachments) to the Securities and Exchange Commission upon request.

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†&nbsp;&nbsp;&nbsp;&nbsp;Pursuant to Item 601(b)(10)(iv) of Regulation S-K, the registrant has redacted portions of this exhibit (indicated by [\*\*\*]) because the registrant has determined that such redacted information is not material and is the type that the registrant treats as private or confidential. The registrant agrees to furnish supplementally an unredacted copy of this exhibit to the Securities and Exchange Commission upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)***Financial Statement Schedules.*** Schedules not listed above have been omitted because the information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

**Item 17. Undertakings.** 

The undersigned registrant hereby undertakes to provide to the underwriter, at the closing specified in the underwriting agreement, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

The undersigned hereby undertakes that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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 **SIGNATURES**

Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Grand Rapids, State of Michigan on July 7, 2025.

---

| | |
|:---|:---|
| **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** |
| By:  | /s/ Robert Ball |
|  | Robert Ball |
|  | *Chief Executive Officer and Executive Chairman* |

---

**SIGNATURES AND POWER OF ATTORNEY**

We, the undersigned officers and directors of Shoulder Innovations, Inc., hereby severally constitute and appoint Robert Ball and Jeffrey Points, and each of them singly (with full power to each of them to act alone), our true and lawful attorneys-in-fact and agents, with full power of substitution and re-substitution in each of them for him or her and in his or her name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement (or any other registration statement for the same offering that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933, as amended), and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| /s/ Robert Ball | Chief Executive Officer and Executive Chairman<br>*(Principal Executive Officer)* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Robert Ball | Chief Executive Officer and Executive Chairman<br>*(Principal Executive Officer)* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Jeffrey Points | Chief Financial Officer<br>*(Principal Financial Officer and Principal Accounting Officer)* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Jeffrey Points | Chief Financial Officer<br>*(Principal Financial Officer and Principal Accounting Officer)* | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Matthew Ahearn | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Matthew Ahearn | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Paul Buckman | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Paul Buckman | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Michael Carusi | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; July 7, 2025 |
| Michael Carusi | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; July 7, 2025 |
| /s/ Geoff Pardo | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Geoff Pardo | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Kevin Sidow | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Kevin Sidow | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| /s/ Casey Tansey | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |
| Casey Tansey | Director | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;July 7, 2025 |

---

## Ex-Filing

**Exhibit 107.1**

**Calculation of Filing Fee Table**

**Form S-1**

(Form Type)

**Shoulder Innovations, Inc.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u>

---

| | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | Security<br>Type | Security<br>Class Title | Fee<br>Calculation<br>Rule | Amount<br>Registered | Proposed<br>Maximum Offering<br>Price Per<br>Security | Maximum<br>Aggregate<br>Offering<br>Price<sup>(1)(2)</sup> | Fee<br>Rate |  | Amount of<br>Registration<br>Fee |
| Fees to be paid | Equity | Common Stock,$0.001 par value per share | Rule 457(o) |  |  | $100000000 | $153.10 per $1,000,000 | $15310.00 | 15310.00 |
|  | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts | Total Offering Amounts |  |  |  | $15310.00 | 15310.00 |
|  | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid | Total Fees Previously Paid |  |  |  |  |  |
|  | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets | Total Fee Offsets |  |  |  |  |  |
|  | Net Fee Due | Net Fee Due | Net Fee Due | Net Fee Due |  |  |  | $15310.00 | 15310.00 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) Includes the aggregate offering price of additional shares of common stock that the underwriters have the option to purchase to cover over-allotments, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.

## Exhibit 3.1

**Exhibit 3.1**

**FOURTH AMENDED AND RESTATED**

**CERTIFICATE OF INCORPORATION**

**OF**

**SHOULDER INNOVATIONS, INC.**

The undersigned, for the purpose of amending and restating the Certificate of Incorporation of SHOULDER INNOVATIONS, INC., a corporation organized and existing under and by virtue of the provisions of the General Corporation Law of the State of Delaware (the ***"Company"***), hereby certifies that:

**ONE:** The Company was incorporated under the name Shoulder Innovations, Inc. pursuant to an original Certificate of Incorporation filed with the Secretary of the State of Delaware (the ***"Delaware Secretary"***) on February 10, 2017; the Certificate of Incorporation was amended pursuant to a Certificate of Amendment filed with the Delaware Secretary on November 17, 2017; the Certificate of Incorporation was subsequently amended pursuant to a Certificate of Amendment filed with the Delaware Secretary on October 1, 2018; the Certificate of Incorporation was subsequently amended and restated pursuant to a First Amended and Restated Certificate of Incorporation filed with the Delaware Secretary on January 27, 2020; the Certificate of Incorporation was subsequently amended and restated pursuant to a Second Amended and Restated Certificate of Incorporation filed with the Delaware Secretary on October 22, 2020; the Certificate of Incorporation was subsequently amended and restated pursuant to a Third Amended and Restated Certificate of Incorporation filed with the Delaware Secretary on February 10, 2023; the Certificate of Incorporation was subsequently amended pursuant to a Certificate of First Amendment filed with the Delaware Secretary on March 2, 2023; the Certificate of Incorporation was subsequently amended pursuant to a Certificate of Second Amendment filed with the Delaware Secretary on August 7, 2023; and the Certificate of Incorporation was subsequently amended pursuant to a Certificate of Third Amendment filed with the Delaware Secretary on April 19, 2024 (collectively, the ***"Certificate of Incorporation"***).

**TWO:** He is the duly elected and acting Chief Executive Officer of the Company.

**THREE:** The Certificate of Incorporation is hereby amended and restated to read as follows:

**I.** The name of the Company is SHOULDER INNOVATIONS, INC.

**II.** The address of the registered office of the Company in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City of Wilmington, County of New Castle, Delaware 19801 and the name of the registered agent of the Company in the State of Delaware at such address is The Corporation Trust Company.

------

**III.** The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law, as amended (the ***"DGCL"***).

**IV.** &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.&nbsp;&nbsp;&nbsp;&nbsp;**Upon the filing of this Fourth Amended and Restated Certificate of Incorporation (this ***"Restated Certificate"***) with the Delaware Secretary (the ***"Filing Date"***), the total number of shares of all classes of capital stock which the Company shall have the authority to issue shall be 519,434,551 shares, consisting solely of: 280,986,575 shares of common stock, par value $0.001 per share (the ***"Common Stock"***); and 238,447,976 shares of preferred stock, par value $0.001 per share (the ***"Preferred Stock"***), 16,840,400 shares of which shall be designated as "Series Seed Convertible Preferred Stock" (the ***"Series Seed Preferred"***), 22,399,370 shares of which shall be designated as "Series A Convertible Preferred Stock" (the ***"Series A Preferred"***), 6,913,964 shares of which shall be designated as "Series B Convertible Preferred Stock" (the ***"Series B Preferred"***), 50,116,284 shares of which shall be designated as "Series C Convertible Preferred Stock" (the "***Series C Preferred***"), 83,403,626 shares of which shall be designated as "Series D Convertible Preferred Stock" (the "***Series D Preferred***") and 58,774,332 shares of which shall be designated as "Series E Convertible Preferred Stock" (the "***Series E Preferred***"). All references to this Restated Certificate shall mean this Restated Certificate as may be amended or restated from time to time in accordance with the terms hereof and applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.&nbsp;&nbsp;&nbsp;&nbsp;**The rights, preferences, privileges, restrictions and other matters relating to the Preferred Stock are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DIVIDEND RIGHTS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Series E Dividend.** Holders of the Series E Preferred, in preference to the holders of the Series D Preferred, the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series Seed Preferred and the Common Stock, shall be entitled to receive, when and if declared by the Board of Directors of the Company (the "***Board***"), but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series E Original Issue Price on each outstanding share of the Series E Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series E Original Issue Price"*** means $0.68278104 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Series D Dividend.** After payment of dividends set forth in <u>Subsection 1(a)</u>, holders of the Series D Preferred, in preference to the holders of the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series Seed Preferred and the Common Stock, shall be entitled to receive, when and if declared by the Board, but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series D Original Issue Price on each outstanding share of the Series D

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Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series D Original Issue Price"*** means $0.5412 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Series C Dividend.** After payment of dividends set forth in <u>Subsections 1(a)</u> and <u>1(b)</u>, holders of the Series C Preferred, in preference to the holders of the Series B Preferred, the Series A Preferred, the Series Seed Preferred and the Common Stock, shall be entitled to receive, when and if declared by the Board, but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series C Original Issue Price on each outstanding share of the Series C Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series C Original Issue Price"*** means $0.43 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Series B Dividend.** After payment of dividends set forth in <u>Subsections 1(a)</u>, <u>1(b)</u> and <u>1(c)</u>, holders of the Series B Preferred, in preference to the holders of the Series A Preferred, the Series Seed Preferred and the Common Stock, shall be entitled to receive, when and if declared by the Board, but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series B Original Issue Price on each outstanding share of the Series B Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series B Original Issue Price"*** means $0.372 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Series A Dividend.** After payment of dividends set forth in <u>Subsections 1(a)</u>, <u>1(b)</u>, <u>1(c)</u> and <u>1(d)</u>, holders of the Series A Preferred, in preference to the holders of the Series Seed Preferred and the Common Stock, shall be entitled to receive, when and if declared by the Board, but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series A Original Issue Price on each outstanding share of the Series A Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series A Original Issue Price"*** means $0.25 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Series Seed Dividend.** After payment of dividends set forth in <u>Subsections 1(a)</u>, <u>1(b)</u>, <u>1(c)</u> <u>1(d)</u>, <u>and</u> <u>1(e)</u>, holders of the Series Seed Preferred, in preference to the holders of the Common Stock, shall be entitled to receive, when and if declared by the Board, but only out of funds that are legally available therefor, a non-cumulative dividend at a rate of eight percent (8%) per annum of the Series Seed Original Issue Price on each outstanding share of the Series Seed Preferred (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like with respect to such shares after the Filing Date). The ***"Series Seed Original Issue Price"*** means $0.08434 per share (as adjusted for any stock dividends, combinations, splits, recapitalizations and the like after the Filing Date).

------

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Participation in Common Stock Dividends.** If the Board shall declare a dividend payable upon the then-outstanding shares of the Common Stock (other than a dividend payable entirely in shares of the Common Stock), in addition to any dividend payable pursuant to <u>Subsections (1)(a)</u> through <u>1(f)</u> above, the Board shall declare at the same time a dividend upon the then-outstanding shares of the Preferred Stock, payable at the same time as the dividend paid on the Common Stock, in an amount equal to the amount of dividends per share of the Preferred Stock as would have been payable on the number of shares of the Common Stock into which each share of the Preferred Stock held by each holder thereof had been converted if such shares of the Preferred Stock had been converted to the Common Stock pursuant to the provisions of <u>Section 4</u> hereof as of the record date for the determination of holders of the Common Stock entitled to receive such dividends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;VOTING RIGHTS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;General Rights.** Except as otherwise provided herein or by law, the Preferred Stock shall vote together with the Common Stock and all other classes and series of stock of the Company as a single class on all actions to be taken by the stockholders of the Company including, but not limited to, actions amending the certificate of incorporation of the Company to increase or decrease the number of authorized shares of the Common Stock. Each holder of shares of the Preferred Stock shall be entitled to the number of votes equal to the whole number of shares of the Common Stock into which such shares of the Preferred Stock are then convertible pursuant to <u>Section 4</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Separate Vote of Preferred Stock.** For so long as any of the authorized shares of the Preferred Stock remains outstanding, the Company shall not, either directly or indirectly by amendment, merger, reclassification, consolidation or otherwise, do any of the following without (in addition to any other vote or consent required by this Restated Certificate or by law) the written consent or affirmative vote of the holders in the aggregate of at least sixty percent (60%) of the then outstanding shares of Preferred Stock, voting or consenting together as a separate single class and on an as converted to Common Stock basis (the "***Preferred Stock Majority***"), given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void *ab initio*, and of no force or effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**authorize or effect a liquidation, dissolution or winding up of the affairs of the Company, or authorize or effect any Deemed Liquidation Event;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**amend, alter or repeal any provision of this Restated Certificate or the bylaws of the Company, as may be amended from time to time pursuant to its terms (the "***Bylaws***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**create, authorize the creation of or issue any additional shares of capital stock (or other equity securities, rights or instruments convertible or exercisable for such shares) unless the same ranks junior to all series of Preferred Stock with respect to the distribution of assets on the liquidation, dissolution or winding up of the Company or upon a Deemed Liquidation Event, the payment of dividends and rights of redemption, if any, or if such

------

additional shares (or other equity securities, rights or instruments convertible or exercisable for such shares) have separate series or class voting rights such that the holders of such shares would be entitled to a separate class or series vote with respect to any matter, including but not limited to those set forth in <u>Subsections 2(b)(i)</u> through <u>2(b)(xix),</u> except for rights which such new class or series of stock would have pursuant to Section 242(b)(2) of the General Corporation Law (the "***Separate Voting Rights***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**reclassify, alter or amend any existing security of the Company that is *pari passu* with the Preferred Stock (or any series thereof) in respect of the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to the Preferred Stock (or any series thereof) in respect of any such right, preference, or privilege, (ii) reclassify, alter or amend any existing security of the Company that is junior to the Preferred Stock (or any series thereof) in respect of the distribution of assets on the liquidation, dissolution or winding up of the Company, the payment of dividends or rights of redemption, if such reclassification, alteration or amendment would render such other security senior to or *pari passu* with the Preferred Stock (or any series thereof) in respect of any such right, preference or privilege, or (iii) reclassify, alter or amend any existing security of the Company that does not have Separate Voting Rights, if such reclassification, alteration or amendment would provide for Separate Voting Rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**amend, alter, repeal, or change any provision of this Restated Certificate, or of the Bylaws in any manner adverse to the Preferred Stock, or any series thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(vi)&nbsp;&nbsp;&nbsp;&nbsp;**increase or decrease the authorized number of shares of Common Stock or Preferred Stock, or any series thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(vii)&nbsp;&nbsp;&nbsp;&nbsp;**purchase or redeem (or permit any subsidiary to purchase or redeem) or pay or declare any dividend or make any distribution on, any shares of capital stock of the Company other than (y) repurchases of stock from former employees, officers, directors, consultants or other persons who performed services for the Company or any subsidiary in connection with the cessation of such employment or service at the lower of the original purchase price or the then-current fair market value thereof or (z) as otherwise approved by the Board (including a majority of the then-serving Preferred Directors (as defined below));

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(viii)&nbsp;&nbsp;&nbsp;&nbsp;**increase or decrease the size of the Board;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ix)&nbsp;&nbsp;&nbsp;&nbsp;**issue any debt instrument (or series of related debt instruments) in excess of $1,000,000 or cumulative debt in excess of $2,000,000, unless such debt instruments unless are provided for in the Company's budget as approved by the Board; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(x)&nbsp;&nbsp;&nbsp;&nbsp;**undertake any act or enter into any agreement that could result in the Company's issuing shares of its capital stock to acquire all or substantially all of the equity securities of another entity or all or substantially all of the assets of any other entity and the number of shares of capital stock of the Company so issued or issuable would exceed ten

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percent (10%) of the shares of the Company's capital stock (including all outstanding securities of the Company on as exercised and as converted to Common Stock basis, plus the amount of any unallocated shares of Common stock in any incentive plan of the Company) outstanding immediately prior to such issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xi)&nbsp;&nbsp;&nbsp;&nbsp;**authorize or effect the acquisition in any manner, directly or indirectly, of the capital stock or a substantial portion of the assets of any entity by the Company if such transaction involves commitments by the Company in excess of $1,000,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xii)&nbsp;&nbsp;&nbsp;&nbsp;**change the principal business of the Company, enter new lines of business, or exit the current line of business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xiii)&nbsp;&nbsp;&nbsp;&nbsp;**create any new equity incentive plan, or increase the number of shares reserved for issuance under any of the Company's equity incentive plans except to the extent approved by the Board (including a majority of the then-serving Preferred Directors);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xiv)&nbsp;&nbsp;&nbsp;&nbsp;**enter into or be a party to any transaction with any director, officer or 5% stockholder of the Company or any "associate" (as defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended) of any such person (other than (i) standard employment agreements and employee benefits generally made available to all employees, (ii) standard director and officer indemnification agreements, and (iii) the purchase of shares of the Company's capital stock and the issuance of options to purchase shares of the Company's Common Stock) except to the extent approved by the Board (including a majority of the then-serving Preferred Directors);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xv)&nbsp;&nbsp;&nbsp;&nbsp;**create or hold capital stock in any subsidiary that is not wholly-owned, or dispose of any subsidiary stock or all or substantially all of any subsidiary assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xvi)&nbsp;&nbsp;&nbsp;&nbsp;**unless approved by the Board (including a majority of the then-serving Preferred Directors), cause or permit any of its subsidiaries to sell, issue, sponsor, create or distribute any digital tokens, cryptocurrency or other blockchain-based assets (collectively, "***Tokens***"), including through a pre-sale, initial coin offering, token distribution event or crowdfunding, or through the issuance of any instrument convertible into or exchangeable for Tokens; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(xvii)&nbsp;&nbsp;&nbsp;&nbsp;**permit any subsidiary to take any of the aforementioned prohibited actions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Separate Vote of Series C Preferred**. For so long as at least twenty percent (20%) of the authorized shares of the Series C Preferred remains outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the Company shall not, either directly or indirectly by amendment, merger, reclassification, consolidation or otherwise, do any of the following without (in addition to any other vote or consent required by this Restated Certificate or by law) the written consent or affirmative vote of

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the holders in the aggregate of at least sixty percent (60%) of the then outstanding shares of Series C Preferred, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void *ab initio*, and of no force or effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**alter, change or waive the powers, preferences, or rights of the shares of the Series C Preferred so as to affect them adversely, but shall not so affect the entire class of Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**increase or decrease the number of authorized shares of the Series C Preferred; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**amend, change or waive any provision of this <u>Subsection</u> <u>2(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Separate Vote of Series D Preferred**. For so long as at least twenty percent (20%) of the authorized shares of the Series D Preferred remains outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the Company shall not, either directly or indirectly by amendment, merger, reclassification, consolidation or otherwise, do any of the following without (in addition to any other vote or consent required by this Restated Certificate or by law) the written consent or affirmative vote of the holders in the aggregate of at least sixty-five percent (65%) of the then outstanding shares of Series D Preferred, given in writing or by vote at a meeting, consenting or voting (as the case may be), and any such act or transaction entered into without such consent or vote shall be null and void *ab initio*, and of no force or effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**alter, change or waive the powers, preferences, or rights of the shares of the Series D Preferred so as to affect them adversely, but shall not so affect the entire class of Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**increase or decrease the number of authorized shares of the Series D Preferred; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**amend, change or waive any provision of this <u>Subsection</u> <u>2(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Separate Vote of Series E Preferred**. For so long as at least twenty percent (20%) of the authorized shares of the Series E Preferred remains outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the Company shall not, either directly or indirectly by amendment, merger, reclassification, consolidation or otherwise, do any of the following without (in addition to any other vote or consent required by this Restated Certificate or by law) the written consent or affirmative vote of the holders in the aggregate of at least sixty percent (60%) of the then outstanding shares of Series E Preferred, given in writing or by vote at a meeting, consenting or voting (as the case

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may be), and any such act or transaction entered into without such consent or vote shall be null and void *ab initio*, and of no force or effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**alter, change or waive the powers, preferences, or rights of the shares of the Series E Preferred so as to affect them adversely, but shall not so affect the entire class of Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**increase or decrease the number of authorized shares of the Series E Preferred;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**amend, change or waive any provision of this <u>Subsection</u> <u>2(e)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Election of Board of Directors.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**As long as at least twenty percent (20%) of the aggregate number of shares of Series Seed Preferred, Series A Preferred and Series B Preferred originally issued are then outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the holders of the then outstanding shares of Series Seed Preferred, Series A Preferred and Series B Preferred, voting together as a separate class, shall be entitled to elect one (1) director of the Company at any election of directors (the "***Series Seed/A/B Director***"). As long as at least twenty percent (20%) of the shares of Series C Preferred originally issued are then outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the holders of the then outstanding shares of Series C Preferred shall be entitled to elect two (2) directors of the Company at any election of directors (the "***Series C Directors***"). As long as at least twenty percent (20%) of the shares of Series D Preferred originally issued are then outstanding, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, the holders of the then outstanding shares of Series D Preferred shall be entitled to elect one (1) director of the Company at any election of directors (the "***Series D Director***" and collectively with the Series Seed/A/B Director and the Series C Directors, the "***Preferred Directors***"). The holders of Preferred Stock and the holders of Common Stock, voting together as a single class and on an as converted to Common Stock basis, shall be entitled to elect any remaining directors of the Company.

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vacancy at a meeting of the Company's stockholders or (ii) written consent, if the consenting stockholders hold a sufficient number of shares to elect their designee at a meeting of the stockholders, pursuant to the terms and conditions of that certain Fourth Amended and Restated Voting Agreement entered into as of or around the Filing Date by and among the Company and the Stockholders named therein, as such may be amended or restated in accordance therewith from time to time (the "***Voting Agreement***"). Any director may be removed during his or her term of office, either with or without cause, by, and only by, the affirmative vote of the holders of the shares of the class or series of stock (or the different classes or series voting separately, or together, as the case may be) entitled to elect such director or directors, given either at a special meeting of such stockholders duly called for that purpose or pursuant to a written consent of stockholders, and any vacancy thereby created may be filled by the holders of that class or series of stock (or different classes or series voting separately, or together as the case may be) represented at the meeting or pursuant to written consent, pursuant to the terms of the Voting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**Each such director shall be entitled to one (1) vote on all matters at all meetings of the directors or in connection with any action by written consent in lieu of a meeting pursuant to the DGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**At any meeting held for the purpose of electing a director, the presence in person or by proxy of the holders of a majority of the outstanding shares of the class or series entitled to elect such director as provided above shall constitute a quorum for the purpose of electing such director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;LIQUIDATION RIGHTS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series E Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, the holders of the Series E Preferred then-outstanding shall be entitled to be paid out of the assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Series D Preferred, the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series Seed Preferred or the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series E Preferred by reason of their ownership thereof, an amount per share of the Series E Preferred equal to one times (1x) the Series E Original Issue Price plus any dividends declared but unpaid on each such share of the Series E Preferred (the ***"Series E Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series E Preferred of the Series E Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series E Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series E Preferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series D Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution

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or winding up of the Company, after full payment of the Series E Liquidation Preference, the holders of the Series D Preferred then-outstanding shall be entitled to be paid out of the assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Series C Preferred, the Series B Preferred, the Series A Preferred, the Series Seed Preferred or the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series D Preferred by reason of their ownership thereof, an amount per share of the Series D Preferred equal to one times (1x) the Series D Original Issue Price plus any dividends declared but unpaid on each such share of the Series D Preferred (the ***"Series D Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series D Preferred of the Series D Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series D Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series D Preferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series C Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, after full payment of the Series E Liquidation Preference and the Series D Liquidation Preference, the holders of the Series C Preferred then-outstanding shall be entitled to be paid out of the remaining assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Series B Preferred, the Series A Preferred, the Series Seed Preferred or the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series C Preferred by reason of their ownership thereof, an amount per share of the Series C Preferred equal to one times (1x) the Series C Original Issue Price plus any dividends declared but unpaid on each such share of the Series C Preferred (the ***"Series C Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series C Preferred of the Series C Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series C Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series C Preferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series B Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, after full payment of the Series E Liquidation Preference, the Series D Liquidation Preference and the Series C Liquidation Preference, the holders of the Series B Preferred then-outstanding shall be entitled to be paid out of the remaining assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Series A Preferred, the Series Seed Preferred or the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series B Preferred by reason of their ownership thereof, an amount per share of the Series B Preferred equal to one times (1x) the Series B Original Issue Price plus any dividends declared but unpaid on each such share of the Series B Preferred (the ***"Series B***

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***Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series B Preferred of the Series B Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series B Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series B Preferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series A Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, after full payment of the Series E Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference and the Series B Liquidation Preference, the holders of the Series A Preferred then-outstanding shall be entitled to be paid out of the remaining assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Series Seed Preferred or the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series A Preferred by reason of their ownership thereof, an amount per share of the Series A Preferred equal to one times (1x) the Series A Original Issue Price plus any dividends declared but unpaid on each such share of the Series A Preferred (the ***"Series A Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series A Preferred of the Series A Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series A Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series A Preferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Preferential Payments to the Holders of the Series Seed Preferred.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, after full payment of the Series E Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference, the Series B Liquidation Preference and the Series A Liquidation Preference, the holders of the Series Seed Preferred then-outstanding shall be entitled to be paid out of the remaining assets of the Company legally available for distribution to its stockholders (or the consideration received in such transaction), before any payment shall be made to the holders of the Common Stock or any other class or series of capital stock ranking on liquidation junior to the Series Seed Preferred by reason of their ownership thereof, an amount per share of the Series Seed Preferred equal to one times (1x) the Series Seed Original Issue Price plus any dividends declared but unpaid on each such share of the Series Seed Preferred (the ***"Series Seed Liquidation Preference"***). If, upon any such Deemed Liquidation Event, liquidation, dissolution or winding up, the assets of the Company (or the consideration received in such transaction), shall be insufficient to make payment in full to all holders of the Series Seed Preferred of the Series Seed Liquidation Preference, then such assets (or consideration) shall be distributed among the holders of the Series Seed Preferred at the time outstanding, ratably in proportion to the full amounts to which they would otherwise be respectively entitled with respect to the Series Seed Preferred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Distribution of Remaining Assets.** In the event of any Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company, after full payment of the Series E Liquidation Preference, the Series D Liquidation Preference, the Series C Liquidation Preference, the Series B Liquidation Preference, the Series A Liquidation Preference and the Series Seed Liquidation Preference, the remaining assets of the Company available for distribution to its stockholders (or consideration received in such transaction) shall be distributed among the holders of the shares of the Preferred Stock and the Common Stock, pro rata based on the number of shares held by each such holder, treating for this purpose all such securities as if they had been converted to the Common Stock pursuant to <u>Section 4</u> hereof immediately prior to such Deemed Liquidation Event, liquidation, dissolution or winding up of the Company. The aggregate amount which a holder of a share of the Preferred Stock is entitled to receive under Subsections <u>3(a)</u>, <u>(b)</u>, <u>(c)</u>, <u>(d)</u>, <u>(e)</u>, <u>(f)</u>, and <u>(g)</u> is hereinafter referred to as the ***"Preferred Liquidation Amount"***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Deemed Liquidation Events.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;***Definition.*&nbsp;&nbsp;&nbsp;&nbsp;Each of the following events shall be considered a ***"Deemed Liquidation Event"***, unless the Preferred Stock Majority, voting as a separate class, elects otherwise by written notice given to the Company at least ten (10) days prior to the effective date of any such event:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**a merger or consolidation in which (i) the Company is a constituent party or (ii) a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such merger or consolidation, except any such merger or consolidation involving the Company or a subsidiary in which the shares of capital stock of the Company outstanding immediately prior to such merger or consolidation continue to represent, or are converted into or exchanged for shares of capital stock that represent, immediately following such merger or consolidation, at least a majority of the capital stock of (1) the surviving or resulting corporation; or (2) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such merger or consolidation, the parent corporation of such surviving or resulting corporation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets (or all or substantially all of the intellectual property assets) of the Company and its subsidiaries taken as a whole or (2) the sale or disposition (whether by merger, consolidation or otherwise, and whether in a single transaction or a series of related transactions) of one (1) or more subsidiaries of the Company if substantially all of the assets (or all or substantially all of the intellectual property assets) of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(C)&nbsp;&nbsp;&nbsp;&nbsp;**A Public Offering that is not a Qualified Public Offering.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;***Effecting a Deemed Liquidation Event.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**The Company shall not have the power to effect a Deemed Liquidation Event, voluntary or involuntary liquidation, dissolution or winding up of the Company unless the definitive agreement for such transaction (the ***"Transaction Agreement"***) provides that the consideration payable to the stockholders of the Company shall be allocated among the holders of capital stock of the Company in accordance with <u>Subsections 3(a)</u>, <u>(b)</u>, <u>(c)</u>, <u>(d)</u>, <u>(e)</u>, <u>(f)</u>, and <u>(g)</u> above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**In the event of a Deemed Liquidation Event referred to in <u>Subsections 3(h)(i)(A)(2)</u> or <u>3(h)(i)(B)</u> above, if the Company does not effect a dissolution of the Company under the DGCL within sixty (60) days after such Deemed Liquidation Event, then (1) the Company shall send a written notice to each holder of the Preferred Stock no later than the sixtieth (60th) day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (2) to require the redemption of such shares of the Preferred Stock, and (2) unless the Preferred Stock Majority, voting together as a single class on an as-converted to Common Stock basis, request otherwise in a written instrument delivered to the Company not later than ninety (90) days after such Deemed Liquidation Event, the Company shall use the consideration received by the Company for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board (including the affirmative vote of a majority of the then-serving Preferred Directors)) together with any other assets of the Company available for distribution to its stockholders, all to the extent permitted by Delaware law governing distributions to stockholders (the ***"Available Proceeds"***), on the one hundred twentieth (120th) day after such Deemed Liquidation Event, to redeem all outstanding shares of the Preferred Stock at a price per share equal to the applicable Preferred Liquidation Amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(C)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding the foregoing, in the event of a redemption pursuant to the preceding clause (B), if the Available Proceeds are not sufficient to redeem all outstanding shares of the Preferred Stock, or if the Company does not have sufficient lawfully available funds to effect such redemption, the Company shall *first* redeem a pro rata portion of each holder's shares of the Series E Preferred, in preference to the holders of the shares of the Series D Preferred, the Series C Preferred, the Series B Preferred, the Series A Preferred and the Series Seed Preferred, to the fullest extent of such Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series E Preferred to be redeemed if the legally available funds were sufficient to redeem all such shares of the Series E Preferred, and shall redeem the remaining shares of the Series E Preferred as soon as practicable after the Company has funds legally available therefor *second* redeem a pro rata portion of each holder's shares of the Series D Preferred, in preference to the holders of the shares of the Series C Preferred, the Series B Preferred, the Series A Preferred and the Series Seed Preferred, to the fullest extent of such Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series D Preferred to be redeemed if the legally available funds were sufficient to redeem all

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such shares of the Series D Preferred, and shall redeem the remaining shares of the Series D Preferred as soon as practicable after the Company has funds legally available therefor, *third* redeem a pro rata portion of each holder's shares of the Series C Preferred, in preference to the holders of the shares of the Series B Preferred, Series A Preferred and the Series Seed Preferred, to the fullest extent of such Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series C Preferred to be redeemed if the legally available funds were sufficient to redeem all such shares of the Series C Preferred, and shall redeem the remaining shares of the Series C Preferred as soon as practicable after the Company has funds legally available therefor, *fourth* redeem a pro rata portion of each holder's shares of the Series B Preferred, in preference to the holders of the shares of the Series A Preferred and the Series Seed Preferred, to the fullest extent of such remaining Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series B Preferred to be redeemed if the legally available funds were sufficient to redeem all such shares of the Series B Preferred, and shall redeem the remaining shares of the Series B Preferred as soon as practicable after the Company has funds legally available therefor, *fifth* redeem a pro rata portion of each holder's shares of the Series A Preferred, in preference to the holders of the shares of the Series Seed Preferred, to the fullest extent of such remaining Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series A Preferred to be redeemed if the legally available funds were sufficient to redeem all such shares of the Series A Preferred, and shall redeem the remaining shares of the Series A Preferred as soon as practicable after the Company has funds legally available therefor, and *sixth* redeem a pro rata portion of each holder's shares of the Series Seed Preferred, to the fullest extent of such remaining Available Proceeds or such lawfully available funds, as the case may be, based on the respective amounts which would otherwise be payable in respect of the shares of the Series Seed Preferred to be redeemed if the legally available funds were sufficient to redeem all such shares of the Series Seed Preferred, and shall redeem the remaining shares of the Series Seed Preferred as soon as practicable after the Company has funds legally available therefor. Prior to the distribution or redemption provided for in this <u>Subsection 3(h)(ii)(C),</u> the Company shall not expend or dissipate the consideration received for such Deemed Liquidation Event, except to discharge expenses incurred in connection with such Deemed Liquidation Event or in the ordinary course of business. The date upon which any such redemption is required to be effected pursuant to this <u>Subsection 3(h)(ii)</u> shall be the ***"Redemption Date"***.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(D)&nbsp;&nbsp;&nbsp;&nbsp;**The Company shall send written notice of any redemption pursuant to this <u>Subsection 3(h)(ii)</u> (the ***"Redemption Notice"***) to each holder of record of the Preferred Stock as required by <u>Subsection 3(h)(ii)</u>. Each Redemption Notice shall state:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)&nbsp;&nbsp;&nbsp;&nbsp;**the number of shares held by the holder that the Company shall redeem on the Redemption Date specified in the Redemption Notice (which number shall not be less than the number of shares the Company is then required to redeem);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)&nbsp;&nbsp;&nbsp;&nbsp;**the Redemption Date and the redemption price; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)&nbsp;&nbsp;&nbsp;&nbsp;**that the holder is to surrender to the Company, in the manner and at the place designated, such holder's certificate or certificates representing the shares of Preferred Stock to be redeemed.

If the Company receives, on or prior to the tenth (10th) day after the date of delivery of the Redemption Notice to a holder of the Preferred Stock, written notice from such holder that such holder elects to be excluded from the redemption provided in this <u>Subsection 3(h)(ii</u>), then the shares of the Preferred Stock registered on the books of the Company in the name of such holder at the time of the Company's receipt of such notice shall thereafter be ***"Excluded Shares"***. Excluded Shares shall not be redeemed or redeemable pursuant to this <u>Subsection 3(h)(ii),</u> whether on such Redemption Date or thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(E)&nbsp;&nbsp;&nbsp;&nbsp;**On or before the applicable Redemption Date, each holder of shares to be redeemed on such Redemption Date shall surrender the certificate or certificates representing such shares (or, if such registered holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company, in the manner and at the place designated in the Redemption Notice, and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof. In the event less than all of the shares represented by a certificate are redeemed, a new certificate representing the unredeemed shares shall promptly be issued to such holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(F)&nbsp;&nbsp;&nbsp;&nbsp;**If the Redemption Notice shall have been duly given, and if on the applicable Redemption Date the redemption price payable upon redemption of the shares to be redeemed on such Redemption Date is paid or tendered for payment or deposited with an independent payment agent so as to be available therefor in a timely manner, then notwithstanding that the certificates evidencing any of the shares so called for redemption shall not have been surrendered, dividends (if any) with respect to such shares shall cease to accrue after such Redemption Date and all rights with respect to such shares shall forthwith after the Redemption Date terminate, except only the right of the holders to receive the redemption price without interest upon surrender of their certificate or certificates therefor. Any shares of the Preferred Stock that are redeemed or otherwise acquired by the Company or any of its subsidiaries shall be automatically and immediately cancelled and retired and shall not be reissued, sold or transferred.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;***Amount Deemed Paid or Distributed.* If the amount deemed paid or distributed under this <u>Subsection 3(h)</u> is made in property other than in cash, the value of such distribution shall be the fair market value of such property, determined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**For securities not subject to investment letters or other similar restrictions on free marketability,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)&nbsp;&nbsp;&nbsp;&nbsp;**if traded on a securities exchange or the NASDAQ Stock Market, the value shall be deemed to be the average of the closing prices of the securities on such exchange or market over the thirty (30) trading day period ending three (3) days prior to the closing of such transaction;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)&nbsp;&nbsp;&nbsp;&nbsp;**if actively traded over-the-counter, the value shall be deemed to be the average of the closing bid or sale prices (whichever is applicable) over the thirty (30) trading day period ending three (3) days prior to the closing of such transaction; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)&nbsp;&nbsp;&nbsp;&nbsp;**if there is no active public market, the value shall be the fair market value thereof, as determined by the Board (including the affirmative vote of a majority of the then-serving Preferred Directors).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**The method of valuation of securities subject to investment letters or other similar restrictions on free marketability (other than restrictions arising solely by virtue of a stockholder's status as an affiliate or former affiliate) shall take into account an appropriate discount (as mutually determined by the Board, including the approval of a majority of the then-serving Preferred Directors) from the market value as determined pursuant to clause (A) above so as to reflect the approximate fair market value thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(C)&nbsp;&nbsp;&nbsp;&nbsp;**For any other property other than cash, the value shall be the fair market value thereof, as determined by the Board (including the affirmative vote of the then-serving Preferred Directors).

For the purposes of this Subsection 3(e), ***"trading day"*** means any day which the exchange or system on which the securities to be distributed are traded is open and ***"closing prices"*** or ***"closing bid or sales prices"*** shall be deemed to be: (A) for securities traded primarily on the New York Stock Exchange or Nasdaq Stock Market, the last reported trade price or sale price, as the case may be, at 4:00 p.m., New York time, on that day and (B) for securities listed or traded on other exchanges, markets and systems, the market price as of the end of the regular hours trading period that is generally accepted as such for such exchange, market or system. If, after the date hereof, the benchmark times generally accepted in the securities industry for determining the market price of a stock as of a given trading day shall change from those set forth above, the fair market value shall be determined as of such other generally accepted benchmark times.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;***Allocation of Escrow and Contingent Consideration*. In the event of a Deemed Liquidation Event, liquidation, dissolution or winding up of the affairs of the Company, if any portion of the consideration payable to the stockholders of the Company is

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placed into escrow, is retained as a holdback to be available for satisfaction of indemnification or similar obligations, and/or is payable to the stockholders of the Company subject to contingencies, the Transaction Agreement shall provide that (A) the portion of such consideration that is not placed in escrow, not retained as a holdback to be available for satisfaction of indemnification or similar obligations and not subject to any contingencies (the ***"Initial Consideration"***) shall be allocated among the holders of capital stock of the Company in accordance with <u>Subsections 3(a)</u>, <u>(b)</u>, <u>(c)</u>, <u>(d)</u>, <u>(e)</u>, <u>(f)</u> and <u>(g)</u> above as if the Initial Consideration were the only consideration payable in connection with such Deemed Liquidation Event and (B) any additional consideration which becomes payable to the stockholders of the Company upon release from escrow or satisfaction of contingencies shall be allocated among the holders of capital stock of the Company in accordance with <u>Subsections 3(a)</u>, <u>(b)</u>, <u>(c)</u>, <u>(d)</u>, <u>(e)</u>, <u>(f)</u> and <u>(g)</u> above after taking into account the previous payment of the Initial Consideration as part of the same transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;***Events Not Constituting A Deemed Liquidation Event*. In the event that the Company determines to distribute the proceeds (cash or otherwise) resulting from any sale or other transfer of a significant portion of its assets (which would not be a Deemed Liquidation Event) or the proceeds from an option to acquire securities or assets of the Company, the proceeds resulting therefrom (including in respect of any ongoing payments, such as a royalty or milestone payment) will be distributed in accordance with <u>Subsections 3(a)</u> through <u>(g)</u> (and not as a dividend under <u>Section 1</u>) and shall be deemed to be a payment (or partial payment, as applicable) with respect to the applicable Preferred Liquidation Amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;CONVERSION RIGHTS.** The holders of the Preferred Stock shall have the following rights with respect to conversion into shares of the Common Stock:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Optional Conversion.** Subject to and in compliance with the provisions of this <u>Subsection 4</u>, shares of the Preferred Stock may, at the option of the holder thereof, be converted by the holder thereof at any time into fully-paid and nonassessable shares of the Common Stock. The number of shares of the Common Stock to which a holder of the Preferred Stock shall be entitled upon conversion shall be the product obtained by multiplying the Applicable Conversion Rate (as defined below) then in effect (determined as provided in <u>Subsection 4(b)</u>) by the number of shares of the Preferred Stock being converted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Conversion Rate.** The conversion rate in effect at any time for conversion of the Series E Preferred (the ***"Series E Conversion Rate"***) shall be the quotient obtained by dividing the Series E Original Issue Price by the Series E Conversion Price, calculated as provided in <u>Subsection 4(c).</u> The conversion rate in effect at any time for conversion of the Series D Preferred (the ***"Series D Conversion Rate"***) shall be the quotient obtained by dividing the Series D Original Issue Price by the Series D Conversion Price, calculated as provided in <u>Subsection 4(c).</u> The conversion rate in effect at any time for conversion of the Series C Preferred (the ***"Series C Conversion Rate"***) shall be the quotient obtained by dividing the Series C Original Issue Price by the Series C Conversion Price, calculated as provided in <u>Subsection 4(c).</u> The conversion rate in effect at any time for conversion of the Series B Preferred (the ***"Series B Conversion Rate"***) shall be the quotient

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obtained by dividing the Series B Original Issue Price by the Series B Conversion Price, calculated as provided in <u>Subsection 4(c).</u> The conversion rate in effect at any time for conversion of the Series A Preferred (the ***"Series A Conversion Rate"***) shall be the quotient obtained by dividing the Series A Original Issue Price by the Series A Conversion Price, calculated as provided in <u>Subsection 4(c).</u> The conversion rate in effect at any time for conversion of the Series Seed Preferred (the ***"Series Seed Conversion Rate"***) shall be the quotient obtained by dividing the Series Seed Original Issue Price by the Series Seed Conversion Price, calculated as provided in <u>Subsection 4(c</u>). The term ***"Applicable Conversion Rate"*** shall refer to the Series E Conversion Rate, the Series D Conversion Rate, the Series C Conversion Rate, the Series B Conversion Rate, the Series A Conversion Rate or the Series Seed Conversion Rate, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Conversion Price.** The conversion price for the Series E Preferred (the ***"Series E Conversion Price"***) shall, as of the Filing Date, be the Series E Original Issue Price. The conversion price for the Series D Preferred (the ***"Series D Conversion Price"***) shall, as of the Filing Date, be the Series D Original Issue Price. The conversion price for the Series C Preferred (the ***"Series C Conversion Price"***) shall, as of the Filing Date, be the Series C Original Issue Price. The conversion price for the Series B Preferred (the ***"Series B Conversion Price"***) shall, as of the Filing Date, be the Series B Original Issue Price. The conversion price for the Series A Preferred (the ***"Series A Conversion Price"***) shall, as of the Filing Date, be the Series A Original Issue Price. The conversion price for the Series Seed Preferred (the ***"Series Seed Conversion Price"***) shall, as of the Filing Date, be the Series Seed Original Issue Price. The term ***"Applicable Conversion Price"*** shall refer to the Series E Conversion Price, the Series D Conversion Price, the Series C Conversion Price, the Series B Conversion Price, the Series A Conversion Price or the Series Seed Conversion Price, as the case may be. Each Applicable Conversion Price for a series of Preferred Stock shall be adjusted from time to time in accordance with this <u>Section 4</u>. All references to an Applicable Conversion Price for a series of Preferred Stock shall mean such Applicable Conversion Price, as so adjusted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Mechanics of Conversion.** Each holder of the Preferred Stock who desires to convert the same into shares of the Common Stock pursuant to this <u>Section 4</u> shall surrender the certificate or certificates therefore, duly endorsed (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), at the office of the Company or any transfer agent for the Preferred Stock, and shall give written notice to the Company at such office that such holder elects to convert the same. Such notice shall state the number of shares of the Preferred Stock being converted. Thereupon, the Company shall promptly (but in no event more than three (3) business days after delivery of the notice required by the first sentence of this <u>Subsection 4(d))</u> issue and deliver at such office to such holder a certificate or certificates for the number of shares of the Common Stock to which such holder is entitled and shall promptly pay (i) in shares of the Common Stock (at the Applicable Conversion Price) any declared but unpaid dividends on the shares of such Preferred Stock being converted and (ii) in cash (at the Common Stock's fair market value determined in good faith by the Board (including the affirmative vote of a majority of the Preferred Directors)

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as of the date of conversion) the value of any fractional share of the Common Stock otherwise issuable to any holder of the Preferred Stock. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificates representing the shares of the Preferred Stock to be converted, and the person entitled to receive the shares of the Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of the Common Stock on such date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Adjustment for Stock Splits and Combinations.** If at any time or from time to time on or after the date that the first share of the Series E Preferred is issued (the ***"Series E Original Issue Date"***), the Company effects a subdivision of the outstanding Common Stock without a corresponding subdivision of the Preferred Stock, the Applicable Conversion Price in effect immediately before that subdivision shall be proportionately decreased. Conversely, if at any time or from time to time after the Series E Original Issue Date, the Company combines the outstanding shares of Common Stock into a smaller number of shares without a corresponding combination of the Preferred Stock, the Applicable Conversion Price in effect immediately before the combination shall be proportionately increased. Any adjustment under this <u>Subsection 4(e)</u> shall become effective at the close of business on the date the subdivision or combination becomes effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Adjustment for Common Stock Dividends and Distributions.** If at any time or from time to time on or after the Series E Original Issue Date, the Company pays a dividend or other distribution on the Common Stock in additional shares of the Common Stock, the Applicable Conversion Price that is then in effect shall be decreased as of the time of such issuance, as provided below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**The Applicable Conversion Price shall be adjusted by multiplying such Applicable Conversion Price then in effect by a fraction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**the numerator of which is the total number of shares of the Common Stock issued and outstanding immediately prior to the time of such issuance, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**the denominator of which is the total number of shares of the Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of the Common Stock issuable in payment of such dividend or distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**If the Company fixes a record date to determine which holders of the Common Stock are entitled to receive such dividend or other distribution, the Applicable Conversion Price shall be fixed as of the close of business on such record date and the number of shares of the Common Stock shall be calculated immediately prior to the close of business on such record date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**If such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefore, the Applicable Conversion Price shall be recomputed accordingly as of the close of business on such record date

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and thereafter the Applicable Conversion Price shall be adjusted pursuant to this <u>Subsection 4(f)</u> to reflect the actual payment of such dividend or distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**No such adjustment shall be made if the holders of the Preferred Stock simultaneously receive a dividend or other distribution of shares of the Common Stock in a number equal to the number of shares of the Common Stock as they would have received if all outstanding shares of the Preferred Stock had been converted into shares of the Common Stock on the date of such event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Adjustment for Reclassification, Exchange and Substitution.** If at any time or from time to time on or after the Series E Original Issue Date, the Common Stock issuable upon the conversion of the Preferred Stock is changed into the same or a different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a Deemed Liquidation Event or a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this <u>Section 4</u>), in any such event, each holder of the Preferred Stock shall then have the right to convert such stock into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the maximum number of shares of the Common Stock into which such shares of the Preferred Stock could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other stock, securities or property by the terms thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Reorganizations, Mergers or Consolidations.** If at any time or from time to time on or after the Series E Original Issue Date, there is a capital reorganization of the Common Stock or a merger or consolidation of the Company with or into another corporation or another entity or person (other than a Deemed Liquidation Event or a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this <u>Section 4</u>), as a part of such capital reorganization, merger or consolidation, provision shall be made so that the holders of the Preferred Stock shall thereafter be entitled to receive, upon conversion of the Preferred Stock, the number of shares of stock or other securities or property of the Company to which a holder of the number of shares of the Common Stock deliverable upon conversion would have been entitled upon such capital reorganization, merger or consolidation, subject to adjustment in respect of such stock, securities or property by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this <u>Section 4</u> with respect to the rights of the holders of the Preferred Stock after the capital reorganization, merger or consolidation to the end that the provisions of this <u>Section 4</u> (including adjustment of the Applicable Conversion Price then in effect and the number of shares issuable upon conversion of the Preferred Stock) shall be applicable after that event and be as nearly equivalent as practicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;Sale of Shares Below Applicable Conversion Price.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**If at any time or from time to time after the Series E Original Issue Date, the Company issues or sells, or is deemed by the express provisions of this <u>Subsection 4(i)</u> to have issued or sold, Additional Shares of Common Stock, other than as a

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dividend or other distribution on the Common Stock in Additional Shares of the Common Stock as provided in <u>Subsection 4(f)</u> above, and other than a subdivision or combination of shares of the Common Stock as provided in <u>Subsection 4(e)</u> above, for an Effective Price less than the then-effective Applicable Conversion Price, then and, in each such case, the then-effective Applicable Conversion Price, shall be reduced, as of the opening of business on the date of such issue or sale, to a price determined by multiplying such Applicable Conversion Price in effect immediately prior to such issuance or sale by a fraction equal to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**the numerator of which shall be (1) the number of Shares of Common Stock Deemed Outstanding immediately prior to such issue or sale, *plus* (2) the number of shares of the Common Stock which the Aggregate Consideration received or deemed to have been received by the Company for the total number of Additional Shares of Common Stock so issued would purchase at the then-effective Applicable Conversion Price, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**the denominator of which shall be (1) the number of Shares of Common Stock Deemed Outstanding immediately prior to such issue or sale *plus* (2) the total number of Additional Shares of Common Stock so issued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**No adjustment shall be made to the Applicable Conversion Price under this Subsection 4(i) in an amount less than $0.001 per share. Any adjustment otherwise required by this Subsection 4(i) that is not required to be made due to the preceding sentence shall be included in any subsequent adjustment to the Applicable Conversion Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**For the purpose of the adjustment required under this <u>Subsection 4(i),</u> if the Company issues or sells (y) Options (as defined below) or (z) Convertible Securities (as defined below) (excluding Options or Convertible Securities that are themselves Exempted Securities) for the purchase of Additional Shares of Common Stock, and if the Effective Price of such Additional Shares of Common Stock is less than the then-existing Applicable Conversion Price, in each case the Company shall be deemed to have issued at the time of the issuance of such Options or Convertible Securities the maximum number of Additional Shares of Common Stock issuable upon exercise or conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Company for the issuance of such Options or Convertible Securities plus:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;**in the case of such Options, the minimum amounts of consideration, if any, payable to the Company upon the exercise of such Options; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;**in the case of such Convertible Securities, the minimum amounts of consideration, if any, payable to the Company upon the conversion thereof (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities);

*provided*, that if the minimum amount of such consideration cannot be ascertained, but are a function of anti-dilution or similar protective clauses, the Company shall be deemed to have received the minimum amount of consideration without reference to such clauses;

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*provided further*, that if the minimum amount of consideration payable to the Company upon the exercise or conversion of such Options or Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason of anti-dilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; and

*provided further*, that if the minimum amount of consideration payable to the Company upon the exercise or conversion of such Options or Convertible Securities is subsequently increased, or the number of Additional Shares of Common Stock issued upon such exercise or conversion is subsequently decreased over time or upon the occurrence or non-occurrence of certain specified events other than by reason of anti-dilution adjustments, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Company upon the exercise or conversion of such Options or Convertible Securities, or the number of Additional Shares of Common Stock to be issued shall be again recalculated using the figure to which the number of such shares is decreased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**No further adjustment of the Applicable Conversion Price, as adjusted upon the issuance of such Options or Convertible Securities, shall be made as a result of the actual issuance of Additional Shares of Common Stock or the exercise of any such Options or the conversion of any such Convertible Securities. If any such Options or the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Applicable Conversion Price as adjusted upon the issuance of such Options or Convertible Securities shall be readjusted to the Applicable Conversion Price which would have been in effect had an adjustment been made on the basis that the only Additional Shares of Common Stock so issued were the Additional Shares of Common Stock, if any, actually issued or sold on the exercise of such Options or rights of conversion of such Convertible Securities, and such Additional Shares of Common Stock, if any, were issued or sold for the consideration actually received by the Company upon such exercise, plus the consideration, if any, actually received by the Company for the granting of all such Options, whether or not exercised, plus the consideration received for issuing or selling the Convertible Securities actually converted, plus the consideration, if any, actually received by the Company (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible Securities, provided, that such readjustment shall not apply to prior conversions of any shares of the Preferred Stock.

Notwithstanding the provisions of this <u>Subsection 4(i),</u> (x) no adjustment to the then-existing Series E Conversion Price shall be made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of the Series E Preferred waive the application of this <u>Subsection 4(i)</u> to the Series E Conversion Price in connection with any such issuance or sale, or deemed issuance or sale, and, notwithstanding anything else set forth in this Restated Certificate no waiver of the application of this <u>Subsection 4(i)</u> to the Series E Conversion Price shall be effective without the prior written consent of the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of Series E Preferred, (y) no adjustment to the then-existing Series D Conversion Price shall be

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made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least sixty-five percent (65%) of the outstanding shares of the Series D Preferred waive the application of this <u>Subsection 4(i)</u> to the Series D Conversion Price in connection with any such issuance or sale, or deemed issuance or sale, and, notwithstanding anything else set forth in this Restated Certificate no waiver of the application of this <u>Subsection 4(i)</u> to the Series D Conversion Price shall be effective without the prior written consent of the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of Series D Preferred, (z) no adjustment to the then-existing Series C Conversion Price shall be made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of the Series C Preferred waive the application of this <u>Subsection 4(i)</u> to the Series C Conversion Price in connection with any such issuance or sale, or deemed issuance or sale, and, notwithstanding anything else set forth in this Restated Certificate no waiver of the application of this <u>Subsection 4(i)</u> to the Series C Conversion Price shall be effective without the prior written consent of the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of Series C Preferred, (aa) no adjustment to the then-existing Series B Conversion Price shall be made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least a majority of the outstanding shares of the Series B Preferred waive the application of this <u>Subsection 4(i)</u> to the Series B Conversion Price in connection with any such issuance or sale, or deemed issuance or sale, (bb) no adjustment to the then-existing Series A Conversion Price shall be made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least a majority of the outstanding shares of the Series A Preferred waive the application of this <u>Subsection 4(i)</u> to the Series A Conversion Price in connection with any such issuance or sale, or deemed issuance or sale, and (cc) no adjustment to the then-existing Series Seed Conversion Price shall be made pursuant to this <u>Subsection 4(i)</u> if, on or before the date of an issuance or sale, or deemed issuance or sale, of Additional Shares of Common Stock, the holders in the aggregate of at least a majority of the outstanding shares of the Series Seed Preferred waive the application of this <u>Subsection 4(i)</u> to the Series Seed Conversion Price in connection with any such issuance or sale, or deemed issuance or sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**As used in this <u>Subsection 4(i)</u> and elsewhere in this Restated Certificate, capitalized terms shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(A)&nbsp;&nbsp;&nbsp;&nbsp;*"Additional Shares of Common Stock"*** means all shares of the Common Stock issued by the Company or deemed to be issued pursuant to this <u>Subsection 4(i)</u> (including shares of Common Stock issuable in respect of Convertible Securities and Options, as well as shares of Common Stock subsequently reacquired or retired by the

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Company), and, for purposes of this <u>Subsection 4(i)</u> only, all shares of the Preferred Stock, *other than* the following (collectively, the ***"Exempted Securities"***):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)&nbsp;&nbsp;&nbsp;&nbsp;**shares of the Common Stock issued upon conversion of the Preferred Stock pursuant to the terms hereof, or as a dividend or distribution on the Preferred Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)&nbsp;&nbsp;&nbsp;&nbsp;**shares of the Common Stock or the Preferred Stock issued upon the conversion of any debenture, warrant, option or other convertible security outstanding as of, or approved and authorized prior to, the Series E Original Issue Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(3)&nbsp;&nbsp;&nbsp;&nbsp;**shares of the Common Stock issuable upon a stock split, stock dividend or any subdivision of shares of the Common Stock that is covered by <u>Subsection 4(e)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(4)&nbsp;&nbsp;&nbsp;&nbsp;**shares Common Stock issued by the Company up to a maximum amount of 41,700,495 shares (the "***Authorized Plan Amount***"), and options issued by the Company to purchase such shares of Common Stock, to employees, independent contractors, officers, or directors of the Company pursuant to stock purchase agreements, equity incentive plans or agreements, stock bonus awards, or other incentive stock arrangements approved by the Board (collectively, "***Incentive Equity***") (which maximum amount of shares of Common Stock and options therefore includes Incentive Equity outstanding as of the Filing Date); provided, however that any options for such shares that expire or terminate unexercised or any restricted stock repurchased by the Company at cost shall not be counted toward such maximum number unless and until such shares are regranted as new stock grants (or as new options); provided, further that the Authorized Plan Amount may otherwise be increased if approved by the Board, including the approval of a majority of the then-serving Preferred Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(5)&nbsp;&nbsp;&nbsp;&nbsp;**shares of the Common Stock issued or issuable to banks, equipment lessors pursuant to a debt financing, equipment leasing or real property leasing transaction approved by the Board, including a majority of the then-serving Preferred Directors;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(6)&nbsp;&nbsp;&nbsp;&nbsp;**shares of the Common Stock issued or issuable for consideration other than cash pursuant to a technology license, business combination, strategic partnership or joint venture transaction approved by the Board, including a majority of the then-serving Preferred Directors, which approval expressly provides that such shares are Exempted Securities; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(7)&nbsp;&nbsp;&nbsp;&nbsp;**shares of Common Stock issued by the Company in connection with a Qualified Public Offering.

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References in this definition of "Additional Shares of Common Stock" shall mean all shares of the Common Stock issued by the Company or deemed to be issued pursuant to this <u>Subsection</u> <u>4(i)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(B)&nbsp;&nbsp;&nbsp;&nbsp;"*Aggregate Consideration*"** means: (1) to the extent it consists of cash, be computed at the net amount of cash received by the Company after deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Company in connection with such issue or sale but without deduction of any expenses payable by the Company, (2) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board, including the approval of a majority of the then-serving Preferred Directors, and (3) if Additional Shares of Common Stock, Convertible Securities or Options to purchase either Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board, including the approval of a majority of the then-serving Preferred Directors, to be allocable to such Additional Shares of Common Stock, Convertible Securities or Options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(C)&nbsp;&nbsp;&nbsp;&nbsp;*"Convertible Securities"*** means any evidence of indebtedness, stock or other securities directly or indirectly convertible into or exchangeable for shares of the Common Stock, but excluding Options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(D)&nbsp;&nbsp;&nbsp;&nbsp;*"Effective Price"*** means the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold, by the Company under this <u>Subsection 4(i),</u> into the Aggregate Consideration received, or deemed to have been received by the Company for such issue under this <u>Subsection 4(i)</u> for such Additional Shares of Common Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(E)&nbsp;&nbsp;&nbsp;&nbsp;*"Options"*** means rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock or Convertible Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(F)&nbsp;&nbsp;&nbsp;&nbsp;*"Shares of Common Stock Deemed Outstanding"*** means, as of any given date, the sum of (1) the number of shares of the Common Stock outstanding, (2) the number of shares of the Common Stock into which the then-outstanding shares of the Preferred Stock could be converted if fully converted on the day immediately preceding the given date, and (3) the number of shares of the Common Stock which could be obtained through the exercise or conversion of all other outstanding Options or Convertible Securities outstanding on the day immediately preceding the given date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)&nbsp;&nbsp;&nbsp;&nbsp;Multiple Closing Dates.** In the event the Company shall issue on more than one date Additional Shares of Common Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to the Applicable Conversion Price pursuant to the terms of <u>Subsection 4(i)</u> above, then, upon the final such issuance, the Applicable Conversion Price shall be readjusted to give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additional adjustments as a result of any such subsequent issuances within such period).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k)&nbsp;&nbsp;&nbsp;&nbsp;Certificate of Adjustment.** In each case of an adjustment or readjustment of the Applicable Conversion Price for the number of shares of the Common Stock or other securities issuable upon conversion of the Preferred Stock, the Company, at its expense, shall compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to each registered holder of the Preferred Stock at the holder's address as shown in the Company's books. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (i) the consideration received or deemed to be received by the Company for any Additional Shares of Common Stock issued or sold or deemed to have been issued or sold, (ii) the Effective Price of any such Additional Shares of Common Stock, (iii) the Applicable Conversion Price at the time in effect, (iv) the number of Additional Shares of Common Stock and (v) the type and amount, if any, of other property which at the time would be received upon conversion of the Preferred Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(l)&nbsp;&nbsp;&nbsp;&nbsp;Notices of Record Date.** Upon (i) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, (ii) any Deemed Liquidation Event, (iii) any stock dividend, stock split, combination of shares, reverse stock split, reorganization, recapitalization or other reclassification affecting the Company's equity securities (each a ***"Recapitalization Event"***), or (iv) any merger or consolidation of the Company with or into any other corporation, or any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall mail to each holder of the Preferred Stock at least ten (10) days prior to the record date specified therein (or such shorter period approved by the holders of the Preferred Stock Majority), a notice specifying (x) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (y) the date on which any such Deemed Liquidation Event, Recapitalization Event, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective and (z) the date, if any, that is to be fixed as to when the holders of record of the Common Stock (or other securities) shall be entitled to exchange their shares of the Common Stock (or other securities) for securities or other property deliverable upon such Deemed Liquidation Event, Recapitalization Event, transfer, consolidation, merger, dissolution, liquidation or winding up.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(m)&nbsp;&nbsp;&nbsp;&nbsp;Automatic Conversion.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Upon either (A) the written consent of the Preferred Stock Majority; or (B) immediately prior to the closing of the Company's sale of its Common Stock (which shares are to be listed for trading on the Nasdaq Stock Market's National Market or the New York Stock Exchange) in a firm commitment underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "***Securities Act***") covering the offer and sale of the Common Stock for the account of the Company (a ***"Public Offering"***), with a price per share multiplied by the Common Stock outstanding (including Common Stock issuable upon conversion of the Preferred Stock) immediately prior to the offering, which is at least 2.5 times the Series E Original Issue Price per share (subject to

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appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Common Stock) and resulting in at least $50,000,000 of net proceeds to the Company (the ***"Qualified Public Offering"***) (the time of such closing or the date and time of the event specified in such vote or written consent is referred to herein as the ***"Automatic Conversion Time"***), all outstanding shares of the Preferred Stock shall automatically be converted into shares of the Common Stock, at the then-effective Applicable Conversion Rate. Upon any automatic conversion set forth in this <u>Subsection 4(m)(i),</u> any declared but unpaid dividends on the Preferred Stock shall be paid in accordance with the provisions of <u>Subsection 4(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**The Company shall send to all holders of record of shares of the Preferred Stock written notice of the Automatic Conversion Time and the place designated for mandatory conversion of all such shares of the Preferred Stock pursuant to this <u>Subsection 4(m</u>). The Company need not send such notice in advance of the occurrence of the Automatic Conversion Time. Upon receipt of such notice, each holder of shares of the Preferred Stock shall surrender such holder's certificate or certificates for all such shares (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate) to the Company at the place designated in such notice, and shall thereafter receive a certificate or certificates for the number of shares of the Common Stock to which such holder is entitled pursuant to this <u>Subsection 4(m)</u>. At the Automatic Conversion Time, all outstanding shares of the Preferred Stock shall be deemed to have been converted into shares of the Common Stock, which shall be deemed to be outstanding of record, and all rights with respect to the Preferred Stock so converted, including the rights, if any, to receive notices and vote (other than as a holder of the Common Stock), will terminate, except only the rights of the holders thereof, upon surrender of their certificate or certificates (or lost certificate affidavit and agreement) therefor, to receive the items provided for in the last sentence of this clause (ii). If so required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or by such holder's attorney duly authorized in writing. As soon as practicable after the Automatic Conversion Time and the surrender of the certificate or certificates (or lost certificate affidavit and agreement) for the Preferred Stock, the Company shall issue and deliver to such holder, or to such holder's nominees, a certificate or certificates for the number of full shares of the Common Stock issuable on such conversion in accordance with the provisions hereof, together with cash as provided below in lieu of any fraction of a share of the Common Stock otherwise issuable upon such conversion and the payment of any declared and unpaid dividends on the shares converted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**All shares of the Preferred Stock shall, from and after the Automatic Conversion Time, no longer be deemed to be outstanding and, notwithstanding the failure of the holder or holders thereof to surrender the certificates for such shares on or prior to such time, all rights with respect to such shares shall immediately cease and terminate at the Automatic Conversion Time, except only the right of the holders thereof to receive shares of the Common Stock in exchange therefor and to receive payment of any dividends declared but

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unpaid thereon. All converted shares of the Preferred Stock shall be retired and cancelled and may not be reissued as shares of such series, and the Company may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of the Preferred Stock accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(n)&nbsp;&nbsp;&nbsp;&nbsp;Special Mandatory Conversion.** The capitalized terms used in this <u>Subsection 4(n)</u> shall have the meanings ascribed to them in the Series E Preferred Stock Purchase Agreement entered into by and between the Company and the Purchasers named therein, dated as of on or around the Filing Date (the ***"Stock Purchase Agreement"***).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;Trigger Event.** In the event that any Purchaser does not participate in the Tranche 2 Closing, in accordance with the terms and conditions set forth in the Stock Purchase Agreement by not purchasing such holder's full amount of the shares of the Series E Preferred set forth on Exhibit A of the Stock Purchase Agreement required to be purchased thereby at the Tranche 2 Closing, then each share of the Series E Preferred held by such holder shall automatically, on a certificate-by-certificate basis, and without any further action on the part of such holder, be converted into such number of shares of the Common Stock at a ratio of every ten (10) shares of the Series E Preferred to one (1) share of the Common Stock, pursuant to <u>Subsection 4(a)</u>, rounded to the nearest whole share, effective upon, subject to, and concurrently with, the consummation of each of the Tranche 2 Closing. Such conversion is referred to as a ***"Special Mandatory Conversion."***

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;Voluntary Conversion Not Effective.** Notwithstanding anything to the contrary in <u>Subsection 4(a)</u>, no holder of shares of the Series E Preferred may convert any shares of the Series E Preferred into shares of the Common Stock pursuant to <u>Section 4(a)</u> hereof prior to the date that is ten (10) business days after the Tranche 2 Closing; <u>provided</u>, that this <u>Subsection 4(n)(ii)</u> shall terminate and no longer be of force and effect upon the earliest of (i) the 10th business day following the date of the Tranche 2 Closing, and (ii) the completion of a Deemed Liquidation Event.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;Special Mandatory Conversion Procedural Requirements.** Upon a Special Mandatory Conversion, each holder of shares of the Series E Preferred converted pursuant to <u>Subsection 4(n)(i)</u> shall be sent written notice of such Special Mandatory Conversion and the place designated for mandatory conversion of all such shares of the Series E Preferred pursuant to this <u>Subsection 4(n)</u>. Upon receipt of such notice, each holder of such shares of the Series E Preferred in certificated form shall surrender his, her or its certificate or certificates for all such shares (or, if such holder alleges that any such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Corporation to indemnify the Corporation against any claim that may be made against the Corporation on account of the alleged loss, theft or destruction of such certificate) to the Corporation at the place designated in such notice. If so required by the Corporation, any certificates surrendered for conversion shall be endorsed or accompanied by written instrument or instruments of transfer, in form satisfactory to the Corporation, duly executed by the registered holder or by his, her or its attorney duly authorized in writing. All rights with respect to the shares of the Series E Preferred converted pursuant to <u>Subsection 4(n)(i)</u>, including the

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rights, if any, to receive notices and vote (other than as a holder of the Common Stock), will terminate at the time of the Special Mandatory Conversion (notwithstanding the failure of the holder or holders thereof to surrender any certificates for such shares at or prior to such time), except only the rights of the holders thereof, upon surrender of any certificate or certificates of such holders therefor (or lost certificate affidavit and agreement), to receive the items provided for in the next sentence of this <u>Subsection 4(n)(iii)</u>. As soon as practicable after the Special Mandatory Conversion and, if applicable, the surrender of any certificate or certificates (or lost certificate affidavit and agreement) for shares of the Series E Preferred so converted, the Corporation shall (a) if shares of the Common Stock are in certificated form, issue and deliver to such holder, or to his, her or its nominees, a certificate or certificates for the number of full shares of the Common Stock issuable upon such conversion in accordance with the provisions hereof or (b) if shares of Common Stock are not in certificated form, issue and deliver to such holder, or to his, her or its nominees, a notice of issuance of uncertificated shares and may, upon written request, issue and deliver a certificate for the number of full shares of the Common Stock issuable upon such conversion in accordance with the provisions hereof. Such converted shares of the Series E Preferred shall be retired and cancelled and may not be reissued as shares of such series, and the Corporation may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of the Series E Preferred accordingly.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(o)&nbsp;&nbsp;&nbsp;&nbsp;Fractional Shares.** No fractional shares of the Common Stock shall be issued upon conversion of the Preferred Stock. All shares of the Common Stock (including fractions thereof) issuable upon conversion of more than one share of the Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. If, after the aforementioned aggregation, the conversion would result in the issuance of any fractional share, the Company shall, in lieu of issuing any fractional share, pay cash equal to the product of such fraction multiplied by the Common Stock's fair market value (as determined in good faith by the Board) on the date of conversion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(p)&nbsp;&nbsp;&nbsp;&nbsp;Reservation of Stock Issuable Upon Conversion.** The Company shall at all times reserve and keep available out of its authorized but unissued shares of the Common Stock, solely for the purpose of effecting the conversion of the shares of the Preferred Stock, such number of its shares of the Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding shares of the Preferred Stock. If at any time the number of authorized but unissued shares of the Common Stock shall not be sufficient to effect the conversion of all then-outstanding shares of the Preferred Stock, the Company will take such corporate action as may, in the opinion of its legal counsel, be necessary to increase its authorized but unissued shares of the Common Stock to such number of shares as shall be sufficient for such purpose.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(q)&nbsp;&nbsp;&nbsp;&nbsp;Payment of Taxes.** The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of shares of the Common Stock upon conversion of shares of the Preferred Stock, excluding any tax or other charge imposed in connection with any transfer involved in the

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issue and delivery of shares of the Common Stock in a name other than that in which the shares of the Preferred Stock so converted were registered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;REDEMPTION**. Other than as set forth in <u>Subsections 3(h)(ii)(B)</u>, <u>(C)</u>, <u>(D)</u>, <u>(E)</u> and <u>(F)</u>, the Preferred Stock is not redeemable at the option of the holder thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;NOTICES.** Any notice required or permitted by the provisions of this Article IV to be given to a holder of shares of the Preferred Stock shall be mailed, postage prepaid, to the post office address last shown on the records of the Company, or given by electronic communication in compliance with the provisions of the DGCL, and shall be deemed sent upon such mailing or electronic transmission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.&nbsp;&nbsp;&nbsp;&nbsp;**The rights, preferences, privileges, restrictions and other matters relating to the Common Stock are as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;RELATIVE RIGHTS OF PREFERRED STOCK AND COMMON STOCK.** All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations or restrictions of the Common Stock are expressly made subject to and subordinate to those that may be fixed with respect to any shares of the Preferred Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;VOTING RIGHTS.** The holder of each share of Common Stock shall have the right to one vote for each such share, and shall be entitled to notice of any stockholders' meeting in accordance with the Bylaws, and shall be entitled to vote upon such matters and in such manner as may be provided by law, provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Restated Certificate that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate or pursuant to the General Corporation Law. The number of authorized shares of Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by (in addition to any vote of the holders of one or more series of Preferred Stock that may be required by the terms of this Restated Certificate) the affirmative vote of the holders of a majority of the stock of the Company entitled to vote, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;REDEMPTION**. The Common Stock is not redeemable at the option of the holder.

**V.** The Company is to have perpetual existence.

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**VI.** In furtherance and not in limitation of the powers conferred by statute, the Board is expressly authorized to make, alter or repeal the Bylaws of the Company, subject to any restrictions or voting requirements set forth in this Restated Certificate.

**VII.** Elections of directors need not be by written ballot unless the Bylaws of the Company shall so provide.

**VIII.** Except as otherwise set forth herein, (a) any of the rights, powers, preferences and other terms of the Preferred Stock set forth herein may be waived on behalf of all holders of Preferred Stock by the affirmative written consent or vote of the holders of a majority of the shares of Preferred Stock then outstanding and (b) at any time more than one (1) series of Preferred Stock is issued and outstanding, any of the rights, powers, preferences and other terms of any series of Preferred Stock set forth herein may be waived on behalf of all holders of such series of Preferred Stock by the affirmative written consent or vote of the holders of a majority of the shares of such series of Preferred Stock then outstanding, except for (i) the Series C Preferred which shall require the affirmative written consent or vote of the holders of at least sixty percent (60%) of the shares of Series C Preferred then outstanding; (ii) the Series D Preferred which shall require the affirmative written consent or vote of the holders of at least sixty-five percent (65%) of the shares of Series D Preferred then outstanding; and (iii) the Series E Preferred which shall require the affirmative written consent or vote of the holders of at least sixty percent (60%) of the shares of Series E Preferred then outstanding.

**IX.** No director of the Company shall be liable to the Company or its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such an exemption from liability or limitation thereof is not permitted under the DGCL as presently in effect or as the same may hereafter be amended. No amendment to or repeal of this provision shall apply to or have any effect on the liability or alleged liability of any director of the Company for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal.

**X.** The following indemnification provisions shall apply to the persons enumerated below.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.&nbsp;&nbsp;&nbsp;&nbsp;**The Company shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (an ***"Indemnified Person"***) who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative

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(a ***"Proceeding"***), by reason of the fact that such person, or a person for whom such person is the legal representative, is or was a director or officer of the Company or, while a director or officer of the Company, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such Indemnified Person in such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section C of this Article X, the Company shall be required to indemnify an Indemnified Person in connection with a Proceeding (or part thereof) commenced by such Indemnified Person only if the commencement of such Proceeding (or part thereof) by the Indemnified Person was authorized in advance by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.&nbsp;&nbsp;&nbsp;&nbsp;**The Company shall pay the expenses (including attorneys' fees) incurred by an Indemnified Person in defending any Proceeding in advance of its final disposition, provided, however, that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Indemnified Person to repay all amounts advanced if it should be ultimately determined that the Indemnified Person is not entitled to be indemnified under this Article X or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.&nbsp;&nbsp;&nbsp;&nbsp;**If a claim for indemnification or advancement of expenses under this Article X is not paid in full within thirty (30) days after a written claim therefor by the Indemnified Person has been received by the Company, the Indemnified Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Company shall have the burden of proving that the Indemnified Person is not entitled to the requested indemnification or advancement of expenses under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.&nbsp;&nbsp;&nbsp;&nbsp;**The Company may indemnify and advance expenses to any person who was or is made or is threatened to be made or is otherwise involved in any Proceeding by reason of the fact that such person, or a person for whom such person is the legal representative, is or was an employee or agent of the Company or, while an employee or agent of the Company, is or was serving at the request of the Company as a director, officer, employee or agent of another corporation or of a partnership, joint venture, limited liability company, trust, enterprise or nonprofit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such person in connection with such Proceeding. The ultimate determination of entitlement to indemnification of persons who are non-director or officer employees or agents shall be made in such manner as is determined by the Board in its sole discretion. Notwithstanding the foregoing sentence, the Company shall not be required to indemnify a person in connection with a Proceeding initiated by such person if the Proceeding was not authorized in advance by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.&nbsp;&nbsp;&nbsp;&nbsp;**The Company may pay the expenses (including attorneys' fees) incurred by an employee or agent in defending any Proceeding in advance of its final disposition on such terms and conditions as may be determined by the Board.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.&nbsp;&nbsp;&nbsp;&nbsp;**The rights conferred on any person by this Article X shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Bylaws of the Company, other agreement, vote of stockholders or disinterested directors or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G.&nbsp;&nbsp;&nbsp;&nbsp;**The Company's obligation, if any, to indemnify any person who was or is serving at its request as a director, officer or employee of another corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, limited liability company, joint venture, trust, organization or other enterprise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H.&nbsp;&nbsp;&nbsp;&nbsp;**The Board may, to the fullest extent permitted by applicable law as it presently exists, or may hereafter be amended from time to time, authorize an appropriate officer or officers to purchase and maintain at the Company's expense insurance: (i) to indemnify the Company for any obligation which it incurs as a result of the indemnification of directors, officers and employees under the provisions of this Article X; and (ii) to indemnify or insure directors, officers and employees against liability in instances in which they may not otherwise be indemnified by the Company under the provisions of this Article X.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**I.&nbsp;&nbsp;&nbsp;&nbsp;**Any repeal or modification of the foregoing provisions of this Article X shall not adversely affect any right or protection hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification. The rights provided hereunder shall inure to the benefit of any Indemnified Person and such person's heirs, executors and administrators.

**XI.** The Company renounces, to the fullest extent permitted by law, any interest or expectancy of the Company in, or in being offered an opportunity to participate in, any Excluded Opportunity. An "***Excluded Opportunity***" is any matter, transaction or interest that is presented to, or acquired, created or developed by, or which otherwise comes into the possession of, (A) any director of the Company who is not an employee of the Company or any of its subsidiaries, or (B) any holder of Preferred Stock or any partner, member, director, stockholder, employee, affiliate or agent of any such holder, other than someone who is an employee of the Company or any of its subsidiaries (collectively, "***Covered Persons***"), unless such matter, transaction or interest is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Covered Person expressly and solely in such Covered Person's capacity as a director of the Company while such Covered Person is performing services in such capacity. Any repeal or modification of this Article XI will only be prospective and will not affect the rights under this Article XI in effect at the time of the occurrence of any actions or omissions to act giving rise to liability. Notwithstanding anything to the contrary contained elsewhere in this Restated Certificate, the affirmative vote of the Preferred Stock Majority will be required to amend or repeal, or to adopt any provisions inconsistent with this Article XI.

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**XII.** Unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery in the State of Delaware shall be the sole and exclusive forum for (A) any derivative action or proceeding brought on behalf of the Company, (B) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company's stockholders, (C) any action asserting a claim arising pursuant to any provision of the DGCL or this Restated Certificate or the Bylaws of the Company, each as amended from time to time, or (D) any action asserting a claim governed by the internal affairs doctrine.

**XII.** Meetings of stockholders may be held within or without the State of Delaware, as the Bylaws may provide. The books of the Company may be kept (subject to any provision contained in the statutes) outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws.

\* \* \* \*

**FOUR:** This Restated Certificate has been duly approved by the Board.

**FIVE:** This Restated Certificate has been duly adopted in accordance with the provisions of Sections 242 and 245 of the DGCL by the stockholders of the Company and was approved by written consent of the stockholders of the Company in accordance with the provisions of Section 228 of the DGCL.

**SIGNATURE ON THE FOLLOWING PAGE**

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**IN WITNESS WHEREOF**, the Company has caused this Fourth Amended and Restated Certificate of Incorporation to be signed by its President and Chief Executive Officer this 6th day of March, 2025.

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| | |
|:---|:---|
| **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** |
| By: | /s/ Robert Ball |
| Name: Robert Ball | Name: Robert Ball |
| Title: Chief Executive Officer | Title: Chief Executive Officer |

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SHOULDER INNOVATIONS, INC.

SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

## Exhibit 3.3

**Exhibit 3.3**

**SECOND AMENDED AND RESTATED BYLAWS** 

**OF**

**SHOULDER INNOVATIONS, INC.**

___________________________

Dated as of March 6, 2025

___________________________

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**TABLE OF CONTENTS**

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| | | |
|:---|:---|:---|
| | | **Page** |
| ARTICLE 1 OFFICES | ARTICLE 1 OFFICES | 1 |
| 1.1 | REGISTERED OFFICE. | 1 |
| 1.2 | OTHER OFFICES.. | 1 |
| ARTICLE 2 CORPORATE SEAL | ARTICLE 2 CORPORATE SEAL | 1 |
| 2.1 | CORPORATE SEAL. | 1 |
| ARTICLE 3 STOCKHOLDERS' MEETINGS | ARTICLE 3 STOCKHOLDERS' MEETINGS | 1 |
| 3.1 | PLACE OF MEETINGS. | 1 |
| 3.2 | ANNUAL MEETING. | 1 |
| 3.3 | SPECIAL MEETINGS. | 3 |
| 3.4 | NOTICE OF MEETINGS.. | 4 |
| 3.5 | QUORUM. | 4 |
| 3.6 | ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS. | 5 |
| 3.7 | VOTING RIGHTS | 5 |
| 3.8 | JOINT OWNERS OF STOCK.. | 5 |
| 3.9 | LIST OF STOCKHOLDERS. | 6 |
| 3.10 | ACTION WITHOUT MEETING. | 6 |
| 3.11 | ORGANIZATION. | 6 |
| ARTICLE 4 DIRECTORS | ARTICLE 4 DIRECTORS | 7 |
| 4.1 | NUMBER AND TERM OF OFFICE. | 7 |
| 4.2 | POWERS. | 7 |
| 4.3 | TERM OF DIRECTORS. | 7 |
| 4.4 | VACANCIES. | 8 |
| 4.5 | RESIGNATION. | 8 |
| 4.6 | REMOVAL.. | 8 |
| 4.7 | MEETINGS. | 8 |
| 4.8 | QUORUM AND VOTING. | 9 |
| 4.9 | ACTION WITHOUT MEETING. | 10 |
| 4.10 | FEES AND COMPENSATION. | 10 |
| 4.11 | COMMITTEES. | 10 |
| 4.12 | ORGANIZATION. | 11 |
| ARTICLE 5 OFFICERS | ARTICLE 5 OFFICERS | 12 |
| 5.1 | OFFICERS DESIGNATED. | 11 |
| 5.2 | TENURE AND DUTIES OF OFFICERS. | 12 |
| 5.3 | DELEGATION OF AUTHORITY. | 13 |

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**TABLE OF CONTENTS**

**(continued)**

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| 5.4 | RESIGNATIONS. | 13 |
| 5.5 | REMOVAL | 13 |
| ARTICLE 6 EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION | ARTICLE 6 EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION | 14 |
| 6.1 | EXECUTION OF CORPORATE INSTRUMENTS. | 14 |
| 6.2 | VOTING OF SECURITIES OWNED BY THE CORPORATION. | 14 |
| ARTICLE 7 SHARES OF STOCK | ARTICLE 7 SHARES OF STOCK | 14 |
| 7.1 | FORM AND EXECUTION OF CERTIFICATES. | 14 |
| 7.2 | LOST CERTIFICATES. | 15 |
| 7.3 | TRANSFERS. | 15 |
| 7.4 | FIXING RECORD DATES. | 15 |
| 7.5 | REGISTERED STOCKHOLDERS | 16 |
| ARTICLE 8 OTHER SECURITIES OF THE CORPORATION | ARTICLE 8 OTHER SECURITIES OF THE CORPORATION | 16 |
| 8.1 | EXECUTION OF OTHER SECURITIES | 16 |
| ARTICLE 9 DIVIDENDS | ARTICLE 9 DIVIDENDS | 17 |
| 9.1 | DECLARATION OF DIVIDENDS. | 17 |
| 9.2 | DIVIDEND RESERVE. | 17 |
| ARTICLE 10 FISCAL YEAR | ARTICLE 10 FISCAL YEAR | 17 |
| 10.1 | FISCAL YEAR | 17 |
| ARTICLE 11 INDEMNIFICATION | ARTICLE 11 INDEMNIFICATION | 18 |
| 11.1 | INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS. | 18 |
| ARTICLE 12 NOTICES | ARTICLE 12 NOTICES | 21 |
| 12.1 | NOTICES. | 21 |
| ARTICLE 13 AMENDMENTS | ARTICLE 13 AMENDMENTS | 22 |
| 13.1 | AMENDMENTS. | 22 |
| ARTICLE 14 RIGHT OF FIRST REFUSAL | ARTICLE 14 RIGHT OF FIRST REFUSAL | 23 |

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| | | | **Page** |
| | 14.1 | RIGHT OF FIRST REFUSAL | 23 |
| ARTICLE 15 LOANS TO OFFICERS | ARTICLE 15 LOANS TO OFFICERS | ARTICLE 15 LOANS TO OFFICERS | 25 |
| | 15.1 | LOANS TO OFFICERS | 25 |

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**SHOULDER INNOVATIONS, INC.**

**SECOND AMENDED AND RESTATED BYLAWS**

**ARTICLE 1**

**<u>OFFICES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.1&nbsp;&nbsp;&nbsp;&nbsp;REGISTERED OFFICE.** The registered office of SHOULDER INNOVATIONS, INC., a Delaware corporation (the ***"Corporation"***), in the State of Delaware shall be in the City of Wilmington, County of New Castle.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.2&nbsp;&nbsp;&nbsp;&nbsp;OTHER OFFICES.** The Corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors, and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require.

**ARTICLE 2**

**<u>CORPORATE SEAL</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1&nbsp;&nbsp;&nbsp;&nbsp;CORPORATE SEAL.** The Board of Directors may adopt a corporate seal. The corporate seal shall consist of a die bearing the name of the Corporation and the inscription, "Corporate Seal-Delaware." Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

**ARTICLE 3**

**<u>STOCKHOLDERS' MEETINGS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1&nbsp;&nbsp;&nbsp;&nbsp;PLACE OF MEETINGS.** Meetings of the stockholders of the Corporation may be held at such place, either within or without the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law (the ***"DGCL"***).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2&nbsp;&nbsp;&nbsp;&nbsp;ANNUAL MEETING.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The annual meeting of the stockholders of the Corporation, for the purpose of election of directors and for such other business as may lawfully come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of stockholders: (i) pursuant to the Corporation's notice of meeting of stockholders; (ii) by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in the following paragraph, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 3.2(b) below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. For nominations or other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 3.2(a) above, (i) the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation; (ii) such other business must be a proper matter for stockholder action under the DGCL; (iii) if the stockholder, or the beneficial owner on whose behalf any such proposal or nomination is made, has provided the Corporation with a Solicitation Notice (as defined in this Section 3.2(b)), such stockholder or beneficial owner must, in the case of a proposal, have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation's voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation's voting shares reasonably believed by such stockholder or beneficial owner to be sufficient to elect the nominee or nominees proposed to be nominated by such stockholder, and must, in either case, have included in such materials the Solicitation Notice; and (iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this section, the stockholder or beneficial owner proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 3.2. To be timely, a stockholder's notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the anniversary of the preceding year's annual meeting, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to such annual meeting and not later than the close of business on the later of the 90th day prior to such annual meeting or the 10th day following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a stockholder's notice as described above. Such stockholder's notice shall set forth: (A) as to each person whom the stockholder proposed to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the ***"1934 Act"***) and Rule 14a-4(d) thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (B) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made; and (C) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation's books, and of such beneficial owner; (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner; and (iii) whether either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of, in the case of the proposal, at least the percentage of the Corporation's voting shares

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required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation's voting shares to elect such nominee or nominees (an affirmative statement of such intent, a ***"Solicitation Notice"***).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**Only such persons who are nominated in accordance with the procedures set forth in this Section 3.2 shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 3.2. Except as otherwise provided by law, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such defective proposal or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding the foregoing provisions of this Section 3.2, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders' meeting, stockholders must provide notice as required by the regulations promulgated under the 1934 Act. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation proxy statement pursuant to Rule 14a-8 under the 1934 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**For purposes of this Section 3.2, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3&nbsp;&nbsp;&nbsp;&nbsp;SPECIAL MEETINGS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Special meetings of the stockholders of the Corporation may be called, for any purpose or purposes, by (i) the Chairman of the Board of Directors; (ii) the Chief Executive Officer; (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption);

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or (iv) by the holders of shares entitled to cast not less than 20% of the votes at the meeting**,** and shall be held at such place, on such date, and at such time as the Board of Directors shall fix.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**If a special meeting is properly called by any person or persons other than the Board of Directors, the request shall be in writing, specifying the general nature of the business proposed to be transacted, and shall be delivered personally or sent by certified or registered mail, return receipt requested, or by telegraphic or other facsimile transmission to the Chairman of the Board of Directors, the Chief Executive Officer, or the Secretary of the Corporation. No business may be transacted at such special meeting otherwise than specified in such notice. The Board of Directors shall determine the time and place of such special meeting, which shall be held not less than 35 nor more than 120 days after the date of the receipt of the request. Upon determination of the time and place of the meeting, the officer receiving the request shall cause notice to be given to the stockholders entitled to vote, in accordance with the provisions of Section 3.4 below. Nothing contained in this paragraph (b) shall be construed as limiting, fixing or affecting the time when a meeting of stockholders called by action of the Board of Directors may be held.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4&nbsp;&nbsp;&nbsp;&nbsp;NOTICE OF MEETINGS.** Except as otherwise provided by law, notice, given in writing or by electronic transmission, of each meeting of stockholders shall be given not less than 10 nor more than 60 days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, if any, date and hour, in the case of special meetings the purpose or purposes of the meeting, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder's address as it appears on the records of the Corporation. Notice of the time, place, if any, and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof or by electronic transmission by such person, either before or after such meeting, and will be waived by any stockholder by his attendance thereat in person, by remote communication, if applicable, or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5&nbsp;&nbsp;&nbsp;&nbsp;QUORUM.** At all meetings of stockholders, except where otherwise provided by statute or by the Certificate of Incorporation, or by these Bylaws, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the outstanding shares of stock entitled to vote, shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairman of the meeting or by vote of the holders of a majority of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, in all matters other than the election of directors,

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the affirmative vote of a majority of shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the meeting and entitled to vote generally on the subject matter, shall be the act of the stockholders. Except as otherwise provided by statute, the Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy duly authorized at the meeting and entitled to vote generally on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute or by the Certificate of Incorporation or these Bylaws, a majority of the outstanding shares of such class or classes or series, present in person, by remote communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except where otherwise provided by statute or by the Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of shares of such class or classes or series present in person, by remote communication, if applicable, or represented by proxy at the meeting shall be the act of such class or classes or series.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6&nbsp;&nbsp;&nbsp;&nbsp;ADJOURNMENT AND NOTICE OF ADJOURNED MEETINGS.** Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairman of the meeting or by the vote of a majority of the shares present in person, by remote communication, if applicable, or represented by proxy. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.7&nbsp;&nbsp;&nbsp;&nbsp;VOTING RIGHTS.** For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in whose names shares stand on the stock records of the Corporation on the record date, as provided in Section 3.9 below, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote or execute consents shall have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three years from its date of creation unless the proxy provides for a longer period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.8&nbsp;&nbsp;&nbsp;&nbsp;JOINT OWNERS OF STOCK.** If shares or other securities having voting power stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one votes, his act binds all; (b) if more than one votes, the act of the majority so voting binds all; (c) if more than one votes, but

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the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section 217(b). If the instrument filed with the Secretary shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) shall be a majority or even-split in interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.9&nbsp;&nbsp;&nbsp;&nbsp;LIST OF STOCKHOLDERS.** The Secretary shall prepare and make, at least 10 days before every meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, on a reasonably accessible electronic network provided that the information required to gain access to such list is provided with the notice of the meeting or, during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. The list shall be open to examination of any stockholder during the time of the meeting as provided by law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.10&nbsp;&nbsp;&nbsp;&nbsp;ACTION WITHOUT MEETING.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Unless otherwise provided in the Certificate of Incorporation, any action required by statute to be taken at any annual or special meeting of the stockholders, or any action which may be taken at any annual or special meeting of the stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, or by electronic transmission setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing or by electronic transmission and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of stockholders to take action were delivered to the Corporation as provided in Section 228(c) of the DGCL. If the action which is consented to is such as would have required the filing of a certificate under any section of the DGCL if such action had been voted on by stockholders at a meeting thereof, then the certificate filed under such section shall state, in lieu of any statement required by such section concerning any vote of stockholders, that written consent has been given in accordance with Section 228 of the DGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding the foregoing, no such action by written consent or by electronic transmission may be taken following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the ***"1933 Act"***), covering the offer and sale of Common Stock of the Corporation to the public (the ***"Initial Public Offering"***).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.11&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**At every meeting of stockholders, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President and/or Chief Executive Officer, or, if the President and/or Chief Executive Officer is absent, a chairman of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairman. The Secretary, or, in his absence, an Assistant Secretary directed to do so by the President and/or Chief Executive Officer, shall act as secretary of the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**The Board of Directors of the Corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairman of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairman, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the chairman shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants, and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Unless and to the extent determined by the Board of Directors or the chairman of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure.

**ARTICLE 4**

**<u>DIRECTORS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1&nbsp;&nbsp;&nbsp;&nbsp;NUMBER AND TERM OF OFFICE.** The Board of Directors shall consist of one or more members, each of whom shall be a natural person. Unless the Certificate of Incorporation fixes the number of directors, the number of directors shall be determined from time to time by resolution of the Board of Directors. No reduction of the authorized number of directors shall have the effect of removing any director before that director's term of office expires. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2&nbsp;&nbsp;&nbsp;&nbsp;POWERS.** The powers of the Corporation shall be exercised, its business conducted and its property controlled by the Board of Directors, except as may be otherwise provided by statute or by the Certificate of Incorporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3&nbsp;&nbsp;&nbsp;&nbsp;TERM OF DIRECTORS.** Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, directors shall be elected at each annual meeting of stockholders to serve until the next annual meeting of

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stockholders. Each director shall serve until his successor is duly elected and qualified or until his death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.4&nbsp;&nbsp;&nbsp;&nbsp;VACANCIES.** Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, provided, however, that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected. Except (i) as otherwise provided by applicable law, or (ii) subject to the rights of holders of any series of Preferred Stock, any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director's successor shall have been elected and qualified. A vacancy in the Board of directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.5&nbsp;&nbsp;&nbsp;&nbsp;RESIGNATION.** Any director may resign at any time by delivering his or her notice in writing or by electronic transmission to the Secretary, such resignation to specify whether it will be effective at a particular time, upon receipt by the Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be deemed effective at the pleasure of the Board of Directors. Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock, when one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective. Each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his successor shall have been duly elected and qualified.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.6&nbsp;&nbsp;&nbsp;&nbsp;REMOVAL.** Unless otherwise provided in the Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock, subject to any limitations imposed by applicable law, the Certificate of Incorporation and any agreements among the holders of the Corporation's capital stock, the Board of Directors or any director may be removed from office at any time (i) with cause by the affirmative vote of the holders of a majority of the voting power of all then-outstanding shares of capital stock of the Corporation entitled to vote generally at an election of directors, or (ii) without cause by the affirmative vote

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of the holders of a majority of the voting power of all then-outstanding shares of capital stock of the Corporation, entitled to vote generally at an election of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.7&nbsp;&nbsp;&nbsp;&nbsp;MEETINGS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Regular Meetings.** Unless otherwise restricted by the Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board of Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designated to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means. No further notice shall be required for a regular meeting of the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Special Meetings.** Unless otherwise restricted by the Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairman of the Board, the President or any director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Meetings by Electronic Communications Equipment.** Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Special Meetings.** Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least 24 hours before the date and time of the meeting. If notice is sent by US mail, it shall be sent by first class mail, postage prepaid at least three days before the date of the meeting. Notice of any meeting may be waived in writing or by electronic transmission at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Waiver of Notice.** The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice shall sign a written waiver of notice or shall waive notice by electronic transmission. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.8&nbsp;&nbsp;&nbsp;&nbsp;QUORUM AND VOTING.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Unless the Certificate of Incorporation requires a greater number, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Certificate of Incorporation (the "Authorized Directors"), but in no case shall less than 1/3 of the Authorized Directors constitute a quorum for the transaction of business; provided, however, at any meeting, whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Certificate of Incorporation, these Bylaws or other agreement to which the Corporation is a party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.9&nbsp;&nbsp;&nbsp;&nbsp;ACTION WITHOUT MEETING.** Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.10&nbsp;&nbsp;&nbsp;&nbsp;FEES AND COMPENSATION.** Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee or otherwise and receiving compensation therefor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.11&nbsp;&nbsp;&nbsp;&nbsp;COMMITTEES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Executive Committee.** The Board of Directors may appoint an Executive Committee to consist of one or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any bylaw of the Corporation.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Other Committees.** The Board of Directors may, from time to time, appoint such other committees as may be permitted by law. Such other committees appointed by the Board of Directors shall consist of one or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the powers denied to the Executive Committee in these Bylaws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Meetings.** Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee appointed pursuant to this Section 4.11 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Unless otherwise provided by the Board of Directors in the resolutions authorizing the creation of the committee, a majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.12&nbsp;&nbsp;&nbsp;&nbsp;ORGANIZATION.** At every meeting of the directors, the Chairman of the Board of Directors, or, if a Chairman has not been appointed or is absent, the President, or if the President is absent, the most senior Vice President, (if a director) or, in the absence of any such person, a chairman of the meeting chosen by a majority of the directors present, shall preside

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over the meeting. The Secretary, or in his absence, any Assistant Secretary directed to do so by the President, shall act as secretary of the meeting.

**ARTICLE 5**

**<u>OFFICERS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1&nbsp;&nbsp;&nbsp;&nbsp;OFFICERS DESIGNATED.** The officers of the Corporation shall include, if and when designated by the Board of Directors, the Chairman of the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer, the Chief Technology Officer, the Chief Operations Officer, the Treasurer and the Controller, all of whom shall be elected at the annual organizational meeting of the Board of Directors. The Board of Directors may also appoint one or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the Corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the Corporation shall be fixed by or in the manner designated by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2&nbsp;&nbsp;&nbsp;&nbsp;TENURE AND DUTIES OF OFFICERS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;General.** All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Duties of Chairman of the Board of Directors.** The Chairman of the Board of Directors, when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairman of the Board of Directors shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. If there is no President or Chief Executive Officer, unless otherwise determined by the Board of Directors, then the Chairman of the Board of Directors shall also serve as the President of the Corporation and shall have the powers and duties prescribed in paragraph (c) of this Section 5.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Duties of Chief Executive Officer.** The Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors has been appointed and is present. Unless some other officer has been elected Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. To the extent that a Chief Executive Officer has been appointed, all references in these Bylaws to the President shall be deemed to be references to the Chief Executive Officer. The Chief Executive Officer shall perform other duties commonly incident to the office and shall

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also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Duties of President.** The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, unless the Chairman of the Board of Directors or the Chief Executive Officer has been appointed and is present. Unless another officer has been appointed Chief Executive Officer of the corporation, the President shall be the chief executive officer of the corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the corporation. The President shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Duties of Vice Presidents.** The Vice Presidents may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. The Vice Presidents shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Duties of Secretary.** The Secretary shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the corporation. The Secretary shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary shall perform all other duties provided for in these Bylaws and other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The President may direct any Assistant Secretary to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Duties of Chief Financial Officer.** The Chief Financial Officer shall keep or cause to be kept the books of account of the corporation in a thorough and proper manner and shall render statements of the financial affairs of the corporation in such form and as often as required by the Board of Directors or the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the corporation. The Chief Financial Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time. The President may direct the Treasurer or any Assistant Treasurer, or the Controller or any Assistant Controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each Controller and Assistant Controller shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the President shall designate from time to time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3&nbsp;&nbsp;&nbsp;&nbsp;DELEGATION OF AUTHORITY.** The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.4&nbsp;&nbsp;&nbsp;&nbsp;RESIGNATIONS.** Any officer may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors or to the Chief Executive Officer or to the Secretary. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the corporation under any contract with the resigning officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.5&nbsp;&nbsp;&nbsp;&nbsp;REMOVAL.** Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or by the Chief Executive Officer or by other superior officers upon whom such power of removal may have been conferred by the Board of Directors.

**ARTICLE 6**

**<u>EXECUTION OF CORPORATE INSTRUMENTS AND VOTING</u>**

**<u>OF SECURITIES OWNED BY THE CORPORATION</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1&nbsp;&nbsp;&nbsp;&nbsp;EXECUTION OF CORPORATE INSTRUMENTS.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the Corporation any corporate instrument or document, or to sign on behalf of the Corporation the corporate name without limitation, or to enter into contracts on behalf of the Corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**All checks and drafts drawn on banks or other depositaries on funds to the credit of the Corporation or in special accounts of the Corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2&nbsp;&nbsp;&nbsp;&nbsp;VOTING OF SECURITIES OWNED BY THE CORPORATION.** All stock and other securities of other Corporations owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors or, in the

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absence of such authorization, by the Chairman of the Board of Directors, the Chief Executive Officer, the President, or any Vice President.

**ARTICLE 7**

**<u>SHARES OF STOCK</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1&nbsp;&nbsp;&nbsp;&nbsp;FORM AND EXECUTION OF CERTIFICATES.** The shares of the Corporation shall be represented by certificates, or shall be uncertificated. Certificates for the shares of stock, if any, of the Corporation shall be in such form as is consistent with the Certificate of Incorporation and applicable law. Every holder of stock in the Corporation shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairman of the Board of Directors, or Chief Executive Officer, the President or any Vice President and by the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the Corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or back thereof, in full or in summary, all of the powers, designations, preferences, and rights, and the limitations or restrictions of the shares authorized to be issued or shall, except as otherwise required by law, set forth on the face or back a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional, or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. Within a reasonable time after the issuance or transfer of uncertificated stock, the Corporation shall send to the registered owner thereof a written notice containing the information required to be set forth or stated on certificates pursuant to this section or otherwise required by law or, with respect to this section, a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2&nbsp;&nbsp;&nbsp;&nbsp;LOST CERTIFICATES.** A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The Corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or the owner's legal representative, to agree to indemnify the Corporation in such manner as it shall require or to give the Corporation a surety bond in such form and amount as it may direct, as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.3&nbsp;&nbsp;&nbsp;&nbsp;TRANSFERS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Transfers of record of shares of stock of the Corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and upon the surrender of a properly endorsed certificate or certificates for a like number of shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.4&nbsp;&nbsp;&nbsp;&nbsp;FIXING RECORD DATES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than 60 nor less than 10 days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Prior to the Initial Public Offering, in order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which date shall not be more than 10 days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent shall, by written notice to the Secretary, request the Board of Directors to fix a record date. The Board of Directors shall promptly, but in all events within 10 days after the date on which such a request is received, adopt a resolution fixing the record date. If no record date has been fixed by the Board of Directors within 10 days of the date on which such a request is received, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation's registered office shall be by hand or by certified or registered mail, return receipt requested. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by law, the record date for determining stockholders entitled to consent to corporate action in writing

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without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than 60 days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.5&nbsp;&nbsp;&nbsp;&nbsp;REGISTERED STOCKHOLDERS.** The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

**ARTICLE 8**

**<u>OTHER SECURITIES OF THE CORPORATION</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1&nbsp;&nbsp;&nbsp;&nbsp;EXECUTION OF OTHER SECURITIES.** All bonds, debentures and other corporate securities of the Corporation, other than stock certificates (covered in Section 7.1), may be signed by the Chairman of the Board of Directors, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and the corporate seal impressed thereon or a facsimile of such seal imprinted thereon and attested by the signature of the Secretary or an Assistant Secretary, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the Corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the Corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the Corporation.

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**ARTICLE 9**

**<u>DIVIDENDS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.1&nbsp;&nbsp;&nbsp;&nbsp;DECLARATION OF DIVIDENDS.** Dividends upon the capital stock of the Corporation, if any, may, subject to the provisions of the Certificate of Incorporation and applicable law, be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation and applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.2&nbsp;&nbsp;&nbsp;&nbsp;DIVIDEND RESERVE.** Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created.

**ARTICLE 10**

**<u>FISCAL YEAR</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.1&nbsp;&nbsp;&nbsp;&nbsp;FISCAL YEAR.** The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

**ARTICLE 11**

**<u>INDEMNIFICATION</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.1&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION OF DIRECTORS, EXECUTIVE OFFICERS, OTHER OFFICERS, EMPLOYEES AND OTHER AGENTS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Directors and Executive Officers.** The Corporation shall indemnify its directors and executive officers (for the purposes of this Article 11, "executive officers" shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the fullest extent not prohibited by the DGCL or any other applicable law; provided, however, that the Corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers, and; provided, further, that the Corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law; (ii) the proceeding was authorized by the Board of Directors of the Corporation; (iii) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the DGCL or any other applicable law; or (iv) such indemnification is required to be made under subsection (d). A director's entitlement to indemnification under this Article 11 includes his or her capacity both as a member of the Board or Directors and as a member of any committee, including the audit committee, of the Board of Directors.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Other Officers, Employees and Other Agents.** The Corporation shall have power to indemnify its other officers, employees and agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification shall be given to any such person, except executive officers, as the Board of Directors shall determine.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Expenses.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**The Corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer of the Corporation or member of a committee of the Board of Directors, or is or was serving at the request of the Corporation as a director or executive officer of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, or as a limited liability company member or manager, partner of a partnership, or trustee of a trust, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or executive officer in connection with such proceeding; provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or executive officer in his or her capacity as a director or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal that such indemnitee is not entitled to be indemnified for such expenses under this Article 11 or otherwise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding the foregoing, unless otherwise determined pursuant to this Article 11, no advance shall be made by the Corporation to an executive officer of the Corporation (except by reason of the fact that such executive officer is or was a director of the Corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (1) by a majority vote of directors who were not parties to the proceeding, even if not a quorum; or (2) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum; or (3) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Enforcement.** Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Article 11 shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the Corporation and the director or executive officer. Any right to indemnification or advances granted by this Article 11 to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent

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jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within 30 days of request therefore. The claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the Corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the Corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the Corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the Corporation) for advances, the Corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith, or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his conduct was lawful.

Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to be indemnified, or to such advancement of expenses, under this Article 11 or otherwise shall be on the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Non-Exclusivity of Rights.** The rights conferred on any person by this Article 11 shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DGCL, or by any other applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Survival of Rights.** The rights conferred on any person by this Article 11 shall continue as to a person who has ceased to be a director or executive officer and shall inure to the benefit of the heirs, executors and administrators of such a person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Insurance.** To the fullest extent permitted by the DGCL, or any other applicable law, the Corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this Article 11. The Corporation shall promptly notify its directors and executive officers of any change, lapse or cancellation of such insurance coverage.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Amendments.** Any repeal or modification of this Article 11 shall only be prospective and shall not affect the rights under this Article 11 in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;Saving Clause.** If this Article 11 or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this Article 11 that shall not have been invalidated, or by any other applicable law. If this Article 11 shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the Corporation shall indemnify each director and executive officer to the full extent under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)&nbsp;&nbsp;&nbsp;&nbsp;Certain Definitions.** For the purposes of this Article 11, the following definitions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**The term ***"proceeding"*** shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**The term ***"expenses"*** shall be broadly construed and shall include, without limitation, court costs, attorneys' fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**The term the ***"Corporation"*** shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this Bylaw with respect to the resulting or surviving corporation as he would have with respect to such constituent corporation if its separate existence had continued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**References to a ***"director"***, ***"executive officer"***, ***"officer"***, ***"employee"*** or ***"agent"*** of the Corporation shall include, without limitation, situations where such person is serving at the request of the Corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another corporation, limited liability company, partnership, joint venture, trust or other enterprise, or as a limited liability company member or manager, as a partner of a partnership or as trustee of a trust. References to ***"director"*** and ***"directors"*** include directors in their capacities as members of the Board of Directors and as members of any committee (including the audit committee) of the Board of Directors.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**References to ***"other enterprises"*** shall include employee benefit plans; references to ***"fines"*** shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to ***"serving at the request of the Corporation"*** shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner "not opposed to the best interests of the Corporation" as referred to in this Article 11.

**ARTICLE 12**

**<u>NOTICES</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.1&nbsp;&nbsp;&nbsp;&nbsp;NOTICES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Notice to Stockholders.** Written notice to stockholders of stockholder meetings shall be given as provided in Section 3.4 above. Without limiting the manner by which notice may otherwise be given effectively to stockholders under any agreement or contract with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder meetings may be sent by United States mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or other electronic means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Notice to Directors.** Any notice required to be given to any director may be given by the method stated in subsection (a), or as provided for in Section above. If such notice is not delivered personally, it shall be sent to such address as such director shall have filed in writing with the Secretary, or, in the absence of such filing, to the last known post office address of such director.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Affidavit of Mailing.** An affidavit of mailing, executed by a duly authorized and competent employee of the Corporation or its transfer agent appointed with respect to the class of stock affected, or other agent, specifying the name and address or the names and addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Methods of Notice.** It shall not be necessary that the same method of giving notice be employed in respect of all recipients of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Notice to Person with Whom Communication Is Unlawful.** Whenever notice is required to be given, under any provision of law or of the Certificate of Incorporation or Bylaws of the Corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any

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action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Notice to Stockholders Sharing an Address.** Except as otherwise prohibited under DGCL, any notice given under the provisions of DGCL, the Certificate of Incorporation or these Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall have been deemed to have been given if such stockholder fails to object in writing to the Corporation within 60 days of having been given notice by the Corporation of its intention to send the single notice. Any consent shall be revocable by the stockholder by written notice to the Corporation.

**ARTICLE 13**

**<u>AMENDMENTS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.1&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENTS.** Subject to the limitations set forth elsewhere in these Bylaws or the provisions of the Certificate of Incorporation, the Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Certificate of Incorporation, the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws of the Corporation.

**ARTICLE 14**

**<u>RIGHT OF FIRST REFUSAL</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.1&nbsp;&nbsp;&nbsp;&nbsp;RIGHT OF FIRST REFUSAL.** No stockholder shall sell, assign, pledge, or in any manner transfer any of the shares of Common Stock of the Corporation excluding shares of Common Stock of the Corporation issued upon conversion of any Preferred Stock of the Corporation (the ***"Subject Shares"***) or any right or interest therein, whether voluntarily or by operation of law, or by gift or otherwise, except by a transfer which meets the requirements hereinafter set forth in this Article 14:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**If the stockholder desires to sell or otherwise transfer any of his Subject Shares, then the stockholder shall first give written notice thereof to the Corporation. The notice shall name the proposed transferee and state the number of Subject Shares to be transferred, the proposed consideration, and all other terms and conditions of the proposed transfer.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**For thirty (30) days following receipt of such notice, the Corporation shall have the option to purchase all (but not less than all) of the Subject Shares specified in the notice at the price and upon the terms set forth in such notice; *provided, however,* that, with the consent of the stockholder, the Corporation shall have the option to purchase a lesser portion of the Subject Shares specified in such notice at the price and upon the terms set forth therein. In the event of a gift, property settlement or other transfer in which the proposed transferee is not paying the full price for the Subject Shares, and that is not otherwise exempted from the provisions of this Article 14 Section 14.1, the price shall be deemed to be the fair market value of the Common Stock at such time as determined in good faith by the Board of Directors. In the event the Corporation elects to purchase all of the Subject Shares or, with consent of the stockholder, a lesser portion of the Subject Shares, it shall give written notice to the transferring stockholder of its election, and settlement for such Subject Shares shall be made as provided below in paragraph (d).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**The Corporation may assign its rights hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**In the event the Corporation and/or its assignee(s) elect to acquire any of the Subject Shares of the transferring stockholder as specified in such transferring stockholder's notice, the Secretary of the Corporation shall so notify the transferring stockholder, and settlement thereof shall be made in cash within thirty (30) days after the Secretary of the Corporation receives such transferring stockholder's notice; provided that if the terms of payment set forth in such transferring stockholder's notice were other than cash against delivery, the Corporation and/or its assignee(s) shall pay for such Subject Shares on the same terms and conditions set forth in such transferring stockholder's notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**In the event the Corporation and/or its assignees(s) do not elect to acquire all of the Subject Shares specified in the transferring stockholder's notice, such transferring stockholder may, within the sixty (60) day period following the expiration of the option rights granted to the Corporation and/or its assignees(s) herein, transfer the Subject Shares specified in such transferring stockholder's notice which were not acquired by the Corporation and/or its assignees(s) as specified in such transferring stockholder's notice. All Subject Shares so sold by such transferring stockholder shall continue to be subject to the provisions of this Article 14 in the same manner as before such transfer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**Anything to the contrary contained herein notwithstanding, the following transactions shall be exempt from the provisions of this Article 14:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**A stockholder's transfer of any or all Subject Shares held either during such stockholder's lifetime or on death by will or intestacy to such stockholder's immediate family or to any custodian or trustee for the account of such stockholder or such stockholder's immediate family or to any limited partnership of which the stockholder, members of such stockholder's immediate family or any trust for the account of such stockholder or such stockholder's immediate family will be the general of limited partner(s) of such partnership. "Immediate family" as used herein shall mean spouse, lineal descendant, father, mother, brother, or sister of the stockholder making such transfer.

SHOULDER INNOVATIONS, INC.

SECOND AMENDED AND RESTATED BYLAWS - 24

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**A stockholder's bona fide pledge or mortgage of any Subject Shares with a commercial lending institution, provided that any subsequent transfer of such Subject Shares by such institution shall be conducted in the manner set forth in this Article 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**A stockholder's transfer of any or all of such stockholder's Subject Shares to a person who, at the time of such transfer, is an officer or director of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**A corporate stockholder's transfer of any or all of its Subject Shares pursuant to and in accordance with the terms of any merger, consolidation, reclassification of shares or capital reorganization of the corporate stockholder, or pursuant to a sale of all or substantially all of the stock or assets of a corporate stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**A corporate stockholder's transfer of any or all of its Subject Shares to any or all of its stockholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(vi)&nbsp;&nbsp;&nbsp;&nbsp;**A transfer by a stockholder which is a limited or general partnership to any or all of its partners or former partners.

In any such case, the transferee, assignee, or other recipient shall receive and hold such Subject Shares subject to the provisions of this Article 14, and there shall be no further transfer of such Subject Shares except in accord with this Article 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;**The provisions of this Article 14 may be waived with respect to any transfer either by the Corporation, upon duly authorized action of its Board of Directors, or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the Corporation (excluding the votes represented by those shares to be transferred by the transferring stockholder). This Article 14 may be amended or repealed either by a duly authorized action of the Board of Directors or by the stockholders, upon the express written consent of the owners of a majority of the voting power of the Corporation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;**Any sale or transfer, or purported sale or transfer, of Subject Shares shall be null and void unless the terms, conditions, and provisions of this Article 14 are strictly observed and followed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**The foregoing right of first refusal shall terminate upon the date securities of the Corporation are first offered to the public pursuant to a registration statement filed with, and declared effective by, the United States Securities and Exchange Commission under the Securities Act of 1933, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)&nbsp;&nbsp;&nbsp;&nbsp;**If there is any conflict between the terms, conditions and obligations of this Article 14 and the terms, conditions and obligations of a written agreement between the Corporation and a stockholder, the terms, conditions and obligations of such agreement shall control.

SHOULDER INNOVATIONS, INC.

SECOND AMENDED AND RESTATED BYLAWS - 25

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k)&nbsp;&nbsp;&nbsp;&nbsp;**The certificates representing Subject Shares shall bear on their face the following legend so long as the foregoing right of first refusal remains in effect:

"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE CORPORATION AND/OR ITS ASSIGNEE(S), AS PROVIDED IN THE BYLAWS OF THE CORPORATION."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(l)&nbsp;&nbsp;&nbsp;&nbsp;**For the avoidance of doubt, the term "Subject Shares" shall not include, and the right of first refusal provided for in this Section shall not in any manner cover or apply to (1) any shares of the Preferred Stock of the Corporation of any class or series and (2) any shares of Common Stock or any other securities issuable upon conversion or exchange of, or as a dividend or other distribution with respect to, any shares of Preferred Stock of the Corporation of any class or series.

**ARTICLE 15**

**<u>LOANS TO OFFICERS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.1&nbsp;&nbsp;&nbsp;&nbsp;LOANS TO OFFICERS.** Except as otherwise prohibited by applicable law, the Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a Director of the Corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute.

SHOULDER INNOVATIONS, INC.

SECOND AMENDED AND RESTATED BYLAWS - 26

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**CERTIFICATE OF ADOPTION OF THE SECOND AMENDED AND RESTATED BYLAWS OF** 

**SHOULDER INNOVATIONS, INC.** 

The undersigned, Robert Ball, hereby certifies that he is the duly elected, qualified, and acting Chief Executive Officer of Shoulder Innovations, Inc., a Delaware corporation, and that the foregoing Second Amended and Restated Bylaws were duly adopted by the Board of Directors and stockholders of the Corporation as the Bylaws of the Corporation on March 6, 2025.

**IN WITNESS WHEREOF,** the undersigned has hereunto subscribed his name this March 6, 2025.

<u>/s/ Robert Ball</u>_____________________

**ROBERT BALL**

Chief Executive Officer

CERTIFICATE OF ADOPTION OF SHOULDER INNOVATIONS, INC.

SECOND AMENDED AND RESTATED BYLAWS

## Exhibit 4.2

**Exhibit 4.2**

**SHOULDER INNOVATIONS, INC.**

**FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT**

This Fourth Amended and Restated Investors' Rights Agreement (this ***"Agreement"***) is made as of March 6, 2025 (the ***"Effective Date"***), by and among SHOULDER INNOVATIONS, INC., a Delaware corporation (the ***"Company"***), the persons and entities listed on <u>Exhibit A</u> hereto (each, an ***"Investor"*** and collectively, the ***"Investors"***).

**RECITALS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.&nbsp;&nbsp;&nbsp;&nbsp;**The Company and certain of the Investors have entered into that certain Series E Preferred Stock Purchase Agreement of even date herewith (as the same may be amended and restated from time to time, the ***"Series E Purchase Agreement"***), which provides for, among other things, the purchase by the Investors of shares of the Company's Series E Preferred Stock, par value $0.001 per share (the ***"Series E Preferred Stock"***);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.&nbsp;&nbsp;&nbsp;&nbsp;**A condition to the obligations of such Investors under the Series E Purchase Agreement to purchase the Series E Preferred Stock is that the Company and the Investors enter into this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.&nbsp;&nbsp;&nbsp;&nbsp;**The Company and those Investors who own shares of the Company's Series D Preferred Stock, par value $0.001 per share (the ***"Series D Preferred Stock"***), shares of the Company's Series C Preferred Stock, par value $0.001 per share (the ***"Series C Preferred Stock"***), shares of the Company's Series B Preferred Stock, par value $0.001 per share (the ***"Series B Preferred Stock"***), shares of the Company's Series A Preferred Stock, par value $0.001 per share (the ***"Series A Preferred Stock"***) and shares of the Company's Series Seed Preferred Stock, par value $0.001 per share (the ***"Series Seed Preferred Stock"***), are party to that certain Third Amended and Restated Investors' Rights Agreement, dated as of February 10, 2023 (the ***"Prior Agreement"***); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.&nbsp;&nbsp;&nbsp;&nbsp;**In order to further induce the Investors to purchase the Series E Preferred Stock, the undersigned Investors who own shares of the Company's Series D Preferred Stock, Series C Preferred Stock, Series B Preferred Stock, Series A Preferred Stock and Series Seed Preferred Stock, the majority of the Registrable Securities held by the Major Investors (each as defined in the Prior Agreement) and the Company desire to amend and restate in its entirety the Prior Agreement and to accept the rights and obligations created pursuant hereto in lieu of their rights and obligations under the Prior Agreement.

**NOW, THEREFORE**, in consideration of the mutual promises and covenants set forth herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

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**1.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS**. As used in this Agreement, the following terms shall have the meanings set forth below:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;***"Affiliate"*** means, with respect to any specified person or entity, any other person or entity who, directly or indirectly, controls, is controlled by, or is under common control with such person or entity, including without limitation any general partner, managing member, officer, principal, director or trustee of such party, or any venture capital fund, managed investment account or other fund now or hereafter existing that is controlled by one or more general partners, managing members or investment advisers of, or shares the same management or advisory company (or stockholder or member thereof) or investment adviser with, such person or entity; provided that with respect to a person or entity that is either an individual or an irrevocable or revocable trust established for such individual or for such individual and such individual's family, spouse or domestic partner, an "Affiliate" shall mean a family member, spouse or domestic partner of such individual, and includes, in the case of a trust, such individual.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;***"Board"*** means the Company's Board of Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;***"Commission"*** means the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;***"Common Stock"*** means the Common Stock, par value $0.001 per share, of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;***"Converted Holder"*** means any Investor that holds Common Stock issued upon conversion of Series E Preferred Stock pursuant to a Special Mandatory Conversion (as defined in the Restated Certificate), and any of such Investor's Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;***"Deemed Liquidation Event"*** shall have the meaning set forth in the Company's Restated Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;***"Election Period"*** shall have the meaning set forth in <u>Section 4.4</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;***"Excess Securities"*** shall have the meaning set forth in <u>Section 4.4</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;***"Exchange Act"*** means the Securities Exchange Act of 1934, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;***"Fund"*** shall have the meaning set forth in <u>Section 3.3</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;***"Holder"*** means any Investor who holds Registrable Securities and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been duly and validly transferred in accordance with <u>Section 2.12</u> of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;***"Indemnified Party"*** shall have the meaning set forth in <u>Section 2.6(c)</u> hereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;***"Indemnifying Party"*** shall have the meaning set forth in <u>Section 2.6(c)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;***"Initial Public Offering"*** means the closing of the Company's first bona fide, firm commitment underwritten public offering of the Company's Common Stock registered under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;***"Initiating Holders"*** means any Holder or Holders who in the aggregate hold not less than thirty percent (30%) of the Registrable Securities then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;***"Major Investor"*** means any Investor that holds not less than 1,800,000 shares of Preferred Stock or Common Stock issued upon conversion thereof, as shall be adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like. For clarity, at such time as any Investor who previously held the requisite number of shares of Preferred Stock set forth above in this subsection (o) no longer holds at least such amount of Preferred Stock, such Investor shall lose its status as a Major Investor. For purposes of determining whether an Investor qualifies as a "Major Investor", the total number of shares held by such Investor shall be aggregated with the shares held by its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;***"New Securities"*** shall have the meaning set forth in <u>Section 4.2</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;***"Other Selling Stockholders"*** means persons other than Holders who, by virtue of agreements with the Company, are entitled to include their Other Shares in certain registrations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;***"Other Shares"*** means shares of Common Stock, other than Registrable Securities with respect to which registration rights have been granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;***"Preferred Directors"*** shall have the meaning set forth in the Restated Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;***"Preferred Stock Majority"*** means the holders in the aggregate of at least sixty percent (60%) of the outstanding shares of the Preferred Stock, voting together as a single class and on as converted to Common Stock basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;***"Preferred Stock"*** means, collectively, the Series Seed Preferred Stock, Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, the Series D Preferred Stock and the Series E Preferred Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;&nbsp;&nbsp;***"Pro Rata Amount"*** shall have the meaning set forth in <u>Section 4.1</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x)&nbsp;&nbsp;&nbsp;&nbsp;***"Qualified Public Offering"*** shall have the meaning set forth in the Restated Certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y)&nbsp;&nbsp;&nbsp;&nbsp;***"Registrable Securities"*** means (i) shares of Common Stock issued or issuable pursuant to the conversion of the Shares, (ii) any shares of Common Stock, or any shares of Common Stock issued or issuable (directly or indirectly) upon conversion and/or exercise of any other securities of the Company, in each case, held by the Investors on the date hereof or acquired by the Investors after the date hereof, and (iii) any shares of Common Stock issued or

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issuable as a dividend or other distribution with respect to or in exchange for or in replacement of the shares referenced in (i) or (ii) above; *provided*, *however*, that Registrable Securities shall not include any shares of Common Stock described in clauses (i), (ii) or (iii) above which have been sold to the public either pursuant to a registration statement or Rule 144, or which have been sold in a private transaction in which the transferor's rights under this Agreement are not validly assigned in accordance with this Agreement; and *provided, further, however,* that Registrable Securities shall not include any shares of Common Stock described in clauses (i), (ii) or (iii) above as to which rights have terminated pursuant to <u>Section 2.14</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z)&nbsp;&nbsp;&nbsp;&nbsp;***"Registrable Securities then outstanding"*** means the number of shares determined by adding the number of shares of outstanding Common Stock that are Registrable Securities and the number of shares of Common Stock issuable (directly or indirectly) pursuant to then exercisable and/or convertible securities that are Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa)&nbsp;&nbsp;&nbsp;&nbsp;The terms ***"register," "registered"*** and ***"registration"*** refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of the effectiveness of such registration statement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ab)***&nbsp;&nbsp;&nbsp;&nbsp;"Registration Expenses"*** means all expenses incurred in effecting any registration pursuant to this Agreement or an Initial Public Offering, including, without limitation, all registration, qualification, and filing fees, printing expenses, escrow fees, fees and disbursements of counsel for the Company and the reasonable fees and disbursements of one special counsel for the Holders (selected by the Holders of a majority of the Registrable Securities to be registered) (in each case, not to exceed $35,000), blue sky fees and expenses, and expenses of any regular or special audits incident to or required by any such registration, but shall not include Selling Expenses, fees and disbursements of other counsel for the Holders and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ac)***&nbsp;&nbsp;&nbsp;&nbsp;"Restated Certificate"*** means the Company's Fourth Amended and Restated Certificate of Incorporation (as may be amended or restated from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ad)***&nbsp;&nbsp;&nbsp;&nbsp;"Restricted Securities"*** means any Registrable Securities required to bear the first legend set forth in <u>Section 2.8(c)</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ae)***&nbsp;&nbsp;&nbsp;&nbsp;"ROFR Holder"*** shall have the meaning set forth in <u>Section 4.1</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(af)***&nbsp;&nbsp;&nbsp;&nbsp;"Rule 144"*** means Rule 144 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ag)***&nbsp;&nbsp;&nbsp;&nbsp;"Rule 145"*** means Rule 145 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ah)***&nbsp;&nbsp;&nbsp;&nbsp;"Rule 415"*** means Rule 415 as promulgated by the Commission under the Securities Act, as such Rule may be amended from time to time, or any similar successor rule that may be promulgated by the Commission.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ai)***&nbsp;&nbsp;&nbsp;&nbsp;"Securities Act"*** means the Securities Act of 1933, as amended, or any similar successor federal statute and the rules and regulations thereunder, all as the same shall be in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aj)***&nbsp;&nbsp;&nbsp;&nbsp;"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 to the Holders included in Registration Expenses).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ak)***&nbsp;&nbsp;&nbsp;&nbsp;"Shares"*** means the Preferred Stock.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(al)***&nbsp;&nbsp;&nbsp;&nbsp;"Voting Agreement"*** means that certain Fourth Amended and Restated Voting Agreement entered into by and among the Company and the stockholders of the Company named therein as of even date herewith, as such may be amended or restated from time to time in accordance with the provisions thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(am)***&nbsp;&nbsp;&nbsp;&nbsp;"Withdrawn Registration"*** means a forfeited demand registration under <u>Section 2.1</u> in accordance with the terms and conditions of <u>Section 2.4</u>.

**2.&nbsp;&nbsp;&nbsp;&nbsp;<u>REGISTRATION RIGHTS</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;**Requested Registration.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;**Registration**. Subject to the conditions set forth in this <u>Section 2.1</u>, if the Company shall receive from Initiating Holders a written request signed by such Initiating Holders that the Company effect any registration with respect to all or a part of the Registrable Securities (such request shall state the number of shares of Registrable Securities proposed to be disposed of by such Initiating Holders), the Company will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;promptly give written notice of the proposed registration to all other Holders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;as soon as practicable, but in any event within ninety (90) days after the Company's receipt of such written request, file and use its commercially reasonable efforts to effect such registration (including, without limitation, filing post-effective amendments, appropriate qualifications under applicable blue sky or other state securities laws, and appropriate compliance with the Securities Act) and to permit or facilitate the sale and distribution of all or such portion of such Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request received by the Company within thirty (30) days after such written notice from the Company is mailed or delivered.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;**Limitations on Requested Registration**. The Company shall not be obligated to effect, or to take any action to effect, any such registration pursuant to this <u>Section 2.1</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Prior to the earlier of (A) the four (4) year anniversary of the date of this Agreement or (B) six (6) months following the effective date of the first registration statement filed by the Company covering an underwritten offering of any of its securities to the general public (or the subsequent date on which all market stand-off agreements applicable to the offering have terminated, not to exceed an additional thirty-four (34) days);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Company has not yet offered securities pursuant to a registration statement and the Initiating Holders propose to sell less than 20% of the Registrable Securities held by such Initiating Holders unless such lesser number of Registrable Securities proposed to be sold by the Initiating Holders is expected to result in aggregate proceeds of at least $20,000,000 (or if after the Initial Public Offering, Registrable Securities with an anticipated aggregate offering price of at least $2,000,000);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration, qualification, or compliance, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;After the Company has initiated two (2) such registrations pursuant to this <u>Section 2.1</u> (counting for these purposes only (x) registrations which have been declared or ordered effective and pursuant to which securities have been sold, and (y) Withdrawn Registrations);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;During the period that is thirty (30) days prior to the Company's good faith estimate of the date of filing of, and ending on a date ninety (90) days (or one hundred eighty (180) days, in the case of an Initial Public Offering) after the effective date of a Company-initiated registration (or ending on the subsequent date on which all market stand-off agreements applicable to the offering have terminated, not to exceed an additional thirty-four (34) days); *provided* that the Company is actively employing in good faith commercially reasonable efforts to cause such registration statement to become effective; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;If the Initiating Holders propose to dispose of shares of Registrable Securities that may be registered on Form S-3 pursuant to a request made under <u>Section 2.3</u> hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;**Deferral**. If (i) in the good faith judgment of the Board, the filing of a registration statement covering the Registrable Securities would (x) materially interfere with a significant acquisition, corporate reorganization, or other similar transaction involving the Company; (y) require premature disclosure of material information that the Company has a bona fide business purpose for preserving as confidential; or (z) render the Company unable to comply with requirements under the Securities Act or Exchange Act, and the Board concludes, as a result, that it is in the best interests of the Company to defer the filing of such registration

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statement at such time, and (ii) the Company shall furnish to such Holders a certificate signed by the President (or other comparable senior executive officer) of the Company stating that in the good faith judgment of the Board, it would be materially detrimental to the Company for such registration statement to be filed in the near future and that it is, therefore, in the best interests of the Company to defer the filing of such registration statement, then (in addition to the limitations set forth in <u>Section 2.1(b)(v)</u> above) the Company shall have the right to defer such filing for a period of not more than one hundred (100) days after receipt of the request of the Initiating Holders, and, *provided further*, that the Company shall not defer its obligation in this manner more than two (2) times in any twelve-month period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;**Other Shares**. The registration statement filed pursuant to the request of the Initiating Holders may, subject to the provisions of Section 2.1(e), include Other Shares, and may include securities of the Company being sold for the account of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;**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 part of their request made pursuant to this <u>Section 2.1</u> and the Company shall include such information in the written notice given pursuant to <u>Section 2.1(a)(i)</u>. In such event, the right of any Holder to include all or any portion of its Registrable Securities in a registration pursuant to this <u>Section 2.1</u> shall be conditioned upon such Holder's participation in a underwriting. In such case, if the Company shall request inclusion in any registration pursuant to <u>Section 2.1</u> of securities being sold for its own account, or if other persons shall request inclusion in any registration pursuant to <u>Section 2.1</u>, the Initiating Holders shall, on behalf of all Holders, offer to include such securities in the underwriting and such offer shall be conditioned upon the participation of the Company or such other persons in such underwriting and the inclusion of the Company's and such person's other securities of the Company and their acceptance of the further applicable provisions of this <u>Section 2</u> (including <u>Section 2.10</u>). The Company shall (together with all Holders and other persons proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected for such underwriting by the Initiating Holders holding in the aggregate of a majority of the Registrable Securities held by the Initiating Holders, which underwriters are reasonably acceptable to the Company; provided, however, that the liability of each holder as set forth therein shall be several and not joint and limited to an amount equal to the net proceeds from the offering received by such Holder.

Notwithstanding any other provision of this <u>Section 2.1</u>, if the underwriters advise the Initiating Holders in writing that marketing factors require a limitation on the number of shares to be underwritten, the number of Registrable Securities and Other Shares that may be so included shall be allocated as follows: (i) first, among all Holders requesting to include Registrable Securities in such registration statement based on the pro rata percentage of Registrable Securities held by such Holders, assuming conversion (provided that if, by operation of this clause (i), the number of Registrable Securities to be so included is reduced to less than 50% of the aggregate number of Registrable Securities so requested by all Holders to be included, then the Holders in the aggregate of a majority of the Registrable Securities; may withdraw the request for such registration and, in such a case, (A) such registration shall not be

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counted as a registration "initiated" by the Company for purposes of <u>Section 2.1(b)(iv)</u> or "effected" by the Company for purposes of <u>Section 2.3(b)(iii)</u> and (B) the Company shall bear the Registration Expenses of such registration notwithstanding any provision of <u>Section 2.4</u> to the contrary); (ii) second, among all Other Selling Stockholders requesting to include Other Shares in such registration statement based on the pro rata percentage of Other Shares held by such Other Selling Stockholders, assuming conversion; and (iii) third, to the Company, which the Company may allocate, at its discretion, for its own account, or for the account of other stockholders or employees of the Company. If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall be excluded therefrom by written notice from the Company, the underwriter or, if applicable, the Initiating Holders. The securities so excluded shall also be withdrawn from registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall also be withdrawn from such registration. If shares are so withdrawn from the registration and if the number of shares to be included in such registration was previously reduced as a result of marketing factors pursuant to this <u>Section 2.1(e)</u>, then the Company shall then offer to all Holders and Other Selling Stockholders who have retained rights to include securities in the registration the right to include additional Registrable Securities or Other Shares in the registration in an aggregate amount equal to the number of shares so withdrawn, with such shares to be allocated among such Holders and Other Selling Stockholders requesting additional inclusion, as set forth above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;**Company Registration.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;**Registration**. If the Company shall determine to register any of its securities either for its own account or the account of a security holder or holders, other than a registration pursuant to <u>Section 2.1</u> or <u>Section 2.3</u>, a registration relating solely to employee benefit plans, a registration relating to the offer and sale of debt securities only, or a registration relating to a corporate reorganization or other Rule 145 transaction, the Company will:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;promptly give written notice of the proposed registration to all Holders; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;use its commercially reasonable efforts include in such registration (and any related qualification under blue sky laws or other compliance), except as set forth in <u>Section 2.2(b)</u> below, and in any underwriting involved therein, all of such Registrable Securities as are specified in a written request or requests made by any Holder or Holders received by the Company within twenty (20) days after such written notice from the Company is mailed or delivered. Such written request may specify all or a part of a Holder's Registrable Securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;**Underwriting**. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to <u>Section 2.2(a)(i)</u>. In such event, the right of any Holder to registration pursuant to this <u>Section 2.2</u> shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company, the Other Selling

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Stockholders and other holders of securities of the Company with registration rights to participate therein distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the representative of the underwriter or underwriters selected by the Company.

Notwithstanding any other provision of this <u>Section 2.2</u>, if the underwriters advise the Company in writing that marketing factors and the success of the offering require a limitation on the number of shares to be underwritten, the underwriters may (subject to the limitations set forth below) limit the number of Registrable Securities to be included in, the registration and underwriting, the Company shall so advise all holders of securities requesting registration, and the number of shares of securities that are entitled to be included in the registration and underwriting shall be allocated, as follows: (i) first, to the Company for securities being sold for its own account; (ii) second, to the Holders requesting to include Registrable Securities in such registration statement based on the pro rata percentage of Registrable Securities held by such Holders, assuming conversion; and (iii) third, to the Other Selling Stockholders requesting to include Other Shares in such registration statement based on the pro rata percentage of Other Shares held by such Other Selling Stockholders, assuming conversion. Notwithstanding the foregoing, no such reduction shall reduce the value of the Registrable Securities of the Holders included in such registration below twenty-five percent (25%) of the total value of securities included in such registration, unless such offering is an Initial Public Offering and such registration does not include shares of any Other Selling Stockholder (excluding shares registered for the account of the Company), in which event any or all of the Registrable Securities of such Holders may be excluded.

If a person who has requested inclusion in such registration as provided above does not agree to the terms of any such underwriting, such person shall also be excluded therefrom by written notice from the Company or the underwriter. The Registrable Securities or other securities so excluded shall also be withdrawn from such registration. Any Registrable Securities or other securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;**Right to Terminate Registration**. The Company shall have the right to terminate or withdraw any registration initiated by it under this <u>Section 2.2</u> prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;**Registration on Form S-3.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;**Request for Form S-3 Registration**. After its Initial Public Offering, the Company shall use its commercially reasonable efforts to qualify for registration on Form S-3 or any comparable or successor form or forms. After the Company has qualified for the use of Form S-3, in addition to the rights contained in the foregoing provisions of this <u>Section 2</u> and subject to the conditions set forth in this <u>Section 2.3</u>, if the Company shall receive from a Holder or Holders of Registrable Securities a written request that the Company effect any registration on Form S-3 or any similar short form registration statement with respect to all or part of the Registrable Securities (such request shall state the number of shares of Registrable Securities to

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be disposed of and the intended methods of disposition of such shares by such Holder or Holders), the Company will take all such action with respect to such Registrable Securities as required by <u>Sections 2.1(a)(i)</u> and <u>2.1(a)(ii)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;**Limitations on Form S-3 Registration**. The Company shall not be obligated to effect, or take any action to effect, any such registration pursuant to this <u>Section 2.3</u>:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;In the circumstances described in any of Sections <u>2.1(b)(i)</u>, <u>2.1(b)(iii)</u> or <u>2.1(b)(v)</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;If the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) on Form S-3 at an aggregate price to the public of less than $2,000,000; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;If, in a given twelve-month period, the Company has effected two (2) such registrations in such period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;**Deferral**. The provisions of <u>Section 2.1(c)</u> shall apply to any registration pursuant to this <u>Section 2.3</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;**Underwritin<u>g</u>**. If the Holders of Registrable Securities requesting registration under this <u>Section 2.3</u> intend to distribute the Registrable Securities covered by their request by means of an underwriting, the provisions of <u>Section 2.1(e)</u> shall apply to such registration. Notwithstanding anything contained herein to the contrary, registrations effected pursuant to this <u>Section 2.3</u> shall not be counted as requests for registration or registrations effected pursuant to <u>Section 2.1</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;**Expenses of Registration**. All Registration Expenses incurred in connection with registrations pursuant to <u>Sections 2.1</u>, <u>2.2</u> and <u>2.3</u> hereof shall be borne by the Company; *provided*, *however*, that, subject to <u>Section 2.1(e)</u>, the Company shall not be required to pay for any Registration Expenses of any registration proceeding begun pursuant to <u>Sections 2.1</u> and <u>2.3</u> if the registration request is subsequently withdrawn at the request of the Holders in the aggregate of a majority of the Registrable Securities; or because a sufficient number of Holders shall have withdrawn so that the minimum offering conditions set forth in <u>Section 2.1</u> and <u>2.3</u> are no longer satisfied (in which case all participating Holders shall bear such expenses pro rata among each other based on the number of Registrable Securities requested to be so registered), unless the Holders in the aggregate of a majority of the Registrable Securities agree to forfeit their right to a demand registration pursuant to <u>Section 2.1</u>; *provided*, *however*, in the event that a withdrawal by the Holders is based upon material adverse information relating to the Company that is different from the information known or available (upon request from the Company or otherwise) to the Holders requesting registration at the time of their request for registration under <u>Sections 2.1</u> or <u>2.3</u>, such registration shall not be treated as a counted registration for purposes of <u>Sections 2.1</u> or <u>2.3</u> hereof, and the Company shall bear the Registration Expenses for such registration. All Selling Expenses relating to securities registered on behalf of the Holders shall

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be borne by the holders of securities included in such registration pro rata among each other on the basis of the number of Registrable Securities so registered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;**Registration Procedures**. In the case of each registration effected by the Company pursuant to <u>Section 2</u>, the Company will keep each Holder advised in writing as to the initiation of each registration and as to the completion thereof. At its expense, the Company will use its commercially reasonable efforts to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Keep such registration effective for a period of ending on the earlier of the date which is sixty (60) days from the effective date of the registration statement or such time as the Holder or Holders have completed the distribution described in the registration statement relating thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;To the extent the Company is a well-known seasoned issuer (as defined in Rule 405 under the Securities Act) (a ***"WKSI"***) at the time any request for registration is submitted to the Company in accordance with <u>Section 2.3</u>, (i) if so requested, file an automatic shelf registration statement (as defined in Rule 405 under the Securities Act) (an ***"automatic shelf registration statement"***) to effect such registration, and (ii) remain a WKSI (and not become an ineligible issuer (as defined in Rule 405 under the Securities Act)) during the period during which such automatic shelf registration statement is required to remain effective in accordance with this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement 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 for the period set forth in subsection (a) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Furnish such number of prospectuses, including any preliminary prospectuses, and other documents incident thereto, including any amendment of or supplement to the prospectus, as a Holder from time to time may reasonably request;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdiction as shall be reasonably requested by the Holders; *provided*, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Notify each seller of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing, and following such notification promptly prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter

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delivered to the purchasers of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or incomplete in light of the circumstances then existing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;If at any time when the Company is required to re-evaluate its WKSI status for purposes of an automatic shelf registration statement used to effect a request for registration in accordance with <u>Section 2.3</u>, (i) the Company determines that it is not a WKSI, (ii) the registration statement is required to be kept effective in accordance with this Agreement, and (iii) the registration rights of the applicable Holders have not terminated, reasonably promptly amend the registration statement onto a form the Company is then eligible to use or file a new registration statement on such form, and keep such registration statement effective in accordance with the requirements otherwise applicable under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;If (i) a registration made pursuant to a shelf registration statement is required to be kept effective in accordance with this Agreement after the third anniversary of the initial effective date of the shelf registration statement and (ii) the registration rights of the applicable Holders have not terminated, file a new registration statement with respect to any unsold Registrable Securities subject to the original request for registration prior to the end of the three year period after the initial effective date of the shelf registration statement, and keep such registration statement effective in accordance with the requirements otherwise applicable under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a "comfort" letter dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Provide a transfer agent and registrar for all Registrable Securities registered pursuant to such registration statement and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;Otherwise comply with all applicable rules and regulations of the Commission, and make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which similar securities issued by the Company are then listed; *provided* that in the case of the Initial Public Offering, the Registrable Securities shall be listed on a national securities exchange; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;In connection with any underwritten offering pursuant to a registration statement filed pursuant to <u>Section 2.1</u> hereof, enter into an underwriting agreement in form reasonably necessary to effect the offer and sale of Common Stock, *provided* such underwriting agreement contains reasonable and customary provisions, and *provided* further, that each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;**Indemnification.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;To the extent permitted by law, the Company will indemnify and hold harmless each Holder, each of its officers, directors and partners, legal counsel and accountants and each person controlling such Holder within the meaning of Section 15 of the Securities Act, with respect to which registration, qualification or compliance has been effected pursuant to this <u>Section 2</u>, and each underwriter, if any, and each person who controls within the meaning of Section 15 of the Securities Act any underwriter, against all expenses, claims, losses, damages and liabilities (or actions, proceedings or settlements in respect thereof) arising out of or based on: (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any registration statement, prospectus, offering circular, issuer free writing prospectus (as defined in Rule 433 of the Securities Act), issuer information (as defined in Rule 433 of the Securities Act) filed or required to be filed pursuant to Rule 433(d) under the Securities Act or any other document incident to any such registration or related qualification or compliance, (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or (iii) any violation (or alleged violation) by the Company of the Securities Act, any state securities laws or any rule or regulation thereunder applicable to the Company and relating to action or inaction required of the Company in connection with any offering covered by such registration, qualification or compliance, and the Company will reimburse each such Holder, each of its officers, directors, partners, legal counsel and accountants and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any legal and any other expenses reasonably incurred in connection with investigating and defending or settling any such claim, loss, damage, liability or action; *provided* that the Company will not be liable in any such case to the extent that any such claim, loss, damage, liability, or action arises out of or is based on any untrue statement or omission based upon written information furnished to the Company by such Holder, any of such Holder's officers, directors, partners, legal counsel or accountants, any person controlling such Holder, such underwriter or any person who controls any such underwriter, and stated to be specifically for use therein except to the extent such information was corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the person or entity asserting the claim; and *provided*, *further* that, the indemnity agreement contained in this <u>Section 2.6(a)</u> shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;To the extent permitted by law, each Holder will, severally and not jointly, if Registrable Securities held by such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the

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Company, each of its directors, officers, partners, legal counsel and accountants and each underwriter, if any, of the Company's securities covered by such a registration statement, each person who controls the Company or such underwriter within the meaning of Section 15 of the Securities Act, each other such Holder, and each of their officers, directors and partners, and each person controlling each other such Holder, against all claims, losses, damages and liabilities (or actions in respect thereof) arising out of or based on (in each case only to the extent that such claims, losses, damages and liabilities arise out of or are based upon actions or omissions made in reliance upon and in conformity with written information furnished by or on behalf of such selling Holder expressly for use in connection with such registration except to the extent such information was corrected in a subsequent writing prior to or concurrently with the sale of Registrable Securities to the person or entity asserting the claim): (i) any untrue statement (or alleged untrue statement) of a material fact contained or incorporated by reference in any prospectus, offering circular or other document (including any related registration statement, notification, or the like) incident to any such registration, qualification or compliance, or (ii) any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company and such Holders, directors, officers, partners, legal counsel and accountants, persons, underwriters, or control persons for any legal or any other expenses reasonably incurred in connection with investigating or defending any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by such Holder and stated to be specifically for use therein; *provided*, *however*, that the obligations of such Holder hereunder shall not apply to amounts paid in settlement of any such claims, losses, damages or liabilities (or actions in respect thereof) if such settlement is effected without the consent of such Holder (which consent shall not be unreasonably withheld); and *provided* that in no event shall any indemnity under this <u>Section 2.6(b)</u> exceed the net proceeds from the offering received by such Holder, except in the case of fraud or willful misconduct by such Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Each party entitled to indemnification under this <u>Section 2.6</u> (the ***"Indemnified Party"***) shall give notice to the party required to provide indemnification (the ***"Indemnifying Party"***) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of such claim or any litigation resulting therefrom; *provided* that counsel for the Indemnifying Party, who shall conduct the defense of such claim or any litigation resulting therefrom, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense; and *provided further* that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this <u>Section 2.6</u>, to the extent such failure is not prejudicial. 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 to such claim or litigation. Each Indemnified Party shall furnish such information

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regarding itself or the claim in question as an Indemnifying Party may reasonably request in writing and as shall be reasonably required in connection with defense of such claim and litigation resulting therefrom.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;If the indemnification provided for in this <u>Section 2.6</u> is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any loss, liability, claim, damage, or expense referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party hereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the statements or omissions that resulted in such loss, liability, claim, damage, or expense as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and of 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 to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified Party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. No person or entity will be required under this <u>Section 2.6(d)</u> to contribute any amount in excess of the net proceeds from the offering received by such person or entity, except in the case of fraud or willful misconduct by such person or entity. No person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into by the Investors in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control; *provided* that the failure of the underwriting agreement to provide for or address a matter provided for or addressed in the foregoing provisions shall not be a conflict with the foregoing provisions and, in such event, the foregoing provisions shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;**Information by Holder**. Each Holder of Registrable Securities shall furnish to the Company such information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification, or compliance referred to in this <u>Section 2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8&nbsp;&nbsp;&nbsp;&nbsp;**Rule 144 Reporting**. With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of the Restricted Securities to the public without registration, the Company agrees to use its commercially reasonable efforts to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Make and keep adequate current public information with respect to the Company available in accordance with Rule 144 under the Securities Act, at all times from and after ninety (90) days following the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;File with the Commission 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 it has become subject to such reporting requirements; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;So long as a Holder owns any Restricted Securities, furnish to the Holder forthwith upon written request a written statement by the Company as to its compliance with the reporting requirements of Rule 144 (at any time from and after ninety (90) days following the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents so filed as a Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing a Holder to sell any such securities without registration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9&nbsp;&nbsp;&nbsp;&nbsp;**Delay of Registration**. No Holder shall have any right to take any action to restrain, enjoin, or otherwise delay any registration as the result of any controversy that might arise with respect to the interpretation or implementation of this <u>Section 2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10&nbsp;&nbsp;&nbsp;&nbsp;**Transfer or Assignment of Registration Rights**. The rights to cause the Company to register securities granted to a Holder by the Company under this <u>Section 2</u> may be transferred or assigned by a Holder only to a transferee or assignee of not less than twenty percent (20%) of the Registrable Securities (as presently constituted and subject to subsequent adjustments stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like) then held by such Holder; *provided* that (i) such transfer or assignment of Registrable Securities is effected in accordance with the terms of transfer of capital stock of the Company set forth in the Voting Agreement and applicable securities laws, (ii) the Company is given written notice prior to said transfer or assignment, stating the name and address of the transferee or assignee and identifying the securities with respect to which such registration rights are intended to be transferred or assigned and (iii) the transferee or assignee of such rights assumes in writing the obligations of such Holder under this Agreement, including without limitation the obligations with respect to transfer of capital stock of the Company set forth in the Voting Agreement. The foregoing twenty percent (20%) threshold shall not be applicable to any transfers among Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11&nbsp;&nbsp;&nbsp;&nbsp;**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 in the aggregate of a majority of the Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company giving such holder or prospective holder any registration rights the terms of which are senior to or on parity with the registration rights granted to the Holders hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;&nbsp;&nbsp;&nbsp;**Termination of Registration Rights**. The right of any Holder to request registration or inclusion in any registration pursuant to <u>Sections 2.1</u>, <u>2.2</u> or <u>2.3</u> above shall terminate on the earlier of: (i) following the closing of the Company's first registered public offering of Common Stock, with respect to any Holder who then holds an amount of Registrable Securities that is equal to less than one percent (1%) of the outstanding securities of the

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Company and may sell all such Registrable Securities under Rule 144 during any ninety (90) day period, and (ii) four (4) years after the closing of a Qualified Public Offering.

**3.&nbsp;&nbsp;&nbsp;&nbsp;<u>CERTAIN COVENANTS</u>.**

The Company hereby covenants and agrees, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;**Basic Financial Information and Inspection Rights.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;**Basic Financial Information**. The Company will deliver to each Major Investor:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;as soon as practicable after the end of each fiscal year of the Company, and in any event within 120 days after the end of each fiscal year of the Company (i) a consolidated balance sheet of the Company and its subsidiaries, if any, as at the end of such fiscal year, (ii) consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such year, and a comparison between (x) the actual amounts as of and for such fiscal year and (y) the comparable amounts for the prior year and as included in the Budget (as defined below) for such year, with an explanation of any material differences between such amounts and a schedule as to the sources and applications of funds for such year, and (iii) a statement of stockholders' equity as of the end of such year, all such financial statements prepared in accordance with U.S. generally accepted accounting principles consistently applied, and audited and certified by independent public accountants of recognized national standing selected by the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;as soon as practicable after the end of the first, second and third quarterly accounting periods in each fiscal year of the Company, and in any event within 45 days after the end of the first, second, and third quarterly accounting periods in each fiscal year of the Company, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such quarterly period, and unaudited consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject to changes resulting from normal year-end audit adjustments and such financial statements may not contain accompanying notes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;as soon as practicable after the each month, and in any event within 30 days after the end of each such month, an unaudited consolidated balance sheet of the Company and its subsidiaries, if any, as of the end of each such monthly period, and unaudited consolidated statements of income and cash flows of the Company and its subsidiaries, if any, for such period, prepared in accordance with U.S. generally accepted accounting principles consistently applied, subject to changes resulting from normal year-end audit adjustments and such financial statements may not contain accompanying notes, along with a comparison of such results to the Company's operating plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;at least 30 days prior to the end of each fiscal year of the Company, an annual operating plan for such fiscal year (and as soon as available, any subsequent

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material revisions thereto), which shall include revenues, expenses and cash position on a month-to-month basis for the upcoming fiscal year (such operating plan, budget and business plan as approved by the Board, including the majority of the then-serving Preferred Directors, which is collectively referred to herein as the "***Budget***");

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;upon the receipt of a written request by a Major Investor, as soon as practicable after the end of each quarter of each fiscal year of the Company, a statement showing the number of shares of each class and series of capital stock and securities convertible into or exercisable for shares of capital stock outstanding at the end of the period, the Common Stock issuable upon conversion or exercise of any outstanding securities convertible or exercisable for Common Stock and the exchange ratio or exercise price applicable thereto, and the number of shares of issued stock options and stock options not yet issued but reserved for issuance, if any, all in sufficient detail as to permit such Major Investor to calculate their respective percentage equity ownership in the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;such other information relating to the financial condition or business of the Company as any Major Investor may, from time to time, reasonably request related to monitoring its investment in the Company; *<u>provided</u>*, *<u>however</u>*, that the Company shall not be obligated under this <u>Subsection 3.1(a)</u> to provide a complete set of materials prepared by or on behalf of the Company any information: (i) that the Company reasonably determines in good faith to be a trade secret or confidential information (unless covered by an enforceable confidentiality agreement, in a form acceptable to the Company, and is not a trade secret described in the next clause); (ii) that the Company reasonably determines in good faith to be a technology or scientific trade secret; or (iii) the disclosure of which would adversely affect the attorney-client privilege between the Company and its counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;**Inspection Rights**. The Company shall permit each Major Investor to visit and inspect any of the properties of the Company or any of its subsidiaries during normal business hours or at such other reasonable times as may be requested, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and to review such information as is reasonably requested all at such reasonable times and as often as may be reasonably requested; *provided, however,* that the Company shall not be obligated under this <u>Section 3.1(b)</u> with respect to a competitor of the Company (as determined by the Board in good faith) or with respect to information which the Board determines in good faith is highly confidential or attorney-client privileged and should not, therefore, be disclosed; *provided*, however that no Major Investor shall be deemed a competitor solely as a result of holding less than twenty percent (20%) of the outstanding equity of an entity or as a result of maintaining a right to designate any members of the board of directors of a competitor. Each Major Investor may exercise its rights under this <u>Section 3.1(b)</u> only for purposes reasonably related to its interests as a stockholder of the Company. The rights granted pursuant to this <u>Section 3.1(b)</u> may not be assigned or otherwise conveyed to any Holder or by any subsequent transferee of any such rights without the prior written consent of the Company; *provided, further*, that a Major Investor shall be permitted to transfer rights granted pursuant to this <u>Section 3.1(b)</u> to Affiliates of such Major Investor.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;**Gilde Rights**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;The Company acknowledges that part of the money to be invested by Coöperatieve Gilde Healthcare V U.A. (***"Gilde"***) is originating from KfW Capital through the ERP - Venture Capital Fondsfinanzierung facility. The Company shall for the benefit of KfW Capital provide employment figures within one month of the lapse of each calendar quarter to Gilde.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;The Company acknowledges and agrees that each of KfW Capital (and at the request of Gilde or KfW Capital also: the German Ministry for Economic Affairs and Energy, the ERP Special Fund (ERP-Sondervermögen) and/or the German Federal Court of Auditors) (either in person or by way of a duly authorized third party) and Gilde has the right to conduct an audit by means of examining all books and records of the Company, and is furthermore allowed - during normal business hours and observing a reasonable notice period - to (i) visit the sites, facilities, installations and works comprising the Company, (ii) to interview representatives of the Company, and (iii) monitor the structure of the investment and the management.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Upon the occasion of such a visit the Company will provide such documents which are reasonably required and which are in the Company's possession as fall within the aforementioned scope and subject to and limited by any confidentiality obligations on the part of the Company and/or its Subsidiaries to or with any third party. If such documents are not in the Company's possession, it will make reasonable efforts to obtain them provided that the Company will not have to incur any costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;**Confidentiality**. Each Holder agrees that such Holder will keep confidential and will not use for any purpose (other than to monitor its investment) or disclose or divulge any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company's intention to file a registration statement and the contents of any financial statements received), unless such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this <u>Section 3.2</u> by such Holder or as a result of a breach by a third party of any obligation of confidentiality such third party may have to the Company of which such Holder is aware), (b) is or has been independently developed or conceived by Holder without use of or reference to the Company's confidential information, or (c) is or has been made known or disclosed to the Holder by a third party without a breach of any obligation of confidentiality such third party may have to the Company; provided, however, that a Holder may disclose confidential information (i) to its attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring its investment in the Company, provided such persons agree to hold such information confidentially as provided herein; (ii) to any prospective purchaser of any Registrable Securities from such Holder, if such prospective purchaser agrees to be bound by the provisions of this <u>Section 3.2</u>; (iii) to any existing or prospective Affiliate, partner, member, stockholder, or wholly owned subsidiary of such Holder in the ordinary course of business, but only on the condition that such Affiliate, partner, member, stockholder or wholly owned subsidiary of such Holder shall only use such confidential information in connection with

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monitoring such Holder's investment in the Company and not for any other purpose, and provided that such Holder informs such person or entity that such information is confidential and directs such person or entity to maintain confidential treatment of such information; or (iv) as may otherwise be required by law, provided that the Holder promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure. For the avoidance of doubt and notwithstanding anything to the contrary in this <u>Section 3.2</u>, Gilde is permitted to disclose confidential information with investors (for the purposes of, but not limited to, reviewing existing investments and investment proposals) as well as its and such investors' depositary, auditor, lenders, professional advisors, and governmental or other institution or authority to which it is required to disclose confidential information for audit, monitoring, reporting, tax, legal, regulatory, supervisory or other purposes, provided each such recipient is subject to confidentiality by law or contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;**Right to Conduct Activities**. The Company hereby agrees and acknowledges that certain of the Investors and their respective Affiliates are venture capital funds (each, a ***"Fund"***) and as such review the business plans and related proprietary information of many enterprises and invest in numerous portfolio companies, may compete directly or indirectly with the Company's business (as currently conducted or as currently propose to be conducted). Nothing in this Agreement shall preclude or in any way restrict the Investors from evaluating or purchasing securities, including publicly traded securities, of a particular enterprise, or investing or participating in any particular enterprise whether or not such enterprise has products or services which compete with those of the Company. The Company hereby agrees that, to the extent permitted by applicable law, no Fund nor its partners, employees, Affiliates, advisors or affiliated investment funds shall be liable to the Company for any claim arising out of, or based upon, (i) the investment by such Fund (or its Affiliates) in any entity, or activities of such Affiliates, that may be competitive to the Company or (ii) actions taken by any partner, officer, advisor, employee or other representative of such Fund (or its Affiliates) in his, her or its capacity as such to assist any such competitive company whether or not such action was taken as a member of the board of directors of such competitive company or otherwise; *provided, however,* that nothing herein shall relieve any Fund from liability associated with use or disclosure of the Company's confidential information in breach of <u>Section 3.2</u> above or associated with a breach of any other obligation of confidentiality owed to the Company, nor liability associated with violating, breaching or misappropriating any proprietary right of the Company, nor shall relieve any director or officer of the Company from any liability associated with his or her breach of a fiduciary duty.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;**FCPA**. The Company covenants that it shall not (and shall not permit any of its subsidiaries or Affiliates or any of its or their respective directors, officers, managers, employees, independent contractors, representatives or agents to) promise, authorize or make any payment to, or otherwise contribute any item of value to, directly or indirectly, to any third party, including any Non-U.S. Official (as (as such term is defined in the U.S. Foreign Corrupt Practices Act of 1977, as amended (the ***"FCPA"***)), in each case, in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company further covenants that it shall (and shall cause each of its subsidiaries and Affiliates to) cease all of its or their respective activities, as well as remediate any actions taken by the Company, its

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subsidiaries or affiliates, or any of their respective directors, officers, managers, employees, independent contractors, representatives or agents in violation of the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. The Company further represents that it shall (and shall cause each of its subsidiaries and affiliates to) maintain systems of internal controls (including, but not limited to, accounting systems, purchasing systems and billing systems) to ensure compliance with the FCPA, the U.K. Bribery Act, or any other applicable anti-bribery or anti-corruption law. Upon request, the Company agrees to provide responsive information and/or certifications concerning its compliance with applicable anti-corruption laws. The Company shall promptly notify each Fund if the Company becomes aware of any enforcement action pursuant to such laws. The Company shall, and shall cause any direct or indirect subsidiary or entity controlled by it, whether now in existence or formed in the future, to comply with the FCPA. The Company shall use its best efforts to cause any direct or indirect subsidiary, whether now in existence or formed in the future, to comply in all material respects with all applicable laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;**Termination of Covenants**. The covenants set forth in <u>Section 3.1</u> and <u>Section 3.4</u> shall terminate and be of no further force and effect after the earlier of: (a) the Initial Public Offering; and (b) the occurrence of a Deemed Liquidation Event, except that such covenants shall not terminate upon the consummation of a sale of all or substantially all of the assets of the Company; *provided, however,* that this Agreement may be terminated after such sale of all or substantially all of the assets of the Company upon the consent of the Preferred Stock Majority.

**4.&nbsp;&nbsp;&nbsp;&nbsp;<u>RIGHT OF FIRST REFUSAL</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;**Grant of Rights**. Subject to the provisions of <u>Section 4.2</u> through <u>Section 4.5</u> below, the Company hereby grants to each Major Investor who is an "accredited investor" within the meaning of applicable securities laws and regulations (a ***"ROFR Holder"***), the right of first refusal to purchase its Pro Rata Amount (as defined below) of New Securities which the Company may, from time to time, propose to sell and issue after the date of this Agreement. A ROFR Holder's ***"Pro Rata Amount"***, for purposes of this right of first refusal, is equal to the ratio of (a) the number of shares of Common Stock together with the number of shares of Preferred Stock (and warrants or other securities exercisable for Preferred Stock) calculated on an as exercised and as converted to Common Stock basis held by such ROFR Holder, to (b) the total of all outstanding shares of Common Stock and Preferred Stock and all other shares of other convertible securities, rights, options or warrants then outstanding, on an as exercised and as converted to Common Stock basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;**New Securities**. As used herein, ***"New Securities"*** shall mean any capital stock (including Common Stock and/or Preferred Stock) of the Company whether now authorized or not, and rights, convertible securities, options or warrants to purchase such capital stock, and securities of any type whatsoever that are, or may become, exercisable or convertible into capital stock, including debt instruments convertible into capital stock; *provided* that the term "New Securities" does not include (i) Exempted Securities, as defined in the Restated Certificate,

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(ii) any shares of Series E Preferred Stock issued pursuant to the Series E Purchase Agreement, or (iii) any shares of stock of the Company issued in the Initial Public Offering.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;**Notice**. In the event the Company proposes to undertake an issuance of New Securities, it shall give each ROFR Holder written notice of its intention, describing the type of New Securities, and their price and the general terms upon which the Company proposes to issue the same. Each ROFR Holder shall have twenty (20) days after any such notice is mailed or delivered to agree to purchase such ROFR Holder's Pro Rata Amount (or such lesser amount as desired) of such New Securities for the price and upon the terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;**Election Period and Excess Securities**. In the event the foregoing right of first refusal is not exercised in full by all of the ROFR Holders within the fifteen (15) day period described in <u>Section 4.3</u> above (the ***"Election Period"***), the Company shall promptly notify in writing the ROFR Holders who have elected to exercise their right of first refusal with respect to their full Pro Rata Amounts and shall offer such ROFR Holders the right to acquire such unsubscribed New Securities. Each ROFR Holder shall have five (5) days after receipt of such notice to notify the Company of its election to purchase all or a portion thereof of its pro rata portion of the unsubscribed New Securities, indicate whether it intends to purchase unsubscribed New Securities in excess of its pro rata share (***"Excess Securities"***) and, if so, the number of such unsubscribed New Securities it wishes to purchase. The Excess Securities, if any, shall be allocated to participating ROFR Holders in a manner most consistent with the pro rata shares of such participating ROFR Holders as determined in good faith by the Board. If the ROFR Holders fail to exercise in full their rights of first refusal, the Company shall have forty-five (45) days thereafter to sell or enter into an agreement (pursuant to which the sale of New Securities covered thereby shall be closed, if at all, within twenty (20) days from the date of said agreement) to sell that portion of the New Securities with respect to which the ROFR Holders' right of first refusal option set forth in this <u>Section 4</u> was not exercised, at a price and upon terms no more favorable to the purchasers thereof than specified in the Company's notice to ROFR Holders delivered pursuant to <u>Section 4.3</u>. In the event the Company enters into an agreement to sell such New Securities within such forty-five (45) day period following the Election Period, or sells such New Securities within such twenty (20) day period following the date of said agreement, the Company shall not thereafter issue or sell any New Securities, without first again offering such securities to the ROFR Holders in the manner provided in this <u>Section 4</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;**Waiver, Termination, Transfer**. The rights of first refusal granted under this <u>Section 4</u>, including notice with respect thereto, may be waived by the holders in the aggregate of a majority of the Registrable Securities held by Major Investors. Notwithstanding the foregoing, if any of the waiving ROFR Holders purchase New Securities covered by the waiver, then each ROFR Holder shall have the right to purchase its Pro Rata Amount of the New Securities. The rights of first refusal granted under this <u>Section 4</u> shall terminate immediately prior to the earliest: of (i) an Initial Public Offering, (ii) the closing of a Deemed Liquidation Event, except that such covenants shall not terminate upon the consummation of a sale of all or substantially all of the assets of the Company unless agreed to in writing by the Preferred Stock

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Majority, and (iii) as to any Investor at such time it, together with its Affiliates, is no longer a ROFR Holder. The rights of first refusal of a ROFR Holder under this <u>Section 4</u> may be transferred subject to the same restrictions as any transfer of registration rights pursuant to <u>Section 2.12</u>. Notwithstanding anything else set forth above, a ROFR Holder shall be permitted to transfer rights granted pursuant to this <u>Section 4</u> in any amount to its Affiliates.

**5.&nbsp;&nbsp;&nbsp;&nbsp;<u>OTHER COMPANY COVENANTS</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;**Employee Agreements**. The Company shall require all employees and consultants to execute and deliver a non-disclosure and proprietary rights assignment agreement in a form reasonably acceptable to U.S. Venture Partners Select Fund I, LP (***"USVP"***). Where legally permissible based on the advice of counsel, the Company shall require each key employee to enter into a one-year non-competition and non-solicitation agreement in a form reasonably acceptable to USVP. In addition, the Company shall not materially amend, modify, terminate, waive, or otherwise alter, in whole or in part, any of the above-referenced agreements or any restricted stock agreement between the Company and any employee, if such amendment would cause it to be inconsistent with this <u>Section 5.1</u> without the consent of the Board, including the consent of a majority of the then-serving Preferred Directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;**Equity Agreements**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise approved by the Board, including the consent of a majority of the then-serving Preferred Directors, all employees of the Company who purchase, or receive options to purchase, shares of Common Stock following the date hereof shall be required to execute stock purchase or option agreements (such agreements, "***Employee Equity Agreements***") providing for: (i) vesting of shares over sixteen (16) quarters with the first twenty five percent (25%) of such shares vesting following four (4) quarters of continued employment or services, and the remaining shares vesting in equal quarterly installments over the following twelve (12) quarters thereafter; and (ii) a vesting commencement date no earlier than such employee's first date of employment with the Company. Without the prior approval by the Board, including a majority of the then-serving Preferred Directors, the Company shall not amend, modify, terminate, waive or otherwise alter, in whole or in part, any stock purchase, stock restriction or option agreement with any existing employee or service provider if such amendment would cause it to be inconsistent with this <u>Section 5.2</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company shall include and maintain provisions in its Bylaws, Employee Equity Agreements and similar arrangements with employees that provides (i) the Company with a primary right of first refusal and (ii) holders of shares of any series of Preferred Stock with a secondary right of first refusal on any proposed transfer of the Common Stock (clauses (i) and (ii) collectively, the "***ROFR***") until a Qualified Public Offering; *<u>provided</u> <u>that</u>*, the ROFR shall be no less restrictive than the rights of first refusal granted to the Company and the holders of Preferred Stock in Section 2 of that certain Fourth Amended and Restated Right of First Refusal and Co-Sale Agreement entered into by and among the Company and the stockholders of the Company named therein as of even date herewith, as such may be amended or restated from time to time in accordance with the provisions thereof.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;**Successor Indemnification**. If the Company or any of its successors or assignees consolidates with or merges into any other person or entity and is not the continuing or surviving corporation or entity of such consolidation or merger, then to the extent necessary, proper provision shall be made so that the successors and assignees of the Company assume the obligations of the Company with respect to indemnification of members of the Board as in effect immediately before such transaction, whether such obligations are contained in the Company's bylaws, the Company's certificate of incorporation, or elsewhere, as the case may be.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;**Expenses of Counsel**.&nbsp;&nbsp;&nbsp;&nbsp; In the event of a transaction which is a Sale of the Company (as defined in the Voting Agreement), the reasonable fees and disbursements, not to exceed $30,000, of one counsel for the Major Investors as selected by holders of a majority of Registrable Securities then held by the Major Investors ("**Investor Counsel**"), in their capacities as stockholders, shall be borne and paid by the Company. At the outset of considering a transaction which, if consummated would constitute a Sale of the Company, the Company shall obtain the ability to share with the Investor Counsel (and such counsel's clients) and shall share the confidential information (including, without limitation, the drafts of memoranda of understanding (but not necessarily all drafts thereof), letters of intent (but not necessarily all drafts thereof), and definitive transaction documents and related noncompete, employment, consulting and other compensation agreements and plans) pertaining to and memorializing any of the transactions which, individually or when aggregated with others would constitute the Sale of the Company. The Company shall be obligated to share (and cause the Company's counsel and investment bankers to share) copies of definitive agreements with respect to such transaction when distributed to the Company's executives and/or any one or more of the other parties to such transaction(s). In the event that Investor Counsel deems it appropriate, in its reasonable discretion, to enter into a joint defense agreement or other arrangement to enhance the ability of the parties to protect their communications and other reviewed materials under the attorney client privilege, the Company shall, and shall direct its counsel to, execute and deliver to Investor Counsel and its clients such an agreement in form and substance reasonably acceptable to Investor Counsel. In the event that one or more of the other party or parties to such transactions require the clients of Investor Counsel to enter into a confidentiality agreement and/or joint defense agreement in order to receive such information, then the Company shall share whatever information can be shared without entry into such agreement and shall, at the same time, in good faith work expeditiously to enable Investor Counsel and its clients to negotiate and enter into the appropriate agreement(s) without undue burden to the clients of Investor Counsel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;**Observer Right**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company shall allow Dr. Stephen Gunther for so long as he holds not less than 25% of the shares of the Preferred Stock originally purchased by him, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like, to attend all meetings of the Board in a non-voting observer capacity (the ***"Gunther Observer"***) and shall provide the Gunther Observer copies of all notices, minutes, consents, and other materials that it provides to the Board at the same time and in the same manner as provided to the Board. The Gunther Observer shall enter into a standard form of confidentiality agreement with the Company pursuant to which such Gunther Observer shall agree to hold in confidence and trust

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and to act in a fiduciary manner with respect to all information so provided. The Company reserves the right to withhold any information and to exclude the Gunther Observer from any meeting or portion thereof if the Board reasonably believes that access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel, such information is a highly confidential trade secret or would be a conflict of interest between such Gunther Observer and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;So long as Gilde holds not less than 25% of the shares of the Preferred Stock originally purchased by it, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like (or an equivalent amount of Common Stock issued upon conversion thereof), the Company shall invite a representative of Gilde to attend all meetings of the Board in a non-voting observer capacity (the ***"Gilde Observer"***) and shall provide the Gilde Observer copies of all notices, minutes, consents, and other materials that it provides to the Board at the same time and in the same manner as provided to the Board. The Gilde Observer shall enter into a standard form of confidentiality agreement with the Company pursuant to which such Gilde Observer shall agree to hold in confidence and trust with respect to all information so provided. The Company reserves the right to withhold any information and to exclude the Gilde Observer from any meeting or portion thereof if the Board reasonably believes that access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel, such information is a highly confidential trade secret or would be a conflict of interest between such Gilde Observer and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;So long as Arboretum Ventures, LLC ("***Arboretum***") holds not less than 25% of the shares of the Preferred Stock originally purchased by it, as adjusted for any stock splits, stock dividends, combinations, subdivisions, recapitalizations or the like (or an equivalent amount of Common Stock issued upon conversion thereof), the Company shall invite a representative of Arboretum to attend all meetings of the Board in a non-voting observer capacity (the "***Arboretum Observer***") and shall provide the Arboretum Observer copies of all notices, minutes, consents, and other materials that it provides to the Board at the same time and in the same manner as provided to the Board. The Arboretum Observer shall enter into a standard form of confidentiality agreement with the Company pursuant to which such Arboretum Observer shall agree to hold in confidence and trust with respect to all information so provided. The Company reserves the right to withhold any information and to exclude the Arboretum Observer from any meeting or portion thereof if the Board reasonably believes that access to such information or attendance at such meeting could adversely affect the attorney-client privilege between the Company and its counsel, such information is a highly confidential trade secret or would be a conflict of interest between such Arboretum Observer and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;**Indemnification Matters**. The Company hereby acknowledges that one (1) or more of the Preferred Directors nominated to serve on the Board by one (1) or more Investors may have certain rights to indemnification, advancement of expenses and/or insurance provided by one (1) or more of the Investors and certain of their Affiliates (collectively, the "***Investor Indemnitors***"). The Company hereby agrees (a) that it is the indemnitor of first resort (*i.e.*, its obligations to any such Preferred Director are primary and any obligation of the Investor Indemnitors to advance expenses or to provide indemnification for the same expenses or

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liabilities incurred by such Preferred Director are secondary), (b) that it shall be required to advance the full amount of expenses incurred by such Preferred Director and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement by or on behalf of any such Preferred Director to the extent legally permitted and as required by the Certificate of Incorporation or Bylaws of the Company (or any agreement between the Company and such Preferred Director), without regard to any rights such Preferred Director may have against the Investor Indemnitors, and, (c) that it irrevocably waives, relinquishes and releases the Investor Indemnitors from any and all claims against the Investor Indemnitors for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Investor Indemnitors on behalf of any such Preferred Director with respect to any claim for which such Preferred Director has sought indemnification from the Company shall affect the foregoing and the Investor Indemnitors shall have a right of contribution and/or be subrogated to the extent of such advancement or payment to all of the rights of recovery of such Preferred Director against the Company. The Preferred Directors and the Investor Indemnitors are intended third-party beneficiaries of this <u>Section 5.6</u> and shall have the right, power and authority to enforce the provisions of this <u>Section 5.6</u> as though they were a party to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;**Anti-Harassment Policy**. The Company shall maintain (i) a Code of Conduct governing appropriate workplace behavior and (ii) an Anti-Harassment and Discrimination Policy prohibiting discrimination and harassment at the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;**Cybersecurity**. The Company shall maintain a plan to implement reasonable physical, technical and administrative safeguards designed to protect the confidentiality, integrity and availability of its technology and systems (including servers, laptops, desktops, cloud, containers, virtual environments and data centers) and all of the Company's confidential business information and trade secrets and any information about identified or identifiable natural persons maintained by or on behalf of the Company (collectively, "***Protected Data***"). The Company shall evaluate on a periodic basis at least annually whether such safeguards should be updated to maintain a level of security appropriate to the risk posed to Company systems and Protected Data. The Company shall educate its employees about the proper use and storage of Protected Data, including periodic training as determined reasonably necessary by the Company or the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;**Impact Investing**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company acknowledges that Gilde has the objective to measure the (potential) impact of its investment in the Company on the social needs of society, including but not limited to the United Nations Sustainable Development Goal 3 (SDG 3: "Ensure healthy lives and promote well-being of all at all ages"). To accomplish this objective, Gilde seeks to identify, assess, measure, monitor and report the impact of its investment in the Company based on an impact framework developed by Gilde.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees to provide information that allows Gilde to complete its impact framework (updated from time to time) four months after the end of each calendar

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year and shall respond to Gilde's reasonable additional requests for information to complete its impact framework.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Gilde will be allowed to report the (potential) impact of the Company to its investment committee members, investors and advisors (subject to customary confidentiality undertakings).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;**Environmental, Social and Governance**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company acknowledges that Gilde is a signatory to the principles of responsible investment as defined under the United Nations Principles for Responsible Investment ("***UN PRI***"), which are sufficiently known to the parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees to use commercially reasonable efforts to assist Gilde in measuring the Environmental, Social and Governance ("***ESG***") performance of its business activities, and to develop in collaboration with Gilde an action plan to improve the ESG performance of the Company. The Company furthermore agrees to discuss the Company's ESG performance with Gilde at least once per calendar year. Gilde acknowledges that execution of action plans to improve the ESG performance may require approval of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Company agrees to provide information that will continue to allow Gilde to complete its ESG framework (updated from time to time) within four months after the end of each calendar year, and in addition will provide information on ESG targets set and actions planned to improve the Company's ESG performance for the following calendar year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The Company shall respond to Gilde's reasonable additional requests for information based on its ESG policies, practices and procedures, and keep Gilde informed of any material developments on ESG issues at the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Gilde will be allowed to report the ESG performance of the Company to its investment committee members, investors and advisors and use the Company's ESG data aggregated with ESG data of other Gilde portfolio companies to fulfill its public ESG reporting requirements as an UN PRI signatory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp;**Excluded Investments**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company represents not to be involved in (the financing of) research, development or technical applications relating to human cloning for research or therapeutic purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company represents as at the date of this Agreement that it acts in and shall ensure compliance with applicable legal, regulatory and ethical requirements relating to research, development or technical applications of genetically modified organisms ("***GMOs***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;If the Company intends to be involved in any of the activities set forth in <u>Section 5.11(a</u>) or expand its business strategy regarding GMOs (i.e., commercialize GMOs), the Company shall first inform Gilde and will not engage in such activities without the prior written

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approval of Gilde, who will not unreasonably withhold such approval subject to certain conditions relating to the appropriate control of legal, regulatory and ethical issues linked to such human cloning for research or therapeutic purposes and/or GMOs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;**Certain Interested Party Transactions**. Any material contract or transaction between the Company and a party in which an executive officer of the Company has a financial interest shall require the review and approval of the Audit Committee of the Company unless unanimously approved by the Board; provided that if no Audit Committee is in place at the relevant time, such contract or transaction shall instead require the approval of a majority of the disinterested members of the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.13&nbsp;&nbsp;&nbsp;&nbsp;**Termination of Covenants**. The covenants set forth in <u>Sections 5.1</u>, <u>5.2</u>, <u>5.3</u>, <u>5.4,</u> <u>5.5,</u> <u>5.7</u> and <u>5.8</u> above shall terminate and be of no further force or effect upon the consummation of the earlier to occur of (a) an Initial Public Offering, and (b) a Deemed Liquidation Event, except that such covenants shall not terminate upon the consummation of a Deemed Liquidation Event that is the sale of all or substantially all of the assets of the Company unless approved in writing by the Preferred Stock Majority; provided further that the provisions of <u>Sections 5.3</u> and <u>5.4</u> hereof will continue after the closing of any Sale of the Company to the extent necessary to enforce the provisions thereof with respect to such Sale of the Company.

**6.&nbsp;&nbsp;&nbsp;&nbsp;<u>MISCELLANEOUS.</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;**Successors and Assigns**. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;**Governing Law**. This Agreement will be construed and enforced in accordance with the substantive laws of the State of Delaware without reference to principles of conflicts of law. EACH PARTY HERETO HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN DELAWARE, IN ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND TO THE RESPECTIVE COURT TO WHICH AN APPEAL OF THE DECISIONS OF ANY SUCH COURT MAY BE TAKEN, AND EACH PARTY AGREES NOT TO COMMENCE, OR COOPERATE IN OR ENCOURAGE THE COMMENCEMENT OF, ANY SUCH PROCEEDING, EXCEPT IN PROCEEDING WILL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY JURISDICTION BY SUIT IN SUCH A COURT. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE THEREIN OF SUCH A PROCEEDING.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;**Counterparts**. This Agreement may be executed in any number of counterparts and signatures may be delivered via electronic mail (including pdf or any electronic signature complying with the U.S. federal ESIGN Act of 2000, *e.g.*, www.docusign.com) or other transmission method, each of which may be executed by less than all parties, each of which shall

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be enforceable against the parties actually executing such counterparts, and all of which together shall constitute one instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;**Titles and Subtitles**. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.5&nbsp;&nbsp;&nbsp;&nbsp;**Notices**. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given upon the earliest of: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed e-mail or confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day, or (c) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written identification of receipt. All communications shall be sent, if to the Company, at the address set forth on the signature page hereto, and if to an Investor, at its address as set forth on <u>Exhibit A</u> hereto, or at such other address or contact information as such party may designate by ten (10) calendar days' advance written notice to the other parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.6&nbsp;&nbsp;&nbsp;&nbsp;**Amendments and Waivers**. Except as expressly provided herein, any term of this Agreement may be amended, terminated or waived only with the written consent of (a) the Company and (b) the Preferred Stock Majority, or, following the Initial Public Offering of the Company, the holders in the aggregate of at least a majority of the Registrable Securities then outstanding; provided that: (i) no amendment, termination or waiver of any term under this Agreement shall adversely affect any Investor or group of Investors in a manner that is disproportionate to its holdings of stock relative to the other Investors of the same class or series unless such amendment, termination or waiver is agreed to in writing by a majority in interest of the disproportionately affected Investor(s); (ii) <u>Section 3</u> and <u>Section 4</u> and any other section of this Agreement applicable to the Major Investors (including this <u>clause (ii</u>) of this <u>Section 6.6</u>) may be amended, modified, terminated or waived with only the written consent of the Company and the holders of a majority of the Registrable Securities then outstanding and held by the Major Investors, <u>provided</u>, <u>however</u>, if, after giving effect to any waiver of <u>Section 4</u> or any provision pertaining to <u>Section 4</u> with respect to a particular transaction, a Major Investor in fact purchases New Securities in such transaction (such Major Investor, a "***Participating Investor***"), the aforementioned waiver shall be deemed to apply to any Major Investor only if that Major Investor has been provided the opportunity to purchase a proportional number of the New Securities in such transaction based on the pro rata purchase right of each Major Investor set forth in <u>Section 4.1</u>, assuming a transaction size determined based upon the amount purchased by the Participating Investor that invested the largest percentage in such transaction), (iii) neither this clause (iii) or <u>Section 5.5(a)</u> may be amended, terminated or waived without the written consent of Dr. Stephen Gunther for as long as he has the right to appoint a Gunther Observer to attend meetings of the Board pursuant to <u>Section</u> <u>5.5(a)</u>, (iv) neither this clause (iv) or <u>Section 5.5(b)</u> may be amended, terminated or waived without the written consent of Gilde for so long as Gilde has the right to appoint the Gilde Observer to attend meetings of the Board pursuant to <u>Section 5.5(b)</u>, and <u>(v)</u> neither this clause (v) or <u>Section 5.5(c)</u> may be amended, terminated or waived without the written consent of Arboretum for so long as Arboretum has the right to appoint the Arboretum Observer to attend meetings of the Board pursuant to <u>Section 5.5(c)</u>. For the avoidance of doubt, the addition to this Agreement of any new holder of shares of capital

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stock of the Company (***"Capital Stock"***) pursuant to the Company's issuance of such other Capital Stock regardless of whether such Capital Stock has rights, preferences or privileges that are junior, *pari passu* or senior to the Capital Stock then held by then current Investors as long as such other or additional shares of Capital Stock have been authorized and issued in accordance with the Company's then current Restated Certificate and applicable law, and as long as the addition of such new holder of Capital Stock of the Company (or inclusion of such new shares of Capital Stock) has been approved as may be required pursuant to <u>Section 2.13</u> above shall not, in and of itself, be deemed to constitute an amendment or waiver that adversely affects one Investor in a manner that is disproportionate to any other Investor. Any amendment or waiver effected in accordance with this <u>Section 6.6</u> shall be binding upon the Holders and each transferee of the Shares (or the Common Stock issuable upon conversion thereof), each future holder of all such securities, and the Company. Each Holder acknowledges that by the operation of this Section (and pursuant to the terms of this Section), the Preferred Stock Majority will have the right and power to diminish or eliminate all rights of such Holder under this Agreement. The Company shall give prompt notice of any amendment, modification or termination hereof or waiver hereunder to any party hereto that did not consent in writing to such amendment, modification, termination, or waiver. Notwithstanding anything to the contrary contained in this Agreement, if the Company issues additional shares of Series E Preferred Stock after the date hereof pursuant to the Series E Purchase Agreement, any purchaser of such shares of Series E Preferred Stock may become a party to this Agreement by executing and delivering an additional counterpart signature page to this Agreement and thereafter shall be deemed an "Investor" for all purposes hereunder without the consent of any party hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.7&nbsp;&nbsp;&nbsp;&nbsp;**Severability**. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.8&nbsp;&nbsp;&nbsp;&nbsp;**Delays or Omissions**. No delay or omission to exercise any right, power or remedy accruing to any party upon any breach or default of any other party under this Agreement shall impair any such right, power or remedy of such party, nor shall it be construed to be a waiver of any such breach or default or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any party of any breach or default under this Agreement, or any waiver on the part of any party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing or as provided in this Agreement. All remedies, either under this Agreement or by law or otherwise afforded to any party, shall be cumulative and not alternative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.9&nbsp;&nbsp;&nbsp;&nbsp;**Entire Agreement**. This Agreement (including the Schedules and Exhibits hereto), the Series E Purchase Agreement, the Restated Certificate and the other Transaction Agreements, as defined in the Series E Purchase Agreement, constitute the full and entire understanding and agreement among the parties hereto with respect to the subject matter hereof

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and thereof, and supersedes all other agreements of the parties hereto relating to the subject matter hereof and thereof, which are expressly cancelled hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.10&nbsp;&nbsp;&nbsp;&nbsp;**Further Assurances**. At any time or from time to time after the date hereof, the parties hereto agree to cooperate with each other, and at the request of any such party hereto, to execute and deliver any further instruments or documents and to take all such further action as the other party may reasonably request in order to evidence or effectuate the consummation of the transactions contemplated hereby and to otherwise carry out the intent of the parties hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.11&nbsp;&nbsp;&nbsp;&nbsp;**Aggregation of Stock**. All shares of Company equity held or acquired by a Holder and/or its Affiliates shall be aggregated together for the purpose of determining the availability of any rights and any obligations under this Agreement, and such affiliated persons may apportion such rights and obligations as among themselves in any manner they deem appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.12&nbsp;&nbsp;&nbsp;&nbsp;**WAIVER OF JURY TRIAL**. EACH PARTY HERETO AND ANY OTHER PERSON CLAIMING ANY RIGHTS HEREUNDER, HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.13&nbsp;&nbsp;&nbsp;&nbsp;**Amendment and Restatement of Prior Agreement**. The Prior Agreement is hereby amended in its entirety and restated herein. Such amendment and restatement is effective upon the execution of this Agreement by the Company and the requisite Investors as set forth in the Prior Agreement. Upon such execution, all provisions of, rights granted and covenants made in the Prior Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.14&nbsp;&nbsp;&nbsp;&nbsp;**Converted Holder**. Notwithstanding anything contained in this Agreement, if any Investor, or any of his, her, or its Affiliates is or becomes a Converted Holder, then such Investor, any of his, her, or its Affiliates and any of their transferees to whom shares of capital stock are transferred shall no longer have any rights as an Investor or Major Investor under the terms of this Agreement, but shall continue to be bound by all the obligations set forth in this Agreement (including, without limitation, and notwithstanding any provision hereof to the contrary, the obligations set forth in <u>Section 2.1</u>, <u>Section 2.10</u> and <u>Section 3.2</u> hereof).

[THIS SPACE LEFT BLANK INTENTIONALLY]

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **COMPANY:** | **COMPANY:** | **COMPANY:** |
| **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** |
| By: | /s/ Robert Ball | /s/ Robert Ball |
| Name: Robert Ball | Name: Robert Ball | Name: Robert Ball |
| Title: Chief Executive Officer | Title: Chief Executive Officer | Title: Chief Executive Officer |
| Address: | Address: | Shoulder Innovations, Inc. |
|  |  | 1535 Steele Ave SW, Suite B, |
|  |  | Grand Rapids, MI 49507 |
| Attn: | Attn: | Robert Ball |
| E-mail: | E-mail: | [\*\*\*] |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **COÖPERATIEVE GILDE HEALTHCARE V U.A.** | **COÖPERATIEVE GILDE HEALTHCARE V U.A.** |
| By: Gilde Healthcare V Management B.V. | By: Gilde Healthcare V Management B.V. |
| By: Gilde Healthcare Holding B.V. | By: Gilde Healthcare Holding B.V. |
| By: | /s/ Edwin de Graaf |
| Name: Edwin de Graaf | Name: Edwin de Graaf |
| Title: Managing Partner | Title: Managing Partner |
| By: |  |
| Name: Pieter van der Meer | Name: Pieter van der Meer |
| Title: Managing Partner | Title: Managing Partner |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **COÖPERATIEVE GILDE HEALTHCARE V U.A.** | **COÖPERATIEVE GILDE HEALTHCARE V U.A.** |
| By: Gilde Healthcare V Management B.V. | By: Gilde Healthcare V Management B.V. |
| By: Gilde Healthcare Holding B.V. | By: Gilde Healthcare Holding B.V. |
| By: |  |
| Name: Edwin de Graaf | Name: Edwin de Graaf |
| Title: Managing Partner | Title: Managing Partner |
| By: | /s/ Pieter van de Meer |
| Name: Pieter van der Meer | Name: Pieter van der Meer |
| Title: Managing Partner | Title: Managing Partner |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **LIGHTSTONE VENTURES II, L.P.** | **LIGHTSTONE VENTURES II, L.P.** |
| By: LSV Associates II, L.L.C. | By: LSV Associates II, L.L.C. |
| Its: General Partner | Its: General Partner |
| By | /s/ Michael A. Carusi |
| Name: Michael A. Carusi | Name: Michael A. Carusi |
| Title: Managing Director | Title: Managing Director |
| **LIGHTSTONE VENTURES II (A), L.P.** | **LIGHTSTONE VENTURES II (A), L.P.** |
| By: LSV Associates II, L.L.C. | By: LSV Associates II, L.L.C. |
| Its: General Partner | Its: General Partner |
| By |  |
| Name: Michael A. Carusi | Name: Michael A. Carusi |
| Title: Managing Director | Title: Managing Director |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **LIGHTSTONE VENTURES II, L.P.** | **LIGHTSTONE VENTURES II, L.P.** |
| By: LSV Associates II, L.L.C. | By: LSV Associates II, L.L.C. |
| Its: General Partner | Its: General Partner |
| By |  |
| Name: Michael A. Carusi | Name: Michael A. Carusi |
| Title: Managing Director | Title: Managing Director |
| **LIGHTSTONE VENTURES II (A), L.P.** | **LIGHTSTONE VENTURES II (A), L.P.** |
| By: LSV Associates II, L.L.C. | By: LSV Associates II, L.L.C. |
| Its: General Partner | Its: General Partner |
| By | /s/ Michael A. Carusi |
| Name: Michael A. Carusi | Name: Michael A. Carusi |
| Title: Managing Director | Title: Managing Director |

---

Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **MICHAEL & MICHELLE DEVRIES TRUST** | **MICHAEL & MICHELLE DEVRIES TRUST** |
| By | /s/ Mike DeVries |
| Name: Mike DeVries | Name: Mike DeVries |
| Title: Trustee | Title: Trustee |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| **ROB AND MICHELLE BALL** |
| /s/ Robert Ball |
| **ROB BALL** |
| **MICHELLE BALL** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| **ROB AND MICHELLE BALL** |
| **ROB BALL** |
| /s/ Michelle Ball |
| **MICHELLE BALL** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Paul Buckman |
| **PAUL BUCKMAN** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Kevin Sidow |
| **KEVIN SIDOW** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **THE BOARD OF TRUSTEES OF THE LELAN STANFORD JUNIOR UNIVERSITY (SBST)** | **THE BOARD OF TRUSTEES OF THE LELAN STANFORD JUNIOR UNIVERSITY (SBST)** |
| By | /s/ Rajkumar Chellaraj |
| Name: Rajkumar Chellaraj | Name: Rajkumar Chellaraj |
| Title: Authorized Signatory | Title: Authorized Signatory |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | | |
|:---|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (DAPER I)** | **THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (DAPER I)** | **THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (DAPER I)** | **THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY (DAPER I)** |
| By | /s/ Brian Favat | /s/ Brian Favat | /s/ Brian Favat |
| Name: | Name: | Brian Favat | Brian Favat |
| Title: | Title: | Authorized Signatory | Authorized Signatory |
| Address: | Address: | Address: | [\*\*\*] |
| | | | [\*\*\*] |
| | | | [\*\*\*] |
| | | | Ph#: [\*\*\*] |
| | | | Em: [\*\*\*] |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** | **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** | **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** |
| By: | By: |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager, General Partner |
| **CULTIVATE MD CAPITAL FUND I, LLC** | **CULTIVATE MD CAPITAL FUND I, LLC** | **CULTIVATE MD CAPITAL FUND I, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **CULTIVATE MD CAPITAL FUND II, LP** | **CULTIVATE MD CAPITAL FUND II, LP** | **CULTIVATE MD CAPITAL FUND II, LP** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **GENESIS INNOVATION GROUP, LLC** | **GENESIS INNOVATION GROUP, LLC** | **GENESIS INNOVATION GROUP, LLC** |
| By | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **cultivate(MD) Capital Accelerator Fund, L.P.** | **cultivate(MD) Capital Accelerator Fund, L.P.** | **cultivate(MD) Capital Accelerator Fund, L.P.** |
| By: |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager, General Partner |
| **Cultivate MD Capital Fund I, LLC** | **Cultivate MD Capital Fund I, LLC** | **Cultivate MD Capital Fund I, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **Cultivate MD Capital Fund II, LP** | **Cultivate MD Capital Fund II, LP** | **Cultivate MD Capital Fund II, LP** |
| By | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **Genesis Innovation Group, LLC** | **Genesis Innovation Group, LLC** | **Genesis Innovation Group, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **cultivate(MD) Capital Accelerator Fund, L.P.** | **cultivate(MD) Capital Accelerator Fund, L.P.** | **cultivate(MD) Capital Accelerator Fund, L.P.** |
| By: | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager, General Partner |
| **Cultivate MD Capital Fund I, LLC** | **Cultivate MD Capital Fund I, LLC** | **Cultivate MD Capital Fund I, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **Cultivate MD Capital Fund II, LP** | **Cultivate MD Capital Fund II, LP** | **Cultivate MD Capital Fund II, LP** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **Genesis Innovation Group, LLC** | **Genesis Innovation Group, LLC** | **Genesis Innovation Group, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** | **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** | **CULTIVATE(MD) CAPITAL ACCELERATOR FUND, L.P.** |
| By: | By: |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager, General Partner |
| **CULTIVATE MD CAPITAL FUND I, LLC** | **CULTIVATE MD CAPITAL FUND I, LLC** | **CULTIVATE MD CAPITAL FUND I, LLC** |
| By | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **CULTIVATE MD CAPITAL FUND II, LP** | **CULTIVATE MD CAPITAL FUND II, LP** | **CULTIVATE MD CAPITAL FUND II, LP** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |
| **GENESIS INNOVATION GROUP, LLC** | **GENESIS INNOVATION GROUP, LLC** | **GENESIS INNOVATION GROUP, LLC** |
| By |  |  |
| Name: | Name: | Matt Ahearn |
| Title: | Title: | Manager |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Robert Ball |
| **ROBERT BALL** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Matthew Ahearn |
| Matthew Ahearn |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Jake Hogeboom |
| **JAKE HOGEBOOM** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **MARK STACY IRA LLC** | **MARK STACY IRA LLC** |
| By | /s/ Mark Stacy |
| Name: Mark Stacy | Name: Mark Stacy |
| Title: Member | Title: Member |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **MIKE DEVRIES IRA LLC** | **MIKE DEVRIES IRA LLC** |
| By | /s/ Mike DeVries |
| Name: Mike DeVries | Name: Mike DeVries |
| Title: Member | Title: Member |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **APERTURE OPPORTUNITY FUND, L.P.** | **APERTURE OPPORTUNITY FUND, L.P.** | **APERTURE OPPORTUNITY FUND, L.P.** |
| By: | Aperture Opportunity, LLC, its General Partner | Aperture Opportunity, LLC, its General Partner |
| By: | /s/ | Eric Sillman |
| Name: | Name: | Eric Sillman |
| Title: | Title: | Managing Member |
| **APERTURE VENTURE PARTNERS V, L.P.** | **APERTURE VENTURE PARTNERS V, L.P.** | **APERTURE VENTURE PARTNERS V, L.P.** |
| By: | Aperture Opportunity, LLC, its General Partner | Aperture Opportunity, LLC, its General Partner |
| By: |  |  |
| Name: | Name: | Eric Sillman |
| Title: | Title: | Managing Member |

---

Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **APERTURE OPPORTUNITY FUND, L.P.** | **APERTURE OPPORTUNITY FUND, L.P.** | **APERTURE OPPORTUNITY FUND, L.P.** |
| By: | Aperture Opportunity, LLC, its General Partner | Aperture Opportunity, LLC, its General Partner |
| By: |  |  |
| Name: | Name: | Eric Sillman |
| Title: | Title: | Managing Member |
| **APERTURE VENTURE PARTNERS V, L.P.** | **APERTURE VENTURE PARTNERS V, L.P.** | **APERTURE VENTURE PARTNERS V, L.P.** |
| By: | Aperture Opportunity, LLC, its General Partner | Aperture Opportunity, LLC, its General Partner |
| By: | /s/ | Eric Sillman |
| Name: | Name: | Eric Sillman |
| Title: | Title: | Managing Member |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **GILMARTIN CAPITAL FUND I L.P.** | **GILMARTIN CAPITAL FUND I L.P.** | **GILMARTIN CAPITAL FUND I L.P.** |
| **BY: GILMARTIN CAPITAL GP I LLC** | **BY: GILMARTIN CAPITAL GP I LLC** | **BY: GILMARTIN CAPITAL GP I LLC** |
| **ITS: GENERAL PARTNER** | **ITS: GENERAL PARTNER** | **ITS: GENERAL PARTNER** |
| By | /s/ | David R. Lewis |
| Name: | Name: | David R. Lewis |
| Title: | Title: | Managing Partner |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Richard Emmitt |
| **RICHARD EMMITT** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **ARBORETUM VENTURES VI, LP** | **ARBORETUM VENTURES VI, LP** | **ARBORETUM VENTURES VI, LP** |
| By: Arboretum Investment Manager VI, LLC | By: Arboretum Investment Manager VI, LLC | By: Arboretum Investment Manager VI, LLC |
| Its General Partner | Its General Partner | Its General Partner |
| By: | /s/ | Thomas M. Shehab |
| Name: | Name: | Thomas M. Shehab |
| Title: | Title: | Managing Director |
| Address: | Address: | Address: |
| [\*\*\*] | [\*\*\*] | [\*\*\*] |
| [\*\*\*] | [\*\*\*] | [\*\*\*] |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | |
|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** |
| **NEW EMERGING MEDICAL OPPORTUNITIES FUND V SCSP** | **NEW EMERGING MEDICAL OPPORTUNITIES FUND V SCSP** |
| By: Sectoral Asset Management Inc., its Investment Manager | By: Sectoral Asset Management Inc., its Investment Manager |
| By: | /s/ Micheal Sjöström |
| Name: Michael Sjöström | Name: Michael Sjöström |
| Title: Co-Founder & Partner | Title: Co-Founder & Partner |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Brian Detroy |
| **BRIAN DETROY** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Brian Knupp |
| **BRIAN KNUPP** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Brian Young |
| **BRIAN YOUNG** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Chance Leonard |
| **CHANCE LEONARD** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **TETON HOLDING COMPANY, LLC - SERIES C** | **TETON HOLDING COMPANY, LLC - SERIES C** | **TETON HOLDING COMPANY, LLC - SERIES C** |
| By: | /s/ | Mark D. Hanes |
| Name: | Name: | Mark D. Hanes |
| Title: | Title: | Manager |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ John G. Donelson |
| **JOHN DONELSON** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ John Osborne |
| **JON OSBORNE** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Dave Nichols |
| **DAVE NICHOLS** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **SOURCE MEDICAL SYSTEMS INC.** | **SOURCE MEDICAL SYSTEMS INC.** | **SOURCE MEDICAL SYSTEMS INC.** |
| By: | /s/ | Udo Gessner |
| Name: | Name: | Udo Gessner |
| Title: | Title: | President and CEO |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **DAVID LAWERNCE BLUE LIVING TRUST** | **DAVID LAWERNCE BLUE LIVING TRUST** | **DAVID LAWERNCE BLUE LIVING TRUST** |
| By: | /s/ | David L. Blue |
| Name: | Name: | David L. Blue |
| Title | Title | Trustee |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **BRAUER VENTURES LLC DBA OAK TREE CAPITAL PARTNERS** | **BRAUER VENTURES LLC DBA OAK TREE CAPITAL PARTNERS** | **BRAUER VENTURES LLC DBA OAK TREE CAPITAL PARTNERS** |
| By: | /s/ | Matt Brauer |
| Name: | Name: | Matt Brauer |
| Title: | Title: | President |

---

Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **PACIFIC SURGICAL LLC** | **PACIFIC SURGICAL LLC** | **PACIFIC SURGICAL LLC** |
| By: | /s/ | Zackary Warner |
| Name: | Name: | Zackary WARNER |
| Title: | Title: | President |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **NEBKOTA TRUST, DATED AUGUST 9, 2022** | **NEBKOTA TRUST, DATED AUGUST 9, 2022** | **NEBKOTA TRUST, DATED AUGUST 9, 2022** |
| By | /s/ | Travis W. Mark |
| Name: | Name: | Travis W. Mark |
| Title: | Title: | Trustee |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **MASTERS DYNAMICS CONSULTING, LLC** | **MASTERS DYNAMICS CONSULTING, LLC** | **MASTERS DYNAMICS CONSULTING, LLC** |
| By: | /s/ | Bryan T. Masters |
| Name: | Name: | Bryan T. Masters |
| Title: | Title: | Principal |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Brandon Florence |
| **BRANDON FLORENCE** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ James Keith Kipp |
| **JAMES KEITH KIPP** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **GENESIS INVESTMENT HOLDINGS, LLC** | **GENESIS INVESTMENT HOLDINGS, LLC** | **GENESIS INVESTMENT HOLDINGS, LLC** |
| By: **cultivate(MD) Holdings, LLC** | By: **cultivate(MD) Holdings, LLC** | By: **cultivate(MD) Holdings, LLC** |
| Its: **Manager** | Its: **Manager** | Its: **Manager** |
| By: | /s/ | R. Sean Churchill |
| Name: | Name: | R. Sean Churchill, MD, MBA |
| Title: | Title: | Managing Director |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| | | |
|:---|:---|:---|
| **THE INVESTORS:** | **THE INVESTORS:** | **THE INVESTORS:** |
| **U.S. Venture Partners Select Fund I, L.P.** | **U.S. Venture Partners Select Fund I, L.P.** | **U.S. Venture Partners Select Fund I, L.P.** |
| **on its own behalf and as a nominee for** | **on its own behalf and as a nominee for** | **on its own behalf and as a nominee for** |
| **U.S. Venture Partners Select Fund I-A, L.P.** | **U.S. Venture Partners Select Fund I-A, L.P.** | **U.S. Venture Partners Select Fund I-A, L.P.** |
| By: | Presidio Management Group Select Fund I, L.L.C. | Presidio Management Group Select Fund I, L.L.C. |
| Their: | Their: | General Partner |
| By: | /s/ Dale Holladay | /s/ Dale Holladay |
|  | Dale Holladay, Attorney-In-Fact | Dale Holladay, Attorney-In-Fact |

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| | |
|:---|:---|
| **U.S. Venture Partners XII, L.P.** | **U.S. Venture Partners XII, L.P.** |
| **U.S. Venture Partners XII-A, L.P.** | **U.S. Venture Partners XII-A, L.P.** |
| By: | Presidio Management Group Select Fund I, L.L.C. |
| The General Partner of Each | The General Partner of Each |
| By: | /s/ Dale Holladay |
|  | Dale Holladay, Attorney-In-Fact |
| Address: | Address: |
| 1460 El Camino Real, Suite 100 <br>Menlo Park CA 94025 <br>Attn: Chief Financial Officer <br>Fax: [\*\*\*]<br>Email: [\*\*\*] | 1460 El Camino Real, Suite 100 <br>Menlo Park CA 94025 <br>Attn: Chief Financial Officer <br>Fax: [\*\*\*]<br>Email: [\*\*\*] |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

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**IN WITNESS WHEREOF,** the Parties have executed this Fourth Amended and Restated Investors' Rights Agreement as of the Effective Date.

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| |
|:---|
| **THE INVESTORS:** |
| /s/ Aaron Miller |
| **AARON MILLER** |

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Signature Page to Shoulder Innovations, Inc.

Fourth Amended and Restated Investors' Rights Agreement

## Exhibit 10.1

**Exhibit 10.1**

**LEASE AGREEMENT**

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|:---|
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;THIS LEASE AGREEMENT (the "**Lease***"*) is made and executed this **<u>13</u> day of January, 2021**, between **STEELE AVE LLC,** a Michigan Limited Liability Company, whose address is 1655 Steele Ave SW, Suite C, Grand Rapids, MI 49507, ("**Landlord**"), and **SHOULDER INNOVATIONS, INC.**, a Delaware foreign corporation authorized to do business in Michigan, whose address is&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**220 Lyon St. NW Suite 500, Grand Rapids, MI,&nbsp;&nbsp;&nbsp;&nbsp;** ("**Tenant**"). |
| **49503** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Leased Premises</u>**. Landlord is the owner of the real property commonly known as **1535 Steele Ave SW, Grand Rapids, Michigan 49507** and more particularly described on attached **Exhibit A** (the "Land"). Landlord owns a **25,500** square foot building and an adjacent parking lot (the "**Building**") and other related improvements (the "**Improvements**") on the Land. The Land, the Building and the Improvements are collectively referred to in this Lease as the "**Property**". Landlord lets and leases to Tenant, and Tenant hires and leases from Landlord, that portion of the Building, containing approximately **7,000 square feet of floor area (Suite B)**, more particularly described on attached **Exhibits B and C** (the "**Leased Premises**" **or "Premises**"**),** at the rents and under the terms and conditions set forth in this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Purpose of Occupancy</u>**. Tenant shall occupy and use the Leased Premises for the purpose of **warehouse/distribution and office space** but for no other purpose without the written consent of the Landlord. The Leased Premises shall not be used for any purpose which would: a) violate any law, ordinance; or b) in any way create any nuisance or trespass. Notwithstanding, Tenant's use does not violate any of the above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Term of Lease and Renewal Terms</u>**. The term of this Lease shall commence on the date Landlord delivers possession of the Leased Premises to Tenant (the "**Commencement Date**"), and shall continue until five (5) years after the Rent Commencement Date (as defined in Section 4) ["Initial Term"] unless sooner terminated as provided in this Lease; provided, however, that in the event that the Rent Commencement Date is a date other than the first day of a calendar month, then the Initial Term shall extend for said number of years in addition to the remainder of the calendar month in which the Rent Commencement Date occurs. Upon delivery of the Leased Premises, Tenant shall execute and deliver to Landlord the Acceptance of Premises form attached to this Lease as **Exhibit D**.

Provided Tenant is not then in default in the performance of any of its covenants and agreements under this Lease, **Tenant may renew this Lease for one (1) additional five (5) year term**, upon the same terms and conditions as provided in this Lease, except as to Rent (as defined in Section 4) which shall be adjusted as provided in Section 4, below. In order to exercise such renewal rights, Tenant shall serve Landlord with written notice of Tenant's election to renew not less than four and a half (4.5) months prior to the end of the term or each renewal term of this Lease, as applicable. For purposes of this Lease, the word "Term" shall refer to the Initial Term of this Lease and any properly and timely exercised renewal term(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Rent</u>**. Tenant covenants and agrees to pay Landlord as rent for the Leased Premises during the Term as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Base Rent</u>**. Beginning on the Rent Commencement Date, Tenant shall pay as Base Rent in sixty (60) equal monthly installments of **Three Thousand Seven Hundred Sixty-Two and 50/100 Dollars ($3,762.50)**. For purposes of this Section, the "**Rent Commencement Date**" shall be fourteen (14) days following the Substantial Completion Date as described in Section 11 hereof. Base Rent shall be paid in advance on the first day of each month during the Term. Moreover, in the event the Rent Commencement Date is any day other than the first day of the month, Tenant shall pay to Landlord on the

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Rent Commencement Date a prorated portion of the monthly Base Rent for the period from the Rent Commencement Date to the first day of the following month.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Annual Adjustments</u>**. The Base Rent paid by Tenant shall be adjusted upward by two and 50/100 percent (2.5%) effective as of the first anniversary of the Rent Commencement Date and on the same day each year thereafter during the Initial Term. During any renewal period, the Base Rent paid by Tenant shall be adjusted upward by two and 50/100 percent (2.5%) on the same day of each year thereafter during the Renewal Period. The Base Rent, as adjusted, shall be paid in equal monthly installments as provided in Section 4(a), above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Rent</u>**. Commencing on the Rent Commencement Date, Tenant shall also pay to Landlord as additional rent, Tenant's pro rata share of the operating expenses for the Property (which shall include any costs and expenses related to the operation, maintenance, repair and replacement of the common areas and facilities allocated to the Property) (the "**Operating Expenses**"). Tenant's pro rata share shall be based upon the ratio of the number of square feet of leasable floor area of the Leased Premises to the number of leasable square feet of the floor area in the Building, including the hallways and corridors included in the Common Areas (as defined in Section 16, below). Consequently, Tenant's pro rata share of Operating Expenses shall be **Twenty-Seven and 45/100 Percent (27.45%)** ("**Additional Rent**").

As used in this Section 4, Operating Expenses shall include all costs of operating and maintaining the Property, including, without limitation, the following costs and expenses incurred by Landlord: all property taxes and assessments – real, general and special; utility costs and expenses including water, sewer, electricity, gas and other sources of power for heating, lighting, ventilating or air conditioning, except when separately billed to a tenant of the Property; property management fees [limited to 5%]; casualty insurance premiums; janitorial services contracted for by Landlord [for Tenant's space only, if applicable] and/or wages, salaries, fringe benefits and applicable taxes on the employer for services related to the Property performed by Landlord's employees [so long as at market rates for the service provided]; supplies consumed in connection with cleaning, maintenance and repair; snow removal, lawn care, landscaping, parking, and other exterior grounds maintenance and repair; and all installation, maintenance and repair costs. Operating Expenses shall not include any alterations to meet the needs of specific tenants of the Building and leasing commissions, if any.

Such Additional Rent shall be computed on the basis of each calendar year and shall be adjusted in January of each year during the Term. Tenant shall pay its pro rata share of the Operating Expenses in monthly installments on or before the first day of each calendar month, in advance, in an amount estimated by Landlord each year without any deduction or setoff whatsoever, beginning on the Rent Commencement Date of this Lease. Within sixty (60) days after the end of each calendar year, Landlord shall furnish Tenant with a written statement itemizing the Operating Expenses for that calendar year, and a written statement of the amount of the Tenant's pro rata share of said Operating Expenses. If the total amount paid by Tenant for the prior calendar year shall be less than the actual amount due from Tenant for that year, Tenant shall, within ten (10) days after written notice, pay to Landlord the difference between the amount paid by Tenant and the actual amount due. If the total amount paid by Tenant for the prior calendar year exceeds the actual amount due from Tenant for that year, Tenant shall receive a credit for such amount against rent to become due under this Lease, or if the Term has expired, a refund of such excess from Landlord.

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| Steele Ave LLC Lease Agreement – Shoulder Innovations  | Page **2** of **25** |

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Notwithstanding the above, during the Initial Term of the lease, Tenant's pro rata share will be limited to, and shall not exceed, $2.50/square foot. During any renewal period, the Tenant's pro rata share will not be subject to a limit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment</u>**. The monthly installments of Base Rent, Additional Rent and all other sums payable under this Lease by Tenant shall be paid to Landlord at Landlord's address set forth above, or at such other address as Landlord may direct by written notice, without setoff, counter claim, recoupment, abatement, suspension or deduction except as specifically provided in this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Taxes and Special Assessments</u>**. Subject to Section 4(c) above, Landlord shall pay and discharge all real property taxes and special assessments which may be levied against all or any part of the Property during the Term. Tenant shall pay and discharge all personal property taxes which may be levied against its furniture, equipment and other personal property located on the Leased Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Insurance and Indemnity</u>.** Tenant shall have an updated Certificate of Insurance on file with Landlord prior to taking possession of Leased Premises, including Worker's Compensation, Auto and General Liability, naming Landlord as additional insured with respect to General Liability coverage. Tenant shall keep in force without interruption during the course of this Lease, policies of insurance covering Tenant for Worker's Compensation, Commercial General Liability insurance and a Business Auto policy (including hired and non-owned automobile liability) with minimum limits set forth on **Exhibit E**. Tenant's failure to comply with this provision shall be deemed a breach of this Lease.

Subject to Section 4(c) above, Landlord shall keep the Property insured against the loss or damage by fire and those risks covered by "extended coverage" as provided in a Michigan standard fire insurance policy in the amount of the full replacement cost of the Property. All such policies of insurance shall be payable to Landlord or as Landlord specifies.

Tenant shall indemnify Landlord against and save Landlord harmless from any liability, claim, cost or expense (including reasonable attorney's fees) which may be asserted against or incurred by Landlord by reason of any accident or casualty occurring in, on or about the Leased Premises except such as arise from the negligence of Landlord, its agents or employees.

Tenant, at its own expense, shall keep all of its furnishings, equipment and other personal property located on the Leased Premises fully insured against loss or damage by fire and those risks covered by "extended coverage" as provided in a Michigan standard fire insurance policy. Such policy of insurance shall be payable to Tenant or as Tenant specifies. Tenant hereby releases Landlord from any and all liability for any damage to or loss of such personal property from any cause whatsoever except to the extent such loss or damage is the result of the negligence of Landlord, its agents or employees and is not otherwise covered by insurance required to be carried by Tenant under this Lease.

Landlord agrees to indemnify and hold harmless Tenant for any loss, injury or damage of any kind or nature arising from the Building, Improvements and Property (other than the Premises), (except when such injury or damage is a result of a malfunction of or damage to items to be maintained, repaired, or provided by Tenant, or when such injury or damage is a result of Tenant's negligent act and/or willful misconduct) and for breaches of Landlord's representations and warranties contained within the Lease and/or as contained in the Rider.

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| Steele Ave LLC Lease Agreement – Shoulder Innovations  | Page **3** of **25** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Subrogation</u>.** Each policy of insurance authorized or required of either party under this Lease shall contain a clause or endorsement under which the insurer waives all right of subrogation against the other party, its agents and employees with respect to losses payable under such policy, and each party hereby waives all right of recovery it might otherwise have against the other party, its agents and employees for any loss or injury which is covered by such a policy of insurance, notwithstanding that such loss or injury may result from the negligence or fault of such other party, its agents or employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;<u>Utilities</u>.** Tenant shall pay all charges for utility services provided to the Leased Premises which are separately metered. Subject to Section 4(c) above, Landlord shall pay all charges for all other utility services necessary for the reasonable use and operation of the Leased Premises and the Property. Landlord shall not be liable in damages or otherwise for any interruptions or failure in the supply of any utilities or utility service to the Leased Premises except such failure or interruption which results from the gross negligence of Landlord, its agents or employees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;<u>Maintenance and Condition of Leased Premises</u>.** Tenant, at its expense, shall keep the interior of the Leased Premises in good maintenance, condition, and repair, reasonable wear and tear excepted, including, without limitation, the maintenance, repair of all HVAC, plumbing and electrical systems serving the Leased Premises, and perform all other maintenance, repair and replacement upon the Leased Premises and the Property necessitated by the negligent acts of Tenant, its agents, employees or invitees. Subject to Section 4(c) above, all other necessary maintenance, repair and replacement of the Property, including Common Areas (as defined in Section 16, below), shall be promptly performed by Landlord. Tenant shall promptly notify Landlord in writing of any defective condition known to Tenant which Landlord is required to repair or replace and failure to so report such defect shall make Tenant responsible to Landlord for any additional loss or aggravation of loss incurred by Landlord by reason of Tenant's failure to notify Landlord.

Tenant shall keep the Leased Premises in a neat and clean condition, shall not allow refuse to accumulate, and shall conduct its business in such a manner that the risk of fire to the Leased Premises shall not be increased beyond the hazard normal and usual for its type of business. At Tenant's sole cost and expense. Tenant shall maintain a preventive maintenance contract providing for the regular inspection and maintenance of the HVAC system serving the Leased Premises by a heating and air conditioning contractor, such contracts and such contractors shall be subject to Landlord's prior reasonable written approval. Tenant shall provide proof of such preventative maintenance contract to Landlord upon request.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;<u>Alterations</u>.** Tenant shall not make or permit to be made any alterations, additions or improvements in, upon or to the Leased Premises, or any part of the Leased Premises, without the prior written consent of Landlord, which shall not be unreasonably withheld. In the event such consent is obtained, all such alterations, additions or improvements shall be performed at the expense of Tenant in a good, workmanlike manner, free from faults and defects and in accordance with all applicable laws and building codes and plans and specifications approved by Landlord. Tenant shall not allow any such construction liens to attach to the Leased Premises or Property in connection with any such alteration and the failure of Tenant to have any such lien released within ten (10) days after written notice from Landlord shall constitute a default under this Lease. In addition, Tenant shall indemnify, defend and hold Landlord harmless from any and all costs and expenses incurred by Landlord in connection with such construction liens, including, without limitation, attorneys' fees and costs of litigation. All alterations, additions or improvements (except trade fixtures) so made and installed by Tenant shall become part of the realty, shall become the property of Landlord and shall remain for the benefit of Landlord at the end of the Term or other expiration of this Lease in as good condition as they were when installed, reasonable wear and tear excepted. Notwithstanding the foregoing, at the end of the Term or other expiration of this Lease, Landlord may require the Tenant to remove any such alteration, addition or improvement, at Tenant's expense. In

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which case, Tenant shall repair any damage caused by such removal and shall restore the Leased Premises to their condition prior to the making of such alteration, addition or improvement.

Notwithstanding the foregoing, Tenant may make strictly cosmetic changes to the finish work in the Premises, not including any changes affecting the Premises' or Building's roof, structure, systems, or exterior appearance ("**<u>Cosmetic Alterations</u>**"), without Landlord's consent (but subject to all other terms of this Lease), provided that (i) the aggregate cost of any such Cosmetic Alterations does not exceed Ten Thousand Dollars ($10,000.00) in any twelve (12) month period, and (ii) such Cosmetic Alterations do not require any substantial modifications to the Premises. Tenant shall also have the right to install furnishings, equipment, wiring and connections, fixtures and trade fixtures within the Premises.

Tenant agrees to surrender to Landlord, at the end of the Lease Term or upon any termination of this Lease, the Premises in as good condition as the Premises were at the Commencement Date, ordinary wear and tear and damage by casualty or condemnation excepted. Tenant shall not be obligated to remove any Cosmetic Alterations or other alterations that Landlord and Tenant agree shall remain with the Premises as provided above, Tenant shall not have the right to remove any fixtures, wiring, installations or any other Alterations or Tenant Improvements as contemplated by the Work Letter unless specifically permitted in writing by Landlord. In the event Landlord grants Tenant's request to remove any improvements, fixtures or other items, Tenant shall do so in a good and workmanlike manner and shall reasonably repair and patch all floors, ceilings and other effected areas.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;<u>Landlord's Work</u>.** Landlord agrees perform the following work at Landlord's sole cost and expense (collectively "**Landlord's Work**"): (i) all work and services necessary to establish the Building, Improvements and Premises, and (ii) the following work and services within the Premises:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;**(1) large office – room for desk and table for meetings,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;**(1) regular sized office,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)&nbsp;&nbsp;&nbsp;&nbsp;**Space for (5) cubicles,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**d)&nbsp;&nbsp;&nbsp;&nbsp;**(1) conference room – large enough for a table that seats 10-12 people,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**e)&nbsp;&nbsp;&nbsp;&nbsp;**Kitchenette with room for a table to sit and eat,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**f)&nbsp;&nbsp;&nbsp;&nbsp;**Janitorial closet,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**g)&nbsp;&nbsp;&nbsp;&nbsp;**Area for (4) workstations,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**h)&nbsp;&nbsp;&nbsp;&nbsp;**Plumb out water service near the office space for a future cleaning station, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**i)&nbsp;&nbsp;&nbsp;&nbsp;**Air conditioning in warehouse.

The detailed plans, specifications, materials and finishes with respect to the foregoing are to be agreed upon by Landlord and Tenant within thirty (30) days following the date of this Lease.

Notwithstanding the foregoing, Landlord has agreed to fund up to Fifty Thousand and 00/100 Dollars ($50,000.00) of the initial construction expenses for the Tenant's suite buildout as described in (ii) above. Any cost over and above the Landlord's $50,000.00 investment with respect to (ii) above shall be subject to Tenant's approval prior to performance and, if approved by Tenant, will be paid by the Tenant within ten (10) days of receipt of an invoice from Landlord or Landlord's contractor. Notwithstanding the preceding, the total cost of Tenant's suite buildout over Landlord's $50,000 investment will not exceed $75,000.00.

For the Lease Term, Landlord shall warrant the following interior and exterior building components or systems installed by Landlord, including but not by way of limitation: fire protection, plumbing, lighting, electrical system which provides electricity to the building, heating, air conditioning, ventilating, other mechanical systems, foundation floor, sidewalks, roll-up doors and dock area (expressly excluding any additional plumbing, electrical lighting, or other mechanical systems, components or leasehold improvements installed by Landlord. As such Tenant shall not be responsible for repairs to such items to the extent would be required to make repairs or

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perform maintenance as contemplated by Section 9 and such costs shall not be chargeable to Tenant as Operating Expenses as contemplated by Section 4 c). Any modifications the Tenant makes to the space shall be the responsibility of the Tenant.

Landlord's Work shall be Substantially Completed on or before <u>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</u> ("**Delivery Date**"). "**Substantial Completion**" of Landlord's Work shall occur upon satisfaction of all of the following: (a) Landlord's Work is completed in accordance with the approved plans and specifications and subject only to "**Punch List Items**" which are details of construction, decoration and mechanical and electrical adjustments which, in the aggregate, are minor in character and do not materially inconvenience or materially adversely affect Tenant's use or enjoyment of the Premises, and in no event include any item, the completion or correction of which, shall materially interfere with Tenant's use or occupation of the Premises and as approved by Tenant, (b) the issuance of a temporary Certificate of Occupancy or similar certification by the applicable governmental entity, and (c) a certification from the architect or engineer that the Landlord's Work is substantially complete in accordance with the Final Construction Drawings. The date on which Substantial Completion is achieved shall be the "**Substantial Completion Date**". Landlord shall give Tenant notice three (3) business days prior to Substantial Completion so that Landlord and Tenant can inspect the Premises within said three (3) business day period for purposes of compiling a list of Punch List Items (the "**Punch List**"). Landlord shall begin correcting and diligently pursue the correction of Punch List items promptly after completion of the Punch List by Tenant, and Landlord shall complete the Punch List within thirty (30) calendar days of the date that Tenant delivers the Punch List to Landlord.

In the event Landlord fails to achieve Substantial Completion of Landlord's Work on or before the Delivery Date, then, (i) the Rent Commencement Date shall be tolled and Tenant shall be entitled to one day of free Rent and Additional Rent for each day between the Delivery Date and the date Substantial Completion Date; and (ii) in the event the Substantial Completion Date is not achieved within 45 days from the Delivery Date, then Tenant shall have the right to terminate this Lease by delivery of written notice to Landlord and recover all of its damages from Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.&nbsp;&nbsp;&nbsp;&nbsp;<u>Performance by Landlord</u>.** In the event Tenant fails to perform any of its covenants and agreements as set forth in this Lease and such failure continues for a period of ten (10) days after written notice from Landlord (except that no such notice shall be required in emergency situations), Landlord shall have the option to undertake such performance for Tenant, and the costs and expenses incurred by Landlord by reason of such undertaking shall be due and payable forthwith by Tenant to Landlord as Additional Rent under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance with Public Authority Requirements</u>.** Tenant agrees, at its own expense, to promptly comply with all requirements of any legally constituted public authority with respect to Tenant's use of the Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.&nbsp;&nbsp;&nbsp;&nbsp;<u>Hazardous Materials</u>.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Definitions</u>.** For purposes of this Lease, the terms "Hazardous Materials" and "Relevant Environmental Laws" shall be defined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;"Hazardous Materials" shall mean all solids, liquids and gasses, including but not limited to solid waste, asbestos, crude petroleum and petroleum fractions, toxic chemicals, polychlorinated biphenyls, paint containing lead, volatile organic chemicals, chlorinated organic compounds, and urea formaldehyde foam insulation, which are governed or regulated by Relevant Environmental Laws.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;"Relevant Environmental Laws" shall include but not be limited to all federal, state or local laws, rules, regulations, orders or determinations established or issued by any judicial, legislative or executive body, of any governmental or quasi-governmental entity which govern or regulate the existence, storage, use, disposal, or release of any solid, liquid or gas on, in or under the Leased Premises, or which govern or regulate the environmental effect of any activity currently or previously conducted on the Leased Premises.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Tenant's Obligations; Indemnification</u>.** Tenant shall not, nor shall it permit its employees, business invitees, contractors or subcontractors (collectively "Tenant's Agents"), to bring upon, keep, store, use, or dispose of any Hazardous Materials on, in, under, or about the Leased Premises, the Property or any adjacent property except for the following: (i) Hazardous Materials contained within Tenant's products, equipment, or inventory and which do not pose any significant threat of being released into the environment; or (ii) general office supplies (including, without limitation, ordinary cleaning chemicals and solutions) used for their intended purpose and not posing any significant threat of contamination of the Leased Premises, the Property or any adjacent property. Tenant shall cause the presence, use, storage and/or disposal of any Hazardous Materials on, in, under, or about the Leased Premises, the Property or any adjacent property by Tenant or Tenant's Agents to be in complete compliance with Relevant Environmental Laws. Tenant shall defend, indemnify, protect, and hold Landlord harmless from and against all claims, costs, fines, judgments, and liabilities, including attorneys' fees and costs, arising out of or in connection with the presence, storage, use, or disposal of Hazardous Materials in, on, under, or about the Leased Premises, the Property or any adjacent property caused by the acts, omissions, or negligence of Tenant and/or Tenant's Agents. Tenant's obligations hereunder shall survive the termination of this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Landlord's Obligations</u>.** Neither Landlord nor Landlord's employees, business invitees, agents, contractors, or subcontractors (collectively "Landlord's Agents") shall bring upon, keep, store, use, or dispose of any Hazardous Materials in, on, under, or about the Leased Premises, the Property or any adjacent property except in complete compliance with all Relevant Environmental Laws.

Landlord, to the best of its knowledge, represents and warrants to Tenant that there are no Hazardous Materials on or about the Property and that the Property is in compliance with all Relevant Environmental Laws. In addition, Landlord represents and warrants to Tenant that no toxic, explosive or other dangerous materials or hazardous substances are present in the Leased Premises, Building or on the Property or have been concealed within, buried beneath, released on or from, or removed from the Building or Property. Landlord warrants that Landlord will, at Tenant's request prior to lease execution, fully disclose any and all reports, analyses, studies or other documents, including environmental and air quality studies that would identify contaminants on the property. Landlord shall defend, indemnify and hold harmless Tenant from and against any and all third-party claims, actions, damages, liability and expense (including all attorney's, consultant's and expert's fees, expenses and liabilities incurred in defense of any such claim or any action or proceeding brought thereon) arising from environmental conditions not solely caused by Tenant, including, without limitation, any and all costs incurred by Tenant because of any investigation of any portion of the Property or any cleanup, removal or restoration of any portion of the Property to remove or remediate Hazardous Materials not deposited by Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.&nbsp;&nbsp;&nbsp;&nbsp;<u>Damage to Leased Premises</u>.** In the event the Leased Premises and/or the Building are damaged by fire, the elements, acts of God, or other cause to such extent that either the Leased Premises are rendered untenantable by Tenant or more than fifty percent (50%) of the Building is rendered untenantable, and in the event Landlord elects not to rebuild the Leased Premises as they existed prior to the damage or in some other

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manner satisfactory to Tenant, then Landlord, within thirty (30) days of the date the damage occurred, shall notify Tenant in writing of such election, and this Lease shall be canceled as of the date the damage occurred, and Landlord and Tenant shall have no further obligations by reason of its provisions.

In the event the Leased Premises and the Building are not damaged to such an extent that the Leased Premises are rendered wholly untenantable by Tenant or more than fifty percent (50%) of the Building is rendered untenantable, then Tenant shall continue to occupy that portion of the Leased Premises which are tenantable, the rent shall abate proportionately to the portion occupied, and Landlord shall promptly commence and complete repairs to the portion damaged to the extent of available insurance proceeds.

In no event and under no circumstances shall Landlord be liable to Tenant for any loss occasioned by damage to the Leased Premises, other than for the abatement of rent as provided in this Section 14, except to the extent of property damage resulting from the negligence of Landlord or Landlord's Agents which is not otherwise covered by insurance required to be carried by Tenant under this Lease. Under no circumstances shall there by any abatement of rent under this Section 14 if the damage to the Leased Premises is caused by the negligent acts of Tenant or Tenant's Agents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.&nbsp;&nbsp;&nbsp;&nbsp;<u>Eminent Domain</u>.** In the event that the whole of the Leased Premises shall be taken or condemned for any public or quasi-public use or purpose by any competent authority in appropriation proceedings or by any right of eminent domain, then this Lease shall terminate as of the date title vests in the condemner, all rents and other payments shall be paid up to that date, and Landlord and Tenant shall have no further obligations by reason of the provisions of this Lease

In the event that less than the whole of the Leased Premises or any substantial portion of the Property is so taken or condemned, then Landlord shall have the right to terminate this Lease upon written notice to Tenant given at least thirty (30) days prior to the date title vests in the condemner, and this Lease shall terminate as of the date title vests in the condemner, all rents and other payments shall be paid up-to-date, and Landlord and Tenant shall have no further obligations by reason of the provisions of this Lease. In the event that Landlord does not elect to so terminate this Lease, Landlord, to the extent of the condemnation award, shall repair and restore the portion not affected by the taking so as to constitute the remaining premises a complete architectural unit. Thereafter, the Tenant can still terminate this Lease.

Tenant shall have no interest in any award resulting from any condemnation or eminent domain or similar proceedings whether such award be for diminution in value to the leasehold or to the fee of the Leased Premises, except that Tenant shall be entitled to claim, prove and receive in such proceedings such award as may be allowed it for loss of business, relocation, and for Tenant's trade fixtures and personal property which are removable by Tenant at the end of the Term, provided such award shall be in addition to the award for land, buildings and other improvements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17.&nbsp;&nbsp;&nbsp;&nbsp;<u>Parking and Common Areas; Expansion or Alteration of Building</u>.** Tenant shall have the right to use the driveways, walkways and parking areas located on and adjacent to the Property. Tenant shall require its employees (other than those with temporary or permanent disabilities) to park in the areas designated by Landlord. Landlord reserves the right in its absolute discretion to modify, change or alter any Common Area provided such change or alteration does not materially alter the amount of available parking spaces or the accessibility or effective usage of the Leased Premises. In addition, Landlord reserves the right to expand or alter the Building, however, so long as such expansion or alteration will in no way impact Tenant's use of the Property. In such event, Tenant's pro rata share of Operating Expenses as set forth in Section 4(c) of this Lease shall be appropriately adjusted.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.&nbsp;&nbsp;&nbsp;&nbsp;<u>Defaults of Tenant</u>.** The following occurrences shall be deemed defaults by Tenant:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;**Tenant shall fail to pay when due any rent or other sum payable under this Lease and such failure continues for five (5) days after written notice from Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;**Tenant shall make a general assignment for the benefit of creditors or become bankrupt or insolvent, or file or have filed against it in any court a petition in bankruptcy or insolvency or for reorganization or for the appointment of a receiver or trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)&nbsp;&nbsp;&nbsp;&nbsp;**Tenant shall be in breach of any other obligation under this Lease, and such breach shall continue for thirty (30) days after written notice from Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.&nbsp;&nbsp;&nbsp;&nbsp;<u>Remedies of Landlord</u>.** In the event of a default by Tenant, Landlord shall have the following rights and remedies in addition to all other rights and remedies otherwise available to Landlord:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;**Intentionally Deleted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;**Landlord shall have the right to terminate this Lease upon written notice to Tenant without prejudice to any claim for rents or other sums due or to become due under this Lease or damages.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)&nbsp;&nbsp;&nbsp;&nbsp;**Landlord shall have the immediate right of re-entry and may remove all persons and property from the Leased Premises. Such property may be removed and stored at the cost of Tenant. Should Landlord elect to re-enter as herein provided, or should Landlord take possession pursuant to legal proceedings, Landlord may either terminate this Lease or, from time-to-time, without terminating this Lease, relet the Leased Premises or any part thereof for such term or terms (which may be for a term extending beyond the Term) and at such rental or rentals and upon such other terms and conditions as Landlord, in the exercise of its sole discretion, deems advisable, with the right to make alterations and repairs to the Leased Premises. Upon each such reletting, (i) Tenant shall be immediately liable to pay to Landlord, in addition to any indebtedness other than rent due hereunder, the cost and expense of such reletting and of any such alterations and repairs incurred by Landlord, and the amount, if any, by which the rent reserved in this Lease for the period of the reletting as accelerated under Subsection a) of this Section, exceeds the amount agreed to be paid for rent for the Leased Premises by the reletting Tenant; or (ii) at the option of Landlord, rents received by Landlord from such reletting shall be applied first, to the payment of any indebtedness other than rent due hereunder from Tenant to Landlord; second, to the payment of any costs and expenses of such reletting and of such alterations and repairs; third, to the payment of rent unpaid hereunder; and the residue, if any held by Landlord and applied in payment of future unaccelerated rent as the same may become due and payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**d)&nbsp;&nbsp;&nbsp;&nbsp;**Subject to Landlord's duty to mitigate its damages, Landlord may immediately sue to recover from Tenant all damages Landlord may incur by reason of Tenant's default, including the cost of recovering the Leased Premises, and including the rent reserved and charged in this Lease for the remainder of the stated Term as accelerated under Subsection a) of this Section, all of which shall be immediately due and payable along with attorneys' fees and Landlord shall have no obligation to relet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**20.&nbsp;&nbsp;&nbsp;&nbsp;<u>Late Charge and Interest for Past Due Payments</u>.** All installments of rent payable to Landlord under this Lease, if not paid within five (5) days after they become due, shall be subject to a late charge equal to five percent (5%) of the installment amount.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**21.&nbsp;&nbsp;&nbsp;&nbsp;<u>Intentionally Deleted (see Rider)</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**22.&nbsp;&nbsp;&nbsp;&nbsp;<u>Right of Access</u>.** Tenant agrees to permit Landlord, and Landlord's agents, to inspect or examine the Leased Premises at any reasonable time in a reasonable manner, for any emergency reason and to permit Landlord to make such repairs, decorations, alterations, improvements or additions in the Leased Premises or to the Building as Landlord may deem necessary or which Tenant has covenanted in this Lease to do but has failed to do, without the same being construed as an eviction of Tenant, in whole or in part, by reason of loss or interruption of the business of Tenant because of the prosecution of such work, and the rent due under this Lease shall in no way abate while such decorations, repairs, alterations, improvements or additions are being made. Tenant shall have the right to accompany Landlord on any such inspections and examinations, which shall be scheduled to suit the reasonable convenience of both parties.

Landlord shall have the right to enter upon the Leased Premises at any reasonable time during the Term for the purpose of exhibiting the Leased Premises to prospective tenants or purchasers, provided advance notice is given to Tenant, and provided such exhibitions are scheduled to suit the reasonable convenience of both parties. For a period commencing six (6) months prior to the termination of this Lease and any renewals, Landlord may also place signs in, or upon the Leased Premises to indicate that the same are for rent, which signs shall not be altered, removed, obliterated or hidden by Tenant. Signs indicating the Building is for sale may be placed on the Leased Premises at any time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**23.&nbsp;&nbsp;&nbsp;&nbsp;<u>Surrender of Leased Premises</u>.** Tenant covenants and agrees to surrender possession of the Leased Premises to Landlord upon the expiration of the Term, or upon earlier termination of this Lease, in as good condition and repair as the same shall be at the Rent Commencement Date, or as the same may have been put by Landlord or Tenant during the continuance of this Lease and any renewals, or extensions, ordinary wear and tear excepted. In addition, Tenant shall remove all of its personal property from the Leased Premises and shall repair any damage to the Leased Premises caused by such removal. Any improvements mades to the Premises, whether initially paid for by Landlord or by Tenant under paragraph 11 above, shall become the sole possession of Landlord and Tenant shall not remove any part of the improvement, except for its portable personal property (i.e. nothing that is attached to any structure of the Premises), unless specifically authorized in writing by Landlord under the terms of paragraph 10 above.

Any personal property of Tenant or of anyone claiming under Tenant which shall remain on the Leased Premises after the expiration or termination of this Lease shall be deemed to have been abandoned by Tenant, and either may be removed by Landlord as its property or may be disposed of in such a manner as Landlord may see fit, and Landlord shall not be in any way responsible for such property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**24.&nbsp;&nbsp;&nbsp;&nbsp;<u>Holding Over</u>.** In the event Tenant shall continue to occupy all or any part of the Leased Premises after the expiration of the Term with the consent of Landlord, such holding over shall be deemed to constitute a tenancy from month-to-month, upon the same terms and conditions as are contained in this Lease, except as to term; provided, however, if such holding over is without Landlord's written consent, Tenant shall pay to Landlord as rent for each month, or part of a month, that Tenant remains in possession of the Leased Premises, one hundred and fifty percent (150%) of the monthly rental rate in effect immediately prior to the date of termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**25.&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignment and Sublease</u>.** Tenant shall not assign this Lease, or sublease all or any part of the Leased Premises without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, Tenant shall have the unrestricted right to assign, sublet, license or transfer, in whole or in part, (hereinafter collectively "<u>Transfer</u>") any or all of its rights and privileges under the Lease to an Affiliate (hereafter defined), provided that no such Transfer shall operate to relieve Tenant

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of its obligations under the Lease, including the payment of Rent and other charges. For purposes of this provision, "<u>Affiliate</u>" shall mean any entity which controls, is controlled by or is under common control with Tenant, any franchisee of Tenant, any franchisor of Tenant, any franchisee of Tenant's franchisor, or any entity which serves as a secured lender to Tenant. The consent of Landlord to any other Transfer to an entity or person which is not an Affiliate shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, the issuance, sale, purchase or other disposition of the interests of Tenant or an Affiliate of Tenant, any merger or consolidation or sale of all or substantially all of Tenant's or an Affiliate of Tenant's assets by Tenant or an Affiliate of Tenant, or any change in control, directors, management or organization of Tenant or an Affiliate of Tenant shall not be deemed to be a Transfer requiring the consent of Landlord.

Landlord shall have ten (10) calendar days after receipt of notice from Tenant to review and approve any proposed assignment or subletting. Landlord shall have no right to recapture said space and all consideration attributable to any assignment or sublease shall inure to the benefit of the Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**26.&nbsp;&nbsp;&nbsp;&nbsp;<u>Subordination</u>.** This Lease is and shall be subject and subordinate to any mortgage or mortgages now in force, or which shall at any time be placed upon the Leased Premises or the Property or any part thereof, and to each and every advance made pursuant to any such mortgage. Tenant agrees that it will, upon demand, execute and deliver such instruments as shall be required by any mortgagee or proposed mortgagee, to confirm or to effect more fully such subordination of this Lease to the lien of any such mortgage or mortgages, and, in the event of the failure of Tenant to execute or deliver any such instrument, Tenant hereby irrevocably nominates and appoints Landlord as Tenant's attorney-in-fact for the purpose of executing and delivering any such instrument or instruments of subordination. Tenant's refusal to execute or deliver such instrument shall also entitle Landlord, its successors and assigns, to elect that this Lease terminate upon the giving of a written notice as provided for in Section 17(c).

Notwithstanding anything to the contrary, as a condition to Tenant's subordination and attornment, any mortgagee, or successor to mortgagee's interest, must agree that it will not disturb Tenant's right to occupy the Premises under the terms of the Lease for the Term (including any extension thereof), this Lease shall not be terminated, and Tenant's rights under this Lease and Tenant's leasehold estate created hereby shall not be diminished by reason of any default under a mortgage affecting the Property or foreclosure thereof, so long as Tenant is not in default in performance of its obligations under the Lease beyond any applicable cure period provided in the Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**27.&nbsp;&nbsp;&nbsp;&nbsp;<u>Attornment</u>.** In the event any proceedings are brought for the foreclosure of any mortgage covering the Leased Premises, or in the event of the conveyance by deed in lieu of foreclosure, or in the event of exercise of the power of sale under any such mortgage, or in the event of the sale or transfer of the Leased Premises by Landlord, Tenant hereby attorns to the new owner and covenants and agrees to execute an instrument in writing reasonably satisfactory to the new owner whereby Tenant attorns to such successor in interest and recognizes such successor as Landlord under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**28.&nbsp;&nbsp;&nbsp;&nbsp;<u>Sale or Transfer by Landlord</u>.** If Landlord shall sell or transfer the Leased Premises, Landlord shall be automatically and entirely released of all covenants and obligations under this Lease from and after the date of such conveyance or transfer, provided the purchaser on such sale has assumed and agreed to carry out all covenants and obligations of Landlord under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**29.&nbsp;&nbsp;&nbsp;&nbsp;<u>Estoppel Certificate</u>.** At the request of Landlord, Tenant shall within ten (10) days deliver to Landlord or to anyone designated by Landlord, a certificate stating the Commencement Date and the termination

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date of the Term and certifying as of the date of the certificate as to the amount of Base Rent, Additional Rent and other charges paid by Tenant under this Lease, whether this Lease has been modified and is in full force and effect, whether Landlord is in default under this Lease and the nature of any such default.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**30.&nbsp;&nbsp;&nbsp;&nbsp;<u>Quiet Enjoyment</u>.** On paying the rent and on performing all of the covenants and agreements on its part to be performed under the provisions of this Lease, Tenant shall peacefully and quietly have, hold and enjoy the Leased Premises for the Term without hindrance by Landlord, by any predecessor in interest to Landlord or anyone claiming an interest in the Leased Premises by or through Landlord or any such predecessor in interest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**31.&nbsp;&nbsp;&nbsp;&nbsp;<u>Benefit and Obligation</u>.** The benefits of this Lease shall accrue to, and the burdens of this Lease shall be the liabilities of, the heirs, personal representatives, successors and assigns of Landlord and Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**32.&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>.** All notices required under any provision of this Lease shall be deemed to be properly served if delivered personally, or sent by registered or certified mail to each party at their address as stated above or at such other address as each party shall designate in writing delivered to the other party. All mailed notices shall be effective one (1) business day after mailing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**33.&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>.** The failure of either party to enforce any covenant or condition of this Lease shall not be deemed a waiver thereof or of the right of either party to enforce each and every covenant and condition of this Lease, and no provision of this Lease shall be deemed to have been waived unless such waiver is in writing. One or more waivers of any covenant or condition by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant or condition nor shall the acceptance of rent or other payment by Landlord at any time when Tenant is in default under any term, covenant or condition of this Lease constitute a waiver of such default, nor shall any waiver or indulgence granted by either party be taken as an estoppel against the party granting the indulgence or waiver.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**34.&nbsp;&nbsp;&nbsp;&nbsp;<u>Unenforceability</u>.** In the event any covenant, term, provision, obligation, agreement or condition of this Lease is held to be unenforceable, it is mutually agreed and understood, by and between the parties hereto, that the other covenants, terms, provision, obligations, agreements and conditions herein contained shall remain in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**35.&nbsp;&nbsp;&nbsp;&nbsp;<u>Captions</u>.** All headings contained in this Lease are intended for convenience only and are not to be deemed or taken as a summary of the provisions to which they pertain or as a construction thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**36.&nbsp;&nbsp;&nbsp;&nbsp;<u>Security Deposit</u>.** As security for the payment and performance of its obligations under this Lease, Tenant has deposited with Landlord the sum of **Three Thousand Seven Hundred Sixty-Two and 50/100 Dollars ($3,762.50)** (the "**Deposit**"), **payable upon the execution of this Lease**. The Deposit shall be held by Landlord, and, at Landlord's discretion, applied to the payment of any amount due Landlord from Tenant which comes due under the terms of this Lease. Any such use of the Deposit by Landlord shall not serve to cure or waive Tenant's default, and such default shall not be deemed cured until the full amount of the Deposit has been restored to Landlord by Tenant. Any unexpended portion of the Deposit shall be paid over to Tenant within thirty (30) days after the expiration or termination of this Lease and the performance by Tenant of all of its obligations under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**37.&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>.** This Lease shall be governed by the laws of the State of Michigan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**38.&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Landlord Services</u>.** In addition to the other services provided in this Lease, but subject to the provisions of Section 4(c) above, Landlord shall provide a common area for refuse and rubbish to be placed

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there by Tenant and to provide for regular removal of such rubbish. In the event Tenant requires removal of refuse and rubbish from the Leased Premises in an amount or frequency greater than customary and reasonable for normal retail/commercial use during the course of rendering such service, the additional cost shall be paid by Tenant to Landlord as Additional Rent within ten (10) days after notice from Landlord. In no event, however, shall Landlord have any responsibility for removal or disposal of any waste products or material generated by Tenant which is regulated under any municipal, state or federal law, ordinance or regulation and all such waste products and material shall be removed and disposed of by Tenant at its sole cost and expense and in full compliance with all such laws, ordinances and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**39.&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Covenants of Tenant</u>.** Tenant shall not perform or permit any of the following acts to be performed by Tenant or its agents, employees, or invitees without the written consent of the Landlord:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)**&nbsp;&nbsp;&nbsp;&nbsp;Occupy the Leased Premises in any other manner or for any other purpose than as set forth in this lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)**&nbsp;&nbsp;&nbsp;&nbsp;Use or operate any machinery that, in Landlord's reasonable opinion, is harmful to the Property or disturbing to other users or occupants thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**c)**&nbsp;&nbsp;&nbsp;&nbsp;Inscribe, paint or affix or permit to be inscribed, painted or affixed any sign, advertisement or notice on any part of the Property, inside or out, unless first approved by Landlord in writing, which shall not be unreasonably withheld.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**d)**&nbsp;&nbsp;&nbsp;&nbsp;Place any telecommunications lines or other wires and instruments in the Leased Premises unless directed by Landlord as to where and how the same are to be placed, and, without such direction, no placement of any such apparatus shall be permitted; provided, however, Tenant shall be permitted to install standard telephone, internet and computer lines at Tenant's expense within Tenant's leased area.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**e)**&nbsp;&nbsp;&nbsp;&nbsp;Use or allow to be used on the Leased Premises any article or substance having an offensive odor, such as, but not limited to ether, naphtha, phosphorus, benzol, gasoline, benzine, petroleum or any product thereof, crude or refined earth or coal oils, flashlight powder, or other explosives, kerosene, camphene, burning fluid or any dangerous, explosive or rapidly burning matter or material of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**f)**&nbsp;&nbsp;&nbsp;&nbsp;Use electricity in the Leased Premises in excess of the capacity of any of the electrical conductors and equipment in or otherwise serving the Leased Premises nor connect any additional fixtures, appliances or equipment to the Property electric distribution system or make any alteration or addition to the electric system (other than installing a sub-meter) of the Leased Premises other than the connection of lamps, desktop computers, laptop computers and similar small office machines and similar equipment necessary for Tenant's use of the Leased Premises as permitted under this Lease.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**g)**&nbsp;&nbsp;&nbsp;&nbsp;Tenant shall not make or permit any improper noises or odors in the Leased Premises or on the Property, create a nuisance, or do or permit anything which, in Landlord's sole and reasonable judgment, interferes in any way with other tenants of the Property or persons having business with such tenants (except for Tenant's uses already disclosed and permitted in Section 2 above). In the event Tenant's business creates excessive noise or odors, Landlord may, in addition to all other remedies available to Landlord under this Lease, require Tenant, at Tenant's sole cost, to install in the Leased

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Premises such sound insulation, air circulation devices and/or other improvements necessary to isolate the noise/odor in a manner acceptable to Landlord.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**40.&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Rights Reserved to Landlord</u>.** Landlord shall have the right, but shall be under no obligation, to do the following things (at any time or times and from time-to-time) in or about the Leased Premises and the Property:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**a)&nbsp;&nbsp;&nbsp;&nbsp;**Make such reasonable rules and regulations as in its judgment may from time to time be necessary for the safety, care and cleanliness of the Leased Premises, and the Property, and for the preservation of good order therein; provided, however, such rules and regulations are reasonable and customary for buildings of this character, are of uniform application to all tenants, are uniformly enforced against all tenants, and are not inconsistent with the provision of this Lease. Tenant and its agents, employees, invitees, and licensees shall comply with all rules and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**b)&nbsp;&nbsp;&nbsp;&nbsp;**Control and prevent access to any part of the Property or adjacent property by all persons whose presence in the reasonable judgment of Landlord, or Landlord's employees, will be prejudicial to the safety, character, reputation or interest of the Property and its respective tenants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**41.&nbsp;&nbsp;&nbsp;&nbsp;<u>Signs</u>.** Landlord shall have no obligation to provide any signs for Tenant or the Leased Premises. All signs placed on the Leased Premises by Tenant shall conform to the same style, type, size and quality of other signs in or on the Building and shall be subject to the approval of Landlord. All signs approved by Landlord shall be erected at Tenant's sole cost and expenses, and in compliance with all applicable laws, ordinances, codes and regulations. In addition, all such signs shall be removed by Tenant upon the termination of this Lease and all damages repaired at Tenant's cost and expense.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**42.&nbsp;&nbsp;&nbsp;&nbsp;<u>Intentionally Deleted</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**43.&nbsp;&nbsp;&nbsp;&nbsp;<u>Force Majeure</u>.** The time within which any of the parties hereto shall be required to perform any act or acts under this Lease shall be extended to the extent that the performance of such act or acts shall be delayed by acts of God, fire, windstorm, flood, explosion, collapse of structures, riot, or war; provided, however, that the party seeking such extension hereunder shall give notice to the other party of the occurrence causing such delay no later than seven days following such occurrence. However, any extension will not be considered a waiver by Landlord of Tenant's obligations under this lease but will simply be a suspension of the obligation until such time as Landlord gives notice to Tenant that the suspension is lifted and performance of Tenant under this Lease is reactivated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**44.&nbsp;&nbsp;&nbsp;&nbsp;<u>Use of Pronouns</u>.** The use of pronouns in this Lease shall be deemed to include the masculine, feminine and neutral pronouns as well as both the singular and plural pronouns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**45.&nbsp;&nbsp;&nbsp;&nbsp;<u>Tenant's Operations</u>.** Tenant shall not use the sidewalks, driveways or parking areas, other than set forth in the exterior storage in **Exhibit B,** or other Common Areas adjacent to the Leased Premises for the display of merchandise or signs or for any other business purpose without the prior written consent of Landlord. Any exterior storage must comply with all local ordinances or municipality standards. Tenant shall not conduct or permit to be conducted any "going-out-of-business", "bankruptcy", "liquidation" or similar type of sale from the Leased Premises. Tenant acknowledges that Landlord is executing this Lease in reliance upon these covenants and that these covenants are a material element of the consideration inducing Landlord to execute this Lease.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**46.&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement; Amendment</u>.** This Lease contains all of the representations and statements by each party to the other and expresses the entire understanding between the parties with respect to this transaction. All prior communications concerning this transaction are merged in and replaced by this Agreement. This Lease may not be amended except by a further agreement in writing signed by both Landlord and Tenant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**47.&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Right to Trial by Jury</u>.** TENANT HEREBY VOLUNTARILY, IRREVOCABLY AND UNCONDITIONALLY WAIVES FOR THE BENEFIT OF THE LANDLORD ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE IT BRINGS, WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THIS LEASE, INCLUDING BUT NOT LIMITED TO ACTIONS INVOLVING SUMMARY PROCEEDINGS. THIS PROVISION IS A MATERIAL INDUCEMENT TO LANDLORD TO ENTER INTO THIS TRANSACTION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**48.&nbsp;&nbsp;&nbsp;&nbsp;<u>Floor Load</u>.** Tenant shall not place upon any portion of the floor of the Leased Premises a load exceeding such floor's loadbearing capacity. Landlord reserves the right to prescribe the position of all safes, business machines, or other heavy apparatus. Such safes, business machines, or other heavy apparatus shall be maintained by Tenant at Tenant's expense in settings sufficient in the Landlord's judgment to absorb and prevent vibration, noise, and annoyance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**49.&nbsp;&nbsp;&nbsp;&nbsp;<u>Limitation of Landlord's Liability</u>.** Notwithstanding anything contained in this Lease to the contrary, Landlords' liability hereunder shall be limited to, and any judgment against Landlord may only be satisfied out of, (a) the proceeds of sales received on execution of the judgment and levy against the right, title, and interest of Landlord in the Property; (b) out of rent and other income from the Property receivable by Landlord; and (c) out of the consideration received by Landlord from the sale or other disposition of all or any part of Landlord's right, title, and interest in the Property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**50.&nbsp;&nbsp;&nbsp;&nbsp;<u>Rules and Regulations</u>.** The current rules and regulations for the Building and Landlord's Property ("Rules") are attached as **Exhibit F**. Tenant shall observe and comply with and shall require Tenant's Agents to observe and comply with all Rules and any additions or amendments thereto which shall from time to time to adopted by Landlord, which additions and amendments shall not require Tenant's approval or consent or affect Tenant's obligations hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**51.&nbsp;&nbsp;&nbsp;&nbsp;<u>Landlord's Representations and Warranties</u>.** Landlord represents and warrants to Tenant that: (a) Landlord is seized in fee simple title to the Property; (b) Landlord has the authority to enter into this Lease; (c) the person executing this Lease is duly authorized to execute and deliver this Lease on behalf of Landlord; (d) Landlord will deliver the Premises, Building, Property and Improvements in compliance with all applicable governmental rules, laws and regulations, without regard to grandfathering or other variances; (e) all utility and mechanical systems, including plumbing, electrical and HVAC systems, are established, connected to the Premises and are in good working condition and repair; (f) the Premises is in compliance with all applicable laws, codes, rules, regulations and ordinances, Landlord has not received any notice of violations of any health, safety, pollution, zoning or other laws, ordinances, rules or regulations including, without limitation, the ADA with respect to any portion of the Leased Premises; and (g) the Premises has access to sufficient parking and a public road, either directly or as benefited by easements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**52.&nbsp;&nbsp;&nbsp;&nbsp;<u>Authority</u>.** Tenant and Landlord represent and warrant that Tenant and Landlord, respectively, have the capacity and authority to enter into this Lease. If Tenant or Landlord is a corporation, Tenant and Landlord, respectively, represent and warrant that it is duly organized and a validly existing corporation in good standing and that the person executing this Lease has the requisite authority to bind the corporation to the terms

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of this Lease. If Tenant is a partnership (see above), Tenant represents and warrants that it validly exists and that the person executing this Lease has the requisite authority to bind the partnership to the terms of this Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the date first identified above.

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| | | | |
|:---|:---|:---|:---|
| LANDLORD | LANDLORD | TENANT | TENANT |
| Steele Ave LLC | Steele Ave LLC | Shoulder Innovations, Inc. | Shoulder Innovations, Inc. |
| /s/ Jeffrey D. Leeuw | /s/ Jeffrey D. Leeuw | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| By: | Jeffrey D. Leeuw | By: | **Matthew Ahearn** |
| Its: | Manager | Its: | **Chief Operating Officer** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-14-2021 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1-14-2021 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**January 13th, 2021** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**January 13th, 2021** |
| Date | Date | Date | Date |

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## Exhibit 10.2

**Exhibit 10.2**

**<u>Supply Agreement</u>**

On this the third day of the month of June in the year 2024, we at Revelation Medical Devices, located at 1105 Auburn Dr in the State of IN agree to the following parameters in agreement with Shoulder Innovations located at 1535 Steele Ave SW Suite B in the State of Ml. The requirements of this agreement are as follows:

Revelation Medical Devices, further called "The Seller," enters into this agreement willingly. Shoulder Innovations, further called "The Buyer," enters into this agreement willingly.

In consideration of the Buyer's purchase commitment of product instruments herein, the Seller is willing to purchase both a HAAS UMC 500 5th Axis Mill and a HAAS ST-20 Live Tool Lathe (the "Machines") to support the product instrument manufacturing requirements for Shoulder Innovations, as the Buyer. In consideration of Seller's expenditures to acquire the Machines, the Buyer agrees to invest in [\*\*\*] of the total purchase price of the equipment to the Seller with an aggregate gross purchase price of [\*\*\*]. The Buyer will pay a [\*\*\*] share of the [\*\*\*] down payment totaling [\*\*\*]. The Buyer's [\*\*\*] portion of the purchase price after the down payment is [\*\*\*]. The Buyer will pay the remaining balance in quarterly payments starting in Q1 of 2025 with the last payment paid in Q4 2025. The Buyer agrees to buy at least [\*\*\*] (the "Purchase Requirement"), which Purchase Requirement includes open purchase orders with the Seller as of the date hereof. The Buyer shall remain current on payments to the Seller for all purchase orders or provide a payment plan acceptable to the Seller if any invoice becomes delinquent.

The Seller is to ensure they are offering competitive pricing, lead times, and consistent on time in full delivery to a minimum of [\*\*\*] by Q1 of 2025. The Seller is to provide the same high level of quality and costs will remain at the quoted price aside from any substantial material price increases and design changes, which will require requoting. The Seller will purchase and own in its entirety the "Machines" and any other capital equipment purchased for this agreement. The Buyer for its investment in the equipment herein will have [\*\*\*] to support the product instrument manufacturing requirements for Shoulder Innovations, as the Buyer. The Seller reserves the right to manufacture other product on the machines to fulfill machine capacity. The Seller first must exercise the Buyer's first rights of capacity in writing. If the Buyer does not exercise first rights to capacity within 24 hours, then the Seller has the right to manufacture other product on the Machines. The first rights of the Buyer will extend to Q3 of 2026 with an option to extend first rights to the Machines by additional Purchase Order(s).

The undersigned agree to all the above-mentioned terms and conditions found in this agreement.

This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

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IN WITNESS WHEREOF, the parties hereto have caused this Supply Agreement to be executed as of the date first written above by their duly authorized officers.

**[Revelation Medical Devices]:**

Company Address: <u>1105 Auburn Dr, Auburn, IN 46706</u>

Representative Name: <u>Jeff Ondrla</u>

Representative Title: <u>General Manag</u>er

Representative Signature: <u>&nbsp;&nbsp;&nbsp;&nbsp; /s/Jeff Ondrla&nbsp;&nbsp;&nbsp;&nbsp;</u> Date:<u>&nbsp;&nbsp;&nbsp;&nbsp; 6/04/24&nbsp;&nbsp;&nbsp;&nbsp;</u> 

**[Shoulder Innovations]:**

Company Address: <u>1535 Steele Ave SW Suite B. Grand Rapids, Ml 49507</u>

Representative Name: <u>Michael Kitchen</u>

Representative Title: <u>VP of Supply Chain</u>

Representative Signature:<u>&nbsp;&nbsp;&nbsp;&nbsp; /s/Michael Kitchen&nbsp;&nbsp;&nbsp;&nbsp;</u> Date:<u>&nbsp;&nbsp;&nbsp;&nbsp; 6/3/2024&nbsp;&nbsp;&nbsp;&nbsp;</u> 

## Exhibit 10.3

**Exhibit 10.3**

CONSULTING AGREEMENT

This Consulting Agreement ("Agreement") is made as of the 30th day of April, 2015 ("Effective Date") by and between Shoulder Innovations LLC (Client), located at

4670 Fulton Street East

Suite 202

Ada, MI, 49301

and Genesis Innovation Group LLC (Consultant), located at:

9575 Nevada Trail

Missoula, MT 59808

(Client and Consultant being referred to individually as "Party" and collectively as "Parties").

NOW, THEREFORE, in consideration of the mutual promises exchanged herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agrees as follows:

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Consulting Services</u>.&nbsp;&nbsp;&nbsp;&nbsp;Consultant agrees to render consulting services of the nature described in the Addendum signed by the Parties and attached hereto, as may be requested from time to time by Client. The Addendum is incorporated into, and made part of, this Agreement.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Compensation</u>.&nbsp;&nbsp;&nbsp;&nbsp;Client shall pay to Consultant, as compensation for the services performed hereunder, the amount or amounts stated in an applicable Addendum. If services are to be performed on an hourly basis, Client shall be responsible to pay for hours actually worked by Consultant's employees or consultants in performing services under any Addendum, but Client shall not be responsible for payment for normal commuting time nor, if travel is required, for travel time in excess of a total time of 8 hours per day. Client will reimburse Consultant for all agreed-upon travel (other than the normal daily expenses of working and commuting) and other reasonable expenses incurred in connection with performing services for Client. Consultant will submit invoices to Client at least [\*\*\*], and payment of agreed-upon charges will be made within [\*\*\*] of receipt of invoice. If invoices are not submitted within [\*\*\*] after services are performed, Client will not consider invoices for payment. The Consultant agrees not to incur any expenses in Client' name without the prior written authorization of Client.

3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Taxes</u>.&nbsp;&nbsp;&nbsp;&nbsp;Consultant shall have sole responsibility for payment of all federal, state and local taxes or contributions imposed or required under unemployment insurance, social security and income tax laws and for filing all required tax forms with respect to any amounts paid by Client to Consultant hereunder and any amounts paid by Consultant to its employees. Consultant shall indemnify and hold Client harmless against any claim or liability (including penalties) resulting from failure of Consultant to pay such taxes or contributions, or failure of Consultant to file any such tax forms.

4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Insurance</u>.&nbsp;&nbsp;&nbsp;&nbsp;Consultant shall maintain, at Consultant's expense, such insurance as will fully protect Consultant from any claims for damage for bodily injury, including death, and for property damage, which may arise from Consultant's activities under this Agreement, whether such activities are performed by Consultant or by any subcontractor or anyone directly or indirectly employed by either of them.

5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidential Information</u>.&nbsp;&nbsp;&nbsp;&nbsp;Confidential Information shall mean written information, oral information, or information obtained by the inspection of tangible objects, that relates to, business, technical, customer, marketing, and financial information (whether written, oral or otherwise), including without limitation, ideas, inventions, trade secrets, know how, documents, charts, lists, software, drawings, materials, goods, product designs and plans, equipment or samples, disclosed or delivered to Consultant by Client, or arising from work or services done by Consultant for Client. Confidential Information shall not include any information for which that Consultant can demonstrate by competent written proof was (a) known to the public at the time of Client's disclosure to Consultant or entered the public domain thereafter through no fault of Consultant; (b) in Consultant's possession free of any obligation of confidentiality at the time of Client's disclosure to Consultant; or (c) rightfully communicated to Consultant by a third party who was not under any obligation of confidentiality.

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6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Authorized Uses</u>.&nbsp;&nbsp;&nbsp;&nbsp;Confidential Information shall be used by the Consultant only for purposes authorized in writing by Client, shall be treated by the Consultant as confidential proprietary information of Client, and shall not be reproduced or disclosed or made available to others know without prior written permission of Client except to those that have a specific need to know. The Consultant shall take at least those measure that Consultant takes to protect its own highly confidential information. The Consultant shall reproduce Client's proprietary rights notices on any such approved copies, in the same manner in which such notices were set forth in or on the original. The authorized uses of Confidential Information are limited to (a) performing the consulting services described in the Addendum; (b) supplying Client with goods or services; or (c) any other purpose Client may hereafter authorize in writing.

7.&nbsp;&nbsp;&nbsp;&nbsp;<u>Title</u>.&nbsp;&nbsp;&nbsp;&nbsp;The title to the Confidential Information provided to the Recipient by the Discloser, including without limitation any tangible property, shall be vested in the Discloser. Nothing in this Agreement is intended to grant any rights to the Interested Party under any patent, mask work right or copyright of Client, nor shall this Agreement grant the Interested Party any rights in or to Confidential Information except as expressly set forth herein.

8.&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations, Warranties and Indemnification</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;The Consultant represents that during the term of this Agreement no business relationships, employment relationships and consulting obligations of the Consultant shall be a conflict with the obligations to Client set forth herein, or involve the disclosure of Confidential Information, and or interfere with the performance of the Consultant's obligations under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2&nbsp;&nbsp;&nbsp;&nbsp;The Consultant warrants to Client that the Consultant: (a) has the right to enter into this Agreement, (b) has no obligations to any other person or organization that are in conflict with the Consultant's obligations under this Agreement, and (c) that all Inventions and Preexisting Materials (as defined herein) are and will be original, and will not infringe the copyrights, trade secrets, rights of privacy or similar proprietary rights of others. The Consultant agrees to indemnify and hold harmless Client against any expenses, damages, costs, losses and fees (including legal fees) incurred by Client in any suit, claim or proceeding brought by a third party and which is based on facts which constitute a breach of any of the warranties in this Paragraph.

9.&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignment of Inventions</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1&nbsp;&nbsp;&nbsp;&nbsp;The Consultant agrees to keep accurate, complete and timely records of all Inventions made, authored or conceived by the Consultant, either solely or jointly with others, during the term of this Agreement. All Inventions will be promptly and fully disclosed by the Consultant to Client in writing. "Inventions" means discoveries, improvements, ideas, works of authorship (including but not limited to all written materials and computer software), data and information, whether or not patentable or copyrightable, relating to any work performed by the Consultant for Client, either solely or jointly with others, pursuant to this Agreement, or based on or derived from Confidential Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2&nbsp;&nbsp;&nbsp;&nbsp;The Consultant agrees to assign and does hereby assign to Client all rights to Inventions, and to applications to letters patent, copyrights and/or copyright registrations for all such Inventions in all countries, and to all letters patent, copyrights and/or copyright registrations granted for the Inventions in all countries. Consultant agrees that any materials protectable by copyright developed by Consultant as provided in this paragraph shall be "works made for hire" to the extent possible under U.S. or foreign copyright laws, and thus the property of Client. To the extent such materials do not qualify as works made for hire, Consultant agrees to assign and does hereby expressly assign to Client the copyright in such materials on a worldwide basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3&nbsp;&nbsp;&nbsp;&nbsp;The Consultant agrees to execute and deliver promptly to Client (without charge to Client but at the expense of Client) all written instruments, and to do all other legal acts which Client deems necessary or desirable, to enable Client to preserve the property rights to Inventions against forfeiture, abandonment or

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loss, to obtain, defend and maintain letters patent, copyrights and/or copyright registrations, and to vest the entire right and title in and to Inventions in Client.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4&nbsp;&nbsp;&nbsp;&nbsp;The Consultant further agrees that Client may add to, subtract from, arrange, rearrange, revise, modify, change and adapt all Inventions, including any copyrightable or copyrighted works, created or provided by the Consultant to Client under this Agreement. The Consultant hereby waives all of the Consultant's rights under the United States Copyright Act, including any rights provided in 17 U.S.C. § 106 and § 106A and any rights of attribution and integrity and other "moral rights of authors" with respect to the results and proceeds of the Consultant's work under this Agreement to the extent now or hereafter permitted by the laws of the United States of America or the laws of any other countries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5&nbsp;&nbsp;&nbsp;&nbsp;Client shall determine, in its sole discretion, which Invention shall be maintained as a trade secret. In the event that Client elects to prepare and file patent applications for Inventions, such applications will be prepared at Client's expense by attorneys of Client's choice. Consultant will be named as an inventor on any such patent applications as appropriate under applicable legal standards.

10.&nbsp;&nbsp;&nbsp;&nbsp;<u>Incorporated Proprietary Materials</u>.&nbsp;&nbsp;&nbsp;&nbsp;Consultant agrees to notify Client in writing prior to incorporating any proprietary materials, whether or not patentable or patented, which are owned or controlled by Consultant, into the goods, equipment and/or services furnished to Client by Consultant under this Agreement. Consultant will either obtain Client's written agreement to the incorporation such proprietary materials without a license of such rights to Client, or Consultant will grant and hereby grants to Client an irrevocable, perpetual, transferable, nonexclusive, worldwide, royalty-free license to make, use and sell, and to have others make, use and sell on its behalf goods, equipment, services or the like incorporating such proprietary materials.

11.&nbsp;&nbsp;&nbsp;&nbsp;<u>Term and Termination</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1&nbsp;&nbsp;&nbsp;&nbsp;Either Party shall have the right to terminate this Agreement upon sixty days written notice to the other Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2&nbsp;&nbsp;&nbsp;&nbsp;This Agreement shall automatically renew one year after the Effective Date, unless extended by the mutual written agreement of the Parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3&nbsp;&nbsp;&nbsp;&nbsp;The continuing obligations of Consultant under this Agreement with respect to Confidential Information shall survive for five years after the termination date of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4&nbsp;&nbsp;&nbsp;&nbsp;Upon termination of this Agreement, all records and any compositions, articles, devices, Inventions and other items which disclose or embody Confidential Information within the Consultant's possession or control, whether prepared or made by the Consultant or others, will be delivered to Client.

12.&nbsp;&nbsp;&nbsp;&nbsp;<u>No Agency</u>.&nbsp;&nbsp;&nbsp;&nbsp;The Parties do not intend that any agency or partnership relationship be created between them by this Agreement. The Consultant understands and agrees that the Consultant is not an employee of Client. Consultant agrees that the Consultant is not entitled to any Client employee benefits or benefit plans of any kind, including but not limited to, worker's compensation insurance, unemployment insurance, health insurance, life insurance, pension plan or any other benefit or insurance that Client provides to its employees.

13.&nbsp;&nbsp;&nbsp;&nbsp;<u>Third-party Confidential Information</u>.&nbsp;&nbsp;&nbsp;&nbsp;The Consultant understands that Client does not desire to receive any confidential information in breach of the Consultant's obligation to others and agrees that during the term of this Agreement, the Consultant will not disclose to Client or use in the performance of services for Client, any confidential information in breach of the obligations to any third party.

14.&nbsp;&nbsp;&nbsp;&nbsp;<u>Use of Consultant's Written Materials</u>.&nbsp;&nbsp;&nbsp;&nbsp;Client shall have the right, at no additional charge, to use, modify, reproduce and prepare derivative works based on the Consultant's documentation and literature, provided to Client by Consultant in connection with the performance of services under this Agreement, including without limitation, operating and maintenance manuals, technical publications, prints, drawings, training manuals, sales literature, and other similar materials.

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15.&nbsp;&nbsp;&nbsp;&nbsp;<u>Scope of Obligations</u>.&nbsp;&nbsp;&nbsp;&nbsp;The obligations of the Consultant contained in this Agreement shall be binding upon any division, subsidiary, employee, agent, assignee, transferee, successor or receiver of the Consultant. The Consultant agrees to advise and inform such parties who have access to Confidential Information of the obligations of the Consultant under this Agreement and its applicability to them. The Interested Party shall immediately notify Client in the event of any unauthorized use or disclosure of the Confidential Information. The Consultant agrees to be responsible for any breach of this Agreement by such parties.

16.&nbsp;&nbsp;&nbsp;&nbsp;<u>No Commitment</u>.&nbsp;&nbsp;&nbsp;&nbsp;It is understood that this Agreement does not obligate Client to request proposals, bids, or estimates from or to enter into contracts or place orders with the Consultant, and does not constitute all of the conditions or terms of a contract, request, or order from Client to the Consultant. Further conditions and terms of any such contract, request, or order shall be agreed upon between Parties from time to time.

17.&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidential Relationship</u>.&nbsp;&nbsp;&nbsp;&nbsp;[\*\*\*]

18.&nbsp;&nbsp;&nbsp;&nbsp;<u>No Reverse Engineering</u>.&nbsp;&nbsp;&nbsp;&nbsp;Except as expressly provided herein, the Consultant shall not (a) reverse engineer or analyze samples furnished by Client, (b) create derivatives of such samples for commercial purposes, or (c) file any patent application containing a claim to any subject matter derived from the Confidential Information, without the prior written consent of Client.

19.&nbsp;&nbsp;&nbsp;&nbsp;<u>Return of Confidential Information</u>.&nbsp;&nbsp;&nbsp;&nbsp;At any time upon Client's request, or upon the termination of this Agreement, all Confidential Information (and all copies thereof) shall be promptly returned to Client and not retained by the Consultant or the Consultant representatives in any form, and analyses, summaries or other writings prepared by the Consultant or the Consultant advisors based on the Confidential Information shall be promptly destroyed.

20.&nbsp;&nbsp;&nbsp;&nbsp;<u>Injunctive Relief</u>.&nbsp;&nbsp;&nbsp;&nbsp;The Consultant also agrees that, in the event of any breach or threatened breach, Client will be entitled to equitable relief, including injunctive relief and specific performance without posting a bond. Such relief will not be exclusive of Client, but will be in addition to all other remedies. In the event disclosure is legally compelled, the Consultant shall provide Client with prompt written notice so that Client can seek appropriate protections and remedies.

21.&nbsp;&nbsp;&nbsp;&nbsp;<u>Disclaimer</u>.&nbsp;&nbsp;&nbsp;&nbsp;Client provides Confidential Information disclosed hereunder on an "AS IS" basis, without warranties of any kind. Without limiting the foregoing, Client does not represent or warrant that such Confidential Information is accurate, complete or current. The disclosure of Confidential Information is for discussion purposes only. Client may change the content of Confidential Information at any time at Client' sole discretion.

22.&nbsp;&nbsp;&nbsp;&nbsp;<u>Applicable Law and Jurisdiction</u>.&nbsp;&nbsp;&nbsp;&nbsp;The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Indiana (without giving effect to the choice of law principles thereof). The Parties hereby consent and submit to the exclusive jurisdiction of any of the federal or state courts located in the State of Indiana with respect to the enforcement of any rights or remedies hereunder. The Consultant hereby irrevocably appoints the Secretary of State of the State of Indiana as its agent for service of any process, summons or other document related to initiating any action hereunder to enforce the rights of Client.

23.&nbsp;&nbsp;&nbsp;&nbsp;<u>Miscellaneous</u>.&nbsp;&nbsp;&nbsp;&nbsp;No amendment to this Agreement shall be binding upon the Parties unless it is in writing and executed by both Parties. The failure of either Party at any time to require performance of any provision of this Agreement or to exercise any right provided for herein shall not be deemed a waiver of such provision or such right. All waivers must be in writing. Unless the written waiver contains an express statement to the contrary, no waiver by either Party of any breach of any provision of this Agreement or of any right provided for herein shall be construed as a waiver of any continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement. All remedies provided for in this Agreement shall be cumulative and in addition to and not in lieu of any other remedies available to either Party at law, in equity or otherwise. This Agreement contains the entire understanding and agreement between the Parties with respect to the subject matter hereof and supersedes all previous communications, negotiations and agreements, whether oral or written, between the parties with respect to such subject matter. If any provision or clause of this Agreement, or the application

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thereof under certain circumstances is held invalid, the remainder of this Agreement, or the application of such provision or clause under other circumstances, shall not be affected thereby.

24.&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignment</u>.&nbsp;&nbsp;&nbsp;&nbsp;Client reserves the right to assign all or part of its rights under this Agreement. Client agrees to notify Consultant within thirty days of such assignment.

25.&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification</u>. All representatives of Consultant, while on Client's premises shall comply with all reasonable rules and regulations established by Client. Consultant hereby agrees to indemnify and hold harmless Client and its affiliates, and their officers, agents and employees, from and against any and all liability, loss, damage, cost and expense (including attorneys fees) on account of any claim, suit or action made or brought against Client, or their officers, agents or employees, arising from the services performed by Consultant hereunder, including any act of negligence of Consultant or its employees in connection with such services, or arising from any accident, injury or damage caused to any person or to the property of any person during the performance of such services, or arising from injury (including death) to any of Consultant's employees or damage to or loss of Consultant's property while on the premises of Client in connection with this Agreement.

26.&nbsp;&nbsp;&nbsp;&nbsp;<u>Export Control</u>.&nbsp;&nbsp;&nbsp;&nbsp;The Consultant agrees not to export, directly or indirectly, any U.S. source technical data acquired from Client or any products utilizing such data to countries outside the United States, which export may be in violation of the United States export laws or regulations.

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IN WITNESS WHEREOF, the Parties have caused this Agreement to be execute by their authorized representatives as of the date written below.

---

| | |
|:---|:---|
| **Genesis Innovation Group LLC** | **Shoulder Innovations, LLC** |
| /s/ Robert Ball | /s/ Michael DeVries |
| Signature, individually and on behalf <br>of the business identified above | Signature |
| &nbsp;&nbsp;&nbsp;Chairman | Managing Member |
| Title | Title |
| &nbsp;&nbsp;&nbsp;04/29/2015 | 4-29-2015 |
| Date | Date |

---

------

**ADDENDUM**

**to the**

**Client CONSULTING AGREEMENT**

**<u>NATURE OF CONSULTING SERVICES</u>**

It is expected that Client will pay all direct out-of-pocket expenses in connection with the Consulting Services, provided that Consultant obtains Client's advanced written authorization before obligating Client for any such out-of-pocket expenses.

**<u>CONSULTANT'S FEE</u>**

Client agrees to pay Genesis hourly consulting rates according to the following schedule:

*<u>Program Manager.</u>* Responsible for concept development, Intellectual Property creation, surgeon relationship management, and overall project management for a large-scale project ([\*\*\*]). Chargeable Rate: [\*\*\*]

Senior Staff Member: Responsible for duties as assigned by Program Manager for either technical or commercial development of concepts, relationships, business plans, or other subject that may be necessary from time to time in association with a large scale, complex project: [\*\*\*].

Project/Mechanical Engineer. Responsible for detailed design of various products under the direction of Program Manager. May be responsible for project management of sub-projects with a program. Chargeable Rate: [\*\*\*].

Designer/Technician. Responsible for creation of detailed specification design and drawings under direct supervision of Engineer or Program Manager. Chargeable Rate: [\*\*\*].

Assistant/Administrative. Chargeable Rate: [\*\*\*].

Travel time is at [\*\*\*] and is from "office-to-office," and in no case shall be billed at greater than 8 hours per day.

Invoices for services shall be [\*\*\*] (but in no event later than [\*\*\*] after such services are rendered). Client will also reimburse Consultant for all travel expense.

Consultant shall remain responsible for any local, state, or federal taxes associated with receipt of equity grants in Client.

**<u>CONSULTANT'S POINT OF CONTACT AT Client</u>**

Consultant's point of contact at Client shall be Robert Ball. All questions regarding this agreement should be directed to the point of contact.

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---

| | | |
|:---|:---|:---|
| **Genesis Innovation Group LLC** | **Shoulder Innovations, LLC** | |
| /s/ Robert Ball | /s/ Michael DeVries |  |
| Signature, individually and on behalf<br>of the business identified above | Signature | Signature |
| &nbsp;&nbsp;&nbsp;Chairman | Managing Member |  |
| Title |  | Title |
| &nbsp;&nbsp;&nbsp;04/29/2015 | 4/29/2015 |  |
| Date |  | Date |

---

------

**AMENDMENT TO CONSULTING AGREEMENT**

THIS AMENDMENT TO CONSULTING AGREEMENT (this "<u>Amendment</u>") is effective November 15, 2016, by and between Shoulder Innovations, LLC, a Delaware limited liability company ("<u>Client</u>") and Genesis Innovation Group, LLC, a Delaware limited liability company ("<u>Consultant</u>") (each, a "<u>Party</u>" and together, the "<u>Parties</u>").

<u>Recitals</u>

WHEREAS, the Parties entered into a Consulting Agreement, dated April 30, 2015 (including any addendums thereto, "<u>Consulting Agreement</u>"), and pursuant to an Addendum to the Consulting Agreement Client agreed to pay Consultant $115/hour for work performed by Senior Staff Members in accordance with the Consulting Agreement;

WHEREAS, the Parties desire to amend the Consulting Agreement to change the billable rate [\*\*\*] under the Consulting Agreement.

WHEREAS, the Parties desire to enter into this Amendment to memorialize their understanding.

<u>Background</u>

NOW, THEREFORE, in consideration of the foregoing and the terms and conditions set forth below, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Recitals</u>. The above Recitals are incorporated into this Amendment by reference and made a part of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Amendment</u>. The following is hereby added to the Consulting Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.With regard to any work or services provided to Client [\*\*\*], Client shall pay [\*\*\*].

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Miscellaneous</u>. Unless otherwise defined in this Amendment, capitalized terms shall have the meanings set forth in the Consulting Agreement. The terms of this Amendment amend and modify the Consulting Agreement as if fully set forth in the Consulting Agreement. If there is any conflict between the terms, conditions and obligations of this Amendment and the Consulting Agreement, this Amendment's terms, conditions and obligations shall control. All other provisions of the Consulting Agreement not specifically modified by this Amendment are preserved and remain in full force and effect.

The Parties have caused this Amendment to be effective as of the day and year first set forth above. This Amendment may be executed and delivered (including by facsimile or electronic transmission) in one or more counterparts, each of which shall constitute an original, and all of which together shall constitute one and the same instrument.

---

| | | | |
|:---|:---|:---|:---|
| **Shoulder Innovations, LLC** | **Shoulder Innovations, LLC** | **Genesis Innovation Group, LLC** | **Genesis Innovation Group, LLC** |
| By: | /s/ Robert Ball | By: | /s/ Don Running |
| Name: | Robert Ball | Name: | &nbsp;&nbsp;&nbsp;&nbsp;Don Running |
| Title: | Executive Chairman | Title: | &nbsp;&nbsp;&nbsp;&nbsp;CEO |

---

------

**AMENDMENT TO CONSULTING AGREEMENT**

THIS AMENDMENT TO THE CONSULTING AGREEMENT (this "Amendment") is effective January 29<sup>th</sup>, 2019 by and between Shoulder Innovations, Inc., a Delaware Corporation ("Company") and Genesis Innovation Group, LLC ("Consultant") (each, a "Party" and together, the "Parties".

<u>Recitals</u>

WHEREAS, the Parties entered into a Consulting Agreement, dated April 30<sup>th</sup>, 2015 ("Consulting Agreement"), and pursuant to the Consulting Agreement, Consultant agreed to render Consulting Services ("Services") to the Company.

WHEREAS, the Parties desire to amend the Consulting Agreement, to adjust the following Hourly Consulting Rates as detailed in the Addendum to the Client Consulting Agreement:

**<u>Program Manager:</u>** Responsible for concept development, Intellectual Property creation, surgeon relationship management, and overall project management for a large-scale project ([\*\*\*]).

**Chargeable Rate [\*\*\*].**

**<u>Senior Staff Member</u>**: Responsible for duties as assigned by Program Manager for either technical or commercial development of concepts, relationships, business plans, or other subject that may be necessary from time to time in association with a large scale, complex project.

**Chargeable Rate [\*\*\*].**

**<u>Project/Mechanical Engineer</u>:** Responsible for detailed design of various products under the direction of Program Manager. May be responsible for project management of sub-projects with a program.

**Chargeable Rate [\*\*\*].**

**<u>Designer/Technician</u>:** Responsible for creation of detailed specification design and drawings under direct supervision of Engineering or Program Manager.

**Chargeable Rate [\*\*\*].**

**<u>Assistant/Administrative</u>: Chargeable Rate from [\*\*\*].**

WHEREAS, the Parties desire to enter into this Agreement to memorialize their understanding.

<u>General</u>

NOW, THEREFORE, in consideration of the foregoing and the terms and conditions set forth below, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.<u>Recitals.</u> The above Recitals are incorporated into this Amendment by reference and made a part of this Amendment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.<u>Effective Date.</u> The above Recitals are effective January 1<sup>st</sup>, 2019.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.<u>Amendment</u>. The following is hereby added as an Addendum of the Consulting Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.The Hourly Rates will be adjusted as detailed in the above Recitals.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.<u>Miscellaneous</u>. Unless otherwise defined in this Agreement, capitalized terms shall have the meanings set forth in the Consulting Agreement. The terms of this Amendment amend and modify the Consulting Agreement as if fully set forth in the Consulting Agreement. All other provisions of the Consulting Agreement not specifically modified by this Amendment are preserved and remain in full force and effect.

The Parties have caused this Amendment to be effective as of the day and year first set forth above. This Amendment may be executed and delivered (included by facsimile or electronic transmission) in one or more counterparts, each which shall constitute an original, and all of which together shall constitute one and the same instrument.

---

| | | |
|:---|:---|:---|
| **Consultant** | **Shoulder Innovations, Inc.** | |
| /s/ Robert Ball | /s/ Matthew Ahearn |  |
| Signature, individually and on behalf <br>of the business identified above | Signature | Signature |
| CEO | &nbsp;&nbsp;&nbsp;&nbsp; President & Chief Operating Officer | &nbsp;&nbsp;&nbsp;&nbsp; President & Chief Operating Officer |
| Title |  | Title |
| 4/10/19 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; January 29th, 2019 |  |
| Date |  | Date |

---

------

**GENESIS INNOVATION GROUP, LLC**

**FIRST AMENDMENT TO**

**CONSULTING AGREEMENT**

This First Amendment to THE CONSULTING AGREEMENT (this "Amendment") is made effective as of January 1, 2022, by and among Genesis Innovation Group, LLC, a Michigan limited liability company (the "**Consultant**"), and Shoulder Innovations, Inc. (the "**Company**").

**BACKGROUND**

**WHEREAS**, the Consultant and the Company previously entered into that certain Consulting Agreement dated April, 30 2015 (the **"*Agreement"***);

**WHEREAS**, capitalized terms used but not defined herein shall have the meanings attributed to such terms in the Agreement; and

**WHEREAS**, pursuant to the **Consultant's Fee** section of the **Addendum** to the Agreement, Consultant and Company agree to modify the Chargeable Rate for each position listed.

**NOW**, **THEREFORE**, in consideration of the foregoing, the Agreement is modified as follows:

**<u>CONSULTANTS FEE</u>**

Program Manager: [\*\*\*]

Senior Staff Member: [\*\*\*]

Engineering Director: [\*\*\*]

Quality / Regulatory Manager: [\*\*\*]

Project / Mechanical Engineer: [\*\*\*]

Designer / Technician: [\*\*\*]

**COUNTERPARTS.** This Amendment may be executed either originally or by facsimile, .pdf or other electronic means of signature and delivery, each of which shall be deemed an original.

**SIGNATURE ON THE FOLLOWING PAGE**

------

This **FIRST AMENDMENT TO CONSULTING AGREEMENT** is hereby executed and made effective as of the date first above written.

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| | |
|:---|:---|
| **THE CONSULTANT:** | **THE COMPANY:** |
| **GENESIS INNOVATION GROUP, LLC** | **SHOULDER INNOVATIONS, INC** |
| By: /s/ Benjamin L Olds | By: /s/ Robert Ball |
| Name: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Benjamin L Olds | Name: Robert Ball |
| Title: Director, Finance & Operations | Title: CEO, Shoulder Innovations |

---

**SIGNATURE PAGE TO**

**FIRST AMENDMENT TO CONSULTING AGREEMENT**

------

**GENESIS INNOVATION GROUP, INC.**

**THIRD AMENDMENT TO**

**CONSULTING AGREEMENT**

This Second Amendment to THE CONSULTING AGREEMENT (this "Amendment") is made effective as of January 1, 2025, by and among Genesis Innovation Group, Inc., a Michigan corporation (the "**Consultant**"), and Shoulder Innovations, Inc. (the "**Company**").

**BACKGROUND**

**WHEREAS**, the Consultant and the Company previously entered into that certain Consulting Agreement dated April, 30 2015 (the ***"Agreement"***);

**WHEREAS**, capitalized terms used but not defined herein shall have the meanings attributed to such terms in the Agreement; and,

**WHEREAS**, pursuant to the **Consultant's Fee** section of the **Addendum** to the Agreement, Consultant and Company agree to modify the Chargeable Rate for each position listed.

**WHEREAS**, Consultant and Company agree the term shall be twelve (12) months, beginning January 1, 2025 and ending December 31, 2025.

**WHEREAS**, Consultant and Company agree to [\*\*\*] billing cycle, beginning January 1, 2025 and ending December 31, 2025.

**WHEREAS**, Consultant and Company agree to a budgeted AOP amount of $[\*\*\*] of revenue and expenses, for the time period of January 1, 2025 and ending December 31, 2025. The total amount can be increased by mutual agreement of both parties, but not decreased.

**NOW**, **THEREFORE**, in consideration of the foregoing, the Agreement is modified as follows:

**<u>CONSULTANT'S FEE</u>**

<u>Resource Title – Chargeable Rate</u>

■Vice President - $[\*\*\*]

■Senior Director - $[\*\*\*]

■Director - $[\*\*\*]

■Engineer - $[\*\*\*]

■Technician/Intern - $[\*\*\*]

/s/ J P

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■Vice President, Quality - $[\*\*\*]

■Quality/Regulatory Manager - $[\*\*\*]

■IT System Manager - $[\*\*\*]

■Document Control - $[\*\*\*]

**COUNTERPARTS.** This Amendment may be executed either originally or by facsimile, .pdf or other electronic means of signature and delivery, each of which shall be deemed an original.

**SIGNATURE PAGE TO**

**THIRD AMENDMENT TO CONSULTING AGREEMENT**

This **SECOND AMENDMENT TO CONSULTING AGREEMENT** is hereby executed and made effective as of the date first above written.

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| | |
|:---|:---|
| **THE CONSULTANT:** | **THE COMPANY:** |
| **GENESIS INNOVATION GROUP, INC.** | **SHOULDER INNOVATIONS, INC.** |
| By: /s/ Chance Leonard | By: /s/ Jeff Points |
| Name: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chance Leonard | Name: Jeff Points |
| Title: Chief Executive Officer | Title: CFO, Shoulder Innovations |

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## Exhibit 10.4

**Exhibit 10.4**

**<u>SECOND RESTATED AND AMENDED SOFTWARE LICENSE AGREEMENT</u>**

**THIS SECOND RESTATED AND AMENDED SOFTWARE LICENSE AGREEMENT** (this ***"Agreement"***), dated as of June 10, 2025 and effective as of January 1, 2025 (the ***"Amendment Effective Date"***), amends and restates the agreement dated October 22, 2020 (the ***"Effective Date"***), previously amended and restated effective after March 31, 2022, by and between Genesis Software Innovations, LLC, a Michigan limited liability company (***"Licensor"***), and Shoulder Innovations, Inc., a Delaware corporation (***"Licensee"***). Licensor and Licensee may each be referred to as a ***"Party"*** or together as the ***"Parties."***

**WHEREAS**, Licensor owns, or controls the rights to, a proprietary surgery planning platform software as further described as the Licensed Materials (defined below);

**WHEREAS**, Licensor now desires to license the Licensed Materials to Licensee and provide related services subject to the terms and conditions contained herein; and

**WHEREAS**, Licensee wishes to use the Licensed Materials in the Field of Use (as defined below) in the Territory (as defined below) and Licensor is willing to grant to Licensee a license to the Licensed Materials, transfer the Licensed Know-how (as defined in <u>Section 3.1</u>) and perform related services on the terms and conditions set out in this Agreement.

**NOW, THEREFORE,** in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS.** For purposes of this Agreement, the following terms shall have the following meanings:

***"Affiliate"*** means 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 person or entity. The term "control" for purposes of this Agreement means the power to direct or cause the direction of the management and policies of an entity, whether through the ownership of voting securities, by contract or otherwise/direct or indirect ownership of more than fifty percent (50%) of the voting securities of an entity, and "controlled by" and "under common control with" have correlative meanings. Notwithstanding the foregoing, "Affiliates" shall not include portfolio companies that are owned in whole or in part by Licensor (simply because of such ownership). Neither of the Parties shall be deemed to be an "Affiliate" of the other.

"***Authorized Users***" means users designated by Licensee to use the Licensed Materials.

***"Confidential Information"*** means all non-public, confidential or proprietary information of either Party or its Affiliates, whether in oral, written, electronic or other form or media, whether or not such information is marked, designated or otherwise identified as "confidential" and includes the terms and existence of this Agreement and of any term sheets related to this Agreement, and any information that, due to the nature of its subject matter or circumstances surrounding its disclosure, would reasonably be understood to be confidential or

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proprietary, including: (a) the Licensed Know-how; (b) either Party's unpatented inventions, ideas, methods and discoveries, know-how, trade secrets, unpublished patent applications, invention disclosures, invention summaries and other confidential intellectual property; (c) all other designs, specifications, documentation, components, source code, object code, images, icons, audiovisual components and objects, schematics, drawings, protocols, processes, and other visual depictions, in whole or in part, of any of the foregoing; (d) any Data, as defined below, (as Licensee's Confidential Information, except as described in <u>Section 4.5</u>); (e) research data, manufacturing processes and techniques; scientific, manufacturing, marketing and business plans; prototypes; formulas; material and performance specifications and current accumulated experience acquired as a result of technical research or otherwise; and financial and personnel matters relating to the Disclosing Party (as defined in <u>Section 8.1</u>), or to its present or future products, sales, suppliers, customers, employees, investors or business; information disclosed in any audit and all royalty reports and information contained in any Payment Statement (as defined in <u>Section 5.4(b)</u>); and (f) all notes, analyses, compilations, reports, forecasts, studies, samples, data, statistics, summaries, interpretations and other materials prepared by either Party, its Affiliates or its Representatives that contain, are based on, or otherwise reflect or are derived from any of the foregoing in whole or in part.

"***Data***" means all data generated, created, provided, or submitted by, or on behalf of, Licensee or its Authorized Users through the use of the Licensed Materials, which may include clinical summary, patient demographic information, information related to the measurements and anatomy of patients, and other individually-identifiable health information and Protected Health Information (***"PHI"***), which includes electronic Protected Health Information (***"ePHI"***), each as defined by the Health Insurance Portability and Accountability Act of 1996 Public Law 104-191 (***"HIPAA"***) and the regulations promulgated under HIPAA by the U.S. Department of Health and Human Services including 45 C.F.R. Part 164, 162, and Part 160, as amended or modified from time to time, including the Health Information Technology for Economic and Clinical Health Act, as enacted as part of the American Recovery Act of 2009, and by the Affordable Care Act.

**"*Documentation*"** means all operator and user manuals, training materials, technical materials and other materials provided by Licensor in connection therewith.

***"Field of Use"*** means shoulder surgical procedures primarily related to replacement of the shoulder joint articulation (i.e., anatomic shoulder arthroplasty, reverse shoulder arthroplasty, revision shoulder arthroplasty, and hemi-shoulder arthroplasty).

***"GAAP"*** means the United States Generally Accepted Accounting Principles consistently applied.

**"*Intellectual Property Rights*"** means any and all registered and unregistered rights granted, applied for or otherwise now or hereafter in existence under or related to any patent, copyright, trademark, trade secret, database protection or other intellectual property rights laws, and all similar or equivalent rights or forms of protection, in any part of the world.

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***"Law"*** means any statute, law, ordinance, regulation (including privacy and data security laws), rule, code, order, judgment, decree, other requirement or rule of law of any federal, state, local or foreign government or political subdivision thereof, or any arbitrator, court or tribunal of competent jurisdiction.

***"Licensed Materials"*** means that certain SaaS surgery planning platform software known at various times as [\*\*\*] or "ProVoyance Shoulder," or "ProVoyance Planning Software," including all Intellectual Property Rights therein and all updates, upgrades and other modifications, extensions, enhancements and improvements thereto that Licensor makes during the Term. The Licensed Materials include all object code and source code and all other surgery planning software developed by Licensor or its Affiliates, or to which Licensor or its Affiliates acquire rights, during the Term regardless of product or service name, but in all cases limited to the Field of Use.

***"Licensed Products"*** means all shoulder replacement products of Licensee that do, can, or could incorporate or use the Licensed Materials.

***"Losses"*** means all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys' fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers.

***"Net Sales Price"*** means the total gross of revenue received by Licensee from unaffiliated parties (accounted for in accordance with GAAP as consistently applied by Licensee) for sales of Licensed Products less the following deductions to the extent actually taken, paid, accrued, allowed, or allocated based on good-faith estimates with respect to such sales: [\*\*\*]. Net Sales Price shall not include: (a) sales or other transfers of any Licensed Product used for clinical trials or other research for which the Licensee does not receive consideration or sells at or below its cost, or (b) donations for charity or compassionate use for which the Licensee does not receive consideration or sells below its cost.

With respect to sales of a particular Combination Product (where "***Combination Product***" means any product which comprises the Licensed Product and other product(s)), and on a country-by-country basis, the "Net Sales Price" for royalty purposes hereunder shall be calculated by multiplying the actual Net Sales Price (calculated in the manner described above) of such Combination Product by the fraction A/B, in which A is the invoice price of the Licensed Product in the same quantity as contained in the Combination Product, sold separately in the same period without the other product(s) in the same country of sale as the Combination Product, and B is the invoice price of the Combination Product sold in the same period in such country. All invoice prices of the Licensed Product and the Combination Product shall be calculated as the average invoice price of such Licensed Product during the applicable accounting period for which the Net Sales are being calculated.

***"Quarterly Period"*** means each three-month period commencing on January 1, April 1, July 1, and October 1.

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***"Representatives"*** means a Party's and its Affiliates' employees, officers, directors, consultants, and legal advisors.

***"Territory"*** means all the countries of the world.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;GRANT & LICENSED MATERIAL RESTRICTIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.1&nbsp;&nbsp;&nbsp;&nbsp;Software License.** Subject to the other terms and conditions of this Agreement, Licensor hereby grants to Licensee and its Authorized Users an irrevocable (except in the event of a termination under <u>Section 12.2</u>), transferrable, exclusive right and license to store; use; copy; make derivative works from; make modifications, extensions, enhancements and improvements to; and grant sublicenses to make the Licensed Materials in the Field of Use in the Territory. For clarity, (a) the foregoing rights include Licensee's right to store object code versions of Licensed Materials on its own or third-party servers and provide user access to such Licensed Materials through a software-as-a-service business model, and (b) the license granted in this <u>Section 2.1</u> and any exclusivity are limited to the Field of Use. All rights and licenses granted to Licensee herein may be exercised by Licensee through all tiers of commercialization, including but not limited to exercise by Licensee Affiliates, distributors, and resellers.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.2&nbsp;&nbsp;&nbsp;&nbsp;Limited Grant.** Except for the rights and licenses expressly granted by Licensor under this Agreement, this Agreement does not grant to Licensee or any other party any right, title, or interest (whether by implication, estoppel or otherwise). All rights, titles and interests not specifically and expressly granted by Licensor hereunder are hereby reserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.3&nbsp;&nbsp;&nbsp;&nbsp;Permitted Copies**. Any copy of the Licensed Materials made by Licensee: (a) will remain the exclusive property of Licensor; (b) be subject to the terms and conditions of this Agreement; and (c) must include all copyright or other Intellectual Property Rights notices contained in the original.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.4&nbsp;&nbsp;&nbsp;&nbsp;Licensee Restrictions**. Except as contemplated by this Agreement, Licensee shall not, and shall not permit any other party to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**copy the Licensed Materials, in whole or in part;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**rent, lease, lend, sell, sublicense, assign, distribute, publish, transfer or otherwise make available the Licensed Materials to any third party, including on or in connection with the internet or any time-sharing, service bureau, software as a service, cloud or other technology or service;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**bypass or breach any security device or protection used for or contained in the Licensed Materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**remove, delete, efface, alter, obscure, translate, combine, supplement or otherwise change any trademarks, warranties, disclaimers, or other symbols,

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notices, marks, or serial numbers on or relating to any copy of the Licensed Materials or Documentation; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**use the Licensed Materials in any manner or for any purpose that knowingly infringes, misappropriates or otherwise violates any Intellectual Property Right or other right of any third party, or that knowingly violates any applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;SERVICES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1&nbsp;&nbsp;&nbsp;&nbsp;Licensed Know-how Transfer.** "***Licensed Know-how***" shall mean all know-how transferred to Licensee by Licensor's technical staff under this Agreement and the incorporation of the Licensed Materials into the Licensed Products. Licensor hereby grants to Licensee a worldwide perpetual, irrevocable (except in the event of a termination under <u>Section 12.2</u>), transferrable, exclusive right and license to use the Licensed Know-how for any purpose in the Field of Use in the Territory.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2&nbsp;&nbsp;&nbsp;&nbsp;Technical Assistance.** Licensee shall be responsible for all support with respect to Authorized Users in connection with the Licensed Materials. Licensor shall provide back-up support and maintenance services to Licensee, including bug fixes and error corrections in a manner that meets or exceeds the highest of industry standards and practices for similar services (the ***"Support Services"***) in exchange for the Services Fees. For the avoidance of doubt, Licensee may also develop its own bug fixes and error corrections for the Licensed Materials once Licensee is listed as the manufacturer of record.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3&nbsp;&nbsp;&nbsp;&nbsp;Data Services*.*** In exchange for the Services Fees, Licensor shall host and manage the Data in the Field of Use and otherwise make the Data available for Licensee's use (collectively, the ***"Data Services"***), as Licensee may request from time to time, pursuant to the terms in <u>Exhibit B</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4&nbsp;&nbsp;&nbsp;&nbsp;Development and Consulting Services*.*** In exchange for the Services Fees, Licensor shall on an ongoing basis develop for, deliver to, configure for, and integrate into the Licensed Materials any modifications, extensions, enhancements and improvements of the Licensed Materials in the Field of Use as further described in <u>Exhibit A</u> and <u>Exhibit D</u> (collectively, the ***"Development and Consulting Services"***), as Licensee may request from time to time. For the avoidance of doubt, all such modifications, extensions, enhancements, and improvements shall be considered Licensed Materials. Licensor shall retain all rights, ownership, and interest to any proprietary rights to the Licensed Materials, including any modifications, extensions, enhancements, and improvements thereto, outside of the Field of Use (***"Excluded Improvements"***), and such Excluded Improvements are not included in the scope of the license granted under <u>Section</u> <u>3.1</u> of this Agreement. Licensor shall use reasonable commercial effort to obtain clearance to market the initial Licensed Materials and updates to them from the US Food and Drug Administration (the ***"FDA"***) pursuant to one or more 510(k) submissions, and Licensee shall cooperate with all reasonable requests made by Licensor in connection therewith. As between Licensee and Licensor, each Party shall be entitled to receive copies of all correspondence and reports that the other Party develops and that Party submits to or

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receives from the FDA and any other regulatory authority to whom that Party applies for regulatory clearance (including minutes and official contact reports relating to any communications with any such regulatory authority) and adverse event files, in each case, relating to the Licensed Materials in the Field of Use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.5&nbsp;&nbsp;&nbsp;&nbsp;Services Fees**. In exchange for Licensor's performance of the Support Services, Data Services, and the Development and Consulting Services (collectively, the ***"Services"***), Licensee shall pay the fees set forth in <u>Exhibit A</u> (the ***"Services Fees"***). Licensor shall invoice Licensee for the Services Fees, if any, due and owing under this Agreement. Licensor shall invoice Licensee monthly following the provision of any Services provided by Licensor under this Agreement. Licensee shall pay all undisputed amounts on each invoice within thirty (30) days of its receipt of an accurate invoice from Licensor. Licensee may withhold payment of any invoice or part thereof that it in good faith disputes as due or owing. Licensor reserves the right to charge interest at the lesser of (a) the maximum legal rate or (b) [\*\*\*]% compounded monthly on any outstanding invoices.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.6&nbsp;&nbsp;&nbsp;&nbsp;**The failure of Licensee to pay a disputed invoice or a part thereof will not constitute a breach of this Agreement by Licensee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;DATA RIGHTS & OBLIGATIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.1&nbsp;&nbsp;&nbsp;&nbsp;Data**. As between Licensee and Licensor, Licensee shall own and have exclusive right to all Data for any and all lawful uses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.2&nbsp;&nbsp;&nbsp;&nbsp;License to Licensor**. Subject to Licensor's compliance with the provisions of <u>Section 4.4</u> below, Licensee hereby grants Licensor a limited, non-exclusive, and non-transferable right and license to access, use, modify, analyze, maintain, process, and create derivative works of the Data for the sole purposes of: (i) enabling Licensor to perform its obligations hereunder; (ii) updating, upgrading, modifying, extending, enhancing, and improving the Licensed Materials; (iii) customization of an implant, custom implant tools, advance planning of implant procedures, matching of implants with patient anatomy for procedure for the applicable patient and analysis related to implant outcomes, and related health care operations, such as for purposes of statistical analysis, future implant design, reference, research, data analysis, and software improvement), and (iv) assisting Licensor in the development of its other software products outside of the Field of Use. Notwithstanding the foregoing, in no event may Licensor sell, distribute, rent, lease, license, or transfer the Data in whole or in part, and will at all times treat the Data as Confidential Information of Licensee. Additionally, Licensee acknowledges and agrees that Licensor shall have the right during the Term and at any time thereafter to use any De-identified Data (as defined in <u>Section 4.5</u>) for Licensor's internal business purposes, including commercialization thereof, whether or not in the Field of Use. For the avoidance of doubt, the use of any De-identified Data of the Data shall not be deemed Data.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.3&nbsp;&nbsp;&nbsp;&nbsp;License to Licensee**. To the extent applicable, Licensor hereby grants Licensee a limited, non-exclusive, and non-transferable right and license to access

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and use any De-identified Data collected by Licensor through the Licensed Materials outside of the Field of Use for Licensee's use in the Territory in the Field of Use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.4&nbsp;&nbsp;&nbsp;&nbsp;Security Obligations**. Licensor shall employ all physical, administrative, and technical controls, screening, and security procedures and other safeguards necessary to: (a) protect against any unauthorized access to, or use or disclosure of, the Licensed Materials and Data; and (b) control the use of the Data, including the uploading or other provision of the Data for processing by the Licensed Materials consistent with industry standards and applicable Laws. Without limiting the generality of the foregoing, Licensor for itself, its agents and employees, acknowledges that it may have access to PHI or ePHI (including individually-identifiable health information). Licensor agrees to maintain the privacy and security of all PHI and ePHI as required by applicable laws and regulations, including HIPAA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.5&nbsp;&nbsp;&nbsp;&nbsp;HIPAA.** Licensor and Licensee agree to enter into a Business Associate Agreement (the ***"BAA"***) a copy of which is attached to and incorporated herein as <u>Exhibit C</u>. To the extent there is a conflict between the BAA and this Agreement regarding the treatment and handling of PHI, the BAA will control. Licensor is expressly permitted to de-identify the Data in accordance with HIPAA (***"De-Identified Data"***). For the avoidance of doubt, PHI shall not be considered Confidential Information but shall be subject to the use and disclosure limitations outlined in the BAA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.6&nbsp;&nbsp;&nbsp;&nbsp;Patient Data**. Licensee will limit the PHI provided to Licensor to that which is necessary for the services described in this Agreement, and Licensee will not disclose any PHI related to sexually transmitted diseases, HIV/AIDS status, alcohol and drug abuse records governed by 42 C.F.R. Part 2, psychotherapy notes as defined by 45 C.F.R. 164.501, behavioral health information, Social Security numbers, financial account information, or any other personally identifiable information not necessary for the purposes described in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.7&nbsp;&nbsp;&nbsp;&nbsp;Consents and Authorizations**. Licensee will be administratively and financially responsible for obtaining any legally required consent, authorization or permission necessary for Licensor to access, use and disclose PHI. Licensee warrants that (i) Licensee has the authority and may freely transmit all PHI as described or done under this Agreement; (ii) Licensee has provided and obtained all necessary, prior, written notices, consents, and authorizations from patients in order to transfer the PHI to Licensor and for Licensor to use and disclose the PHI as described or done in this Agreement; (iii) such notices, consents and authorizations, and Licensee's transfer of any such data to Licensor, will comply with all applicable laws, regulations, rules, orders and data processing approvals, including but not limited to HIPAA, 42 C.F.R. Part 2, and the General Data Protection Regulation, Regulation (EU) 2016/679 (***"GDPR"***), where applicable; and (iv) Licensee will immediately notify Licensor if and to the extent any consent or authorization mentioned in this <u>Section 4.7</u> is revoked by a patient or other person.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.8&nbsp;&nbsp;&nbsp;&nbsp;Health Records**. Licensee acknowledges and agrees that the Licensed Material is not an electronic health or medical record. Licensee further acknowledges and agrees that the Licensed Material should not be used for documenting health information or relied upon for storing official health or medical record documentation. Licensee acknowledges and agrees that Licensee and its Authorized Users are solely responsible for maintaining official health or medical records documentation in accordance with all applicable Laws and will not rely upon the Data transmitted to, and stored by, Licensor for meeting Licensee's or its Authorized Users' obligations under such applicable Laws, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.9&nbsp;&nbsp;&nbsp;&nbsp;Informational Purposes**. The Licensed Material is intended and provided solely for informational purposes; Licensee shall not use the Licensed Material as a substitute for the medical judgment of a physician or other health care professional. The Licensed Material is intended to be a supplement to, and not a substitute for, Licensee's, its Authorized Users', or any health care professional's knowledge, expertise, skill, and judgment. Licensee further acknowledges that the professional duty to the patient lies solely with Licensee, its Authorized Users, and other health care professionals. Licensor does not assume any liability or damages due to malpractice, failure to warn, negligence, or any other basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;ROYALTIES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.1&nbsp;&nbsp;&nbsp;&nbsp;Upfront Payment and FDA Clearance Payment.** Licensee shall pay Licensor one million dollars ($1,000,000) on the Effective Date (the ***"Upfront Payment"***) and five hundred thousand dollars ($500,000) upon receipt of FDA clearance of the Licensed Materials (the ***"FDA Clearance Payment"***) by wire transfer to a bank account to be designated in writing by Licensor. The Upfront Payment and FDA Clearance Payment are not refundable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.2&nbsp;&nbsp;&nbsp;&nbsp;Royalty.** Licensee shall pay Licensor a royalty of [\*\*\*]([\*\*\*]%) of the Net Sales Price of each Licensed Product that is sold by Licensee (the ***"Royalty"***). Licensee's obligation to pay such Royalties shall cease upon the earlier to occur of: (i) the date that is the ten (10) year anniversary of the Effective Date and (ii) such time as the aggregate of all Royalties paid by Licensee, the Upfront Payment and FDA Clearance Payment is seven million dollars ($7,000,000). Notwithstanding the foregoing at any time prior to the tenth anniversary of the Effective Date, Licensee shall have the right, but not the obligation, to pay Licensor the difference between seven million dollars ($7,000,000) and the aggregate of all Royalties paid by Licensee, the Upfront Payment and FDA Clearance Payment and, upon such payment, all Royalty obligations hereunder, including the submission of Payment Statements, shall cease. After the Royalty payment obligations set forth herein terminate, Licensee's license rights hereunder shall be royalty-free and fully-paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.3&nbsp;&nbsp;&nbsp;&nbsp;Taxes.** Royalties and other sums payable by Licensee under this Agreement are exclusive of taxes. Each Party shall be responsible for collecting and remitting to the appropriate taxing authorities any and all taxes that are paid as a direct

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result of or otherwise directly in connection with the transactions contemplated in this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.4&nbsp;&nbsp;&nbsp;&nbsp;Payment Terms and Payment Statements.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Licensee shall pay all Royalties for each Quarterly Period within [\*\*\*] ([\*\*\*]) [\*\*\*] of the end of such Quarterly Period. Licensee shall make all such payments in US dollars by wire transfer of immediately available funds to a bank account to be designated in writing by Licensor. If applicable, for the purpose of converting the local currency in which any royalties or other payments arise into US dollars, the rate of exchange to be applied shall be the rate of exchange in effect on the last business day of the Quarterly Period to which the payment relates as reported in the Wall Street Journal or its successor publication.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**On or before the due date for all payments to Licensor pursuant to this <u>Section 5</u>, Licensee shall provide Licensor with a statement (the "***Payment Statement"***) showing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the total number of Licensed Products sold by Licensee in the relevant Quarterly Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;the total Net Sales Price of all Licensed Products sold by Licensee in the relevant Quarterly Period;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;the Quarterly Period for which the Royalties were calculated;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;the method used to calculate the Royalties, including an identification of all deductions taken to calculate the Royalties;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;the exchange rate used for calculating any Royalties, if applicable; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;such other particulars as are reasonably necessary for an accurate accounting of the Royalties made pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;RECORDS AND AUDIT.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1&nbsp;&nbsp;&nbsp;&nbsp;Records.** The Parties shall keep, and require their Affiliates to keep, complete, true and accurate books of accounts and records for the purpose of determining the amounts payable to the other Party pursuant to this Agreement. Such books and records shall be kept for such period of time required by applicable Laws, but no less than at least three (3) years following the end of the year to which they pertain. Such records shall be subject to inspection in accordance with the terms of this Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2&nbsp;&nbsp;&nbsp;&nbsp;Audit.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Each Party to whom payments are owed or have been made (a ***"Payee"***) may, at its own expense, one (1) time each calendar year, nominate an independent certified public accountant (the ***"Auditor"***) who shall have access to the records of the Party who has paid or has payment obligations hereunder (the ***"Payor"***) during the Payor's normal business hours for the purpose of verifying all payments made by Payor under this Agreement. A Payee shall have no right hereunder to audit payment of the Payor after one year after such Payor no longer has any payment obligation hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**The Payee shall provide to the Payor a copy of the Auditor's audit report within [\*\*\*] ([\*\*\*]) [\*\*\*] of the Payee's receipt of the report. If the report shows that payments made by the Payor are deficient, the Payor shall pay the Payee the deficient amount within [\*\*\*] ([\*\*\*]) [\*\*\*] after the Payor's receipt of the audit report. If the report shows that the Payee has overpaid, the Payee shall either (i) issue to the Payor a credit in the amount of the overpayment or (ii) pay the Payor the amount of any such overpayment within [\*\*\*] ([\*\*\*]) [\*\*\*] after the Payee's receipt of the audit report. If payments made by the Payor are found to be deficient by more than [\*\*\*] ([\*\*\*]%), the Payor shall pay for the cost of the audit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;INTELLECTUAL PROPERTY RIGHTS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.1&nbsp;&nbsp;&nbsp;&nbsp;Intellectual Property Ownership.** Licensee acknowledges and agrees that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The Licensed Materials are licensed, not sold, to Licensee by Licensor and Licensee does not and will not have or acquire under or in connection with this Agreement any ownership interest in the Licensed Materials;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Licensor is and will remain the sole and exclusive owner of all right, title and interest in and to the Licensed Materials, including all Intellectual Property Rights therein, subject only to the licenses granted to Licensee under this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Licensee shall have the first right to prepare, file and prosecute patent applications and maintain any patents related to the Licensed Materials in the Field of Use, and may deduct all reasonable costs and expenses associated therewith from any obligation Licensee may have to pay the Upfront Payment, FDA Clearance Payment and any Royalties; provided that Licensee shall (i) consult with Licensor in good faith prior to the filing, prosecution, or maintenance of any patents related to the Licensed Materials, (ii) provide Licensor the opportunity to comment on any materials in connection with any patents related to the Licensed Materials; and (iii) work cooperatively with Licensor to determine a budget for the preparation, filing and prosecution of patent applications and maintenance of any patents related to the Licensed Materials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.2&nbsp;&nbsp;&nbsp;&nbsp;No Implied Rights**. Except for the limited rights and licenses expressly granted under this Agreement, nothing in this Agreement grants, by implication, waiver, estoppel or otherwise, to Licensee or any third party any Intellectual Property

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Rights or other right, title, or interest in or to any of the Licensed Materials or Documentation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.3&nbsp;&nbsp;&nbsp;&nbsp;Right to Bring Action or Defend.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Licensee has the first right and discretion to commence or prevent or abate any actual or threatened, suit, action or proceeding (each, an ***"Action"***) for misappropriation, infringement or and to attempt to resolve and pursue any Action relating to Intellectual Property Rights with respect to the Licensed Materials and Licensed Know-how in the Field of Use, including by (i) pursuing (or threatening to pursue) Actions against third parties, prosecuting or defending Actions of any kind, and (ii) taking any other lawful action to protect, enforce or defend any Licensed Materials or Licensed Know-how in the Field of Use. Licensee has the right to join Licensor as a party if a court of competent jurisdiction determines Licensor is an indispensable party to such Action. Licensee shall bear its own costs and expenses in all such Actions and have the right to control the conduct thereof and be represented by counsel of its own choice therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Licensor shall and hereby does irrevocably and unconditionally waive any objection to Licensee's joinder of Licensor to any Action described in <u>Section 7.3(a)</u> on any grounds whatsoever, including on the grounds of personal jurisdiction, venue or *forum non conveniens*. If Licensee brings or defends any such Action, Licensor shall cooperate in all respects with Licensee in the conduct thereof, and assist in all reasonable ways, including having its employees testify when requested and make available for discovery or trial exhibit relevant records, papers, information, samples, specimens, and the like at Licensee's cost.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**If Licensee undertakes the enforcement or defense of any Intellectual Property Rights with respect to any Licensed Materials or Licensed Know-how as set forth in <u>Section 7.3(a)</u>: (i) Licensee shall pay Licensor (after Licensee's recovery of all costs and expenses associated therewith, including attorneys' fees) [\*\*\*] ([\*\*\*]%) of any recovery, damages or settlement of such Action; and (ii) Licensee may settle any such Action, whether by consent order, settlement or other voluntary final disposition, without the prior written approval of Licensor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**If any Action alleging that the Licensed Materials or Licensed Know-how misappropriate or infringe the Intellectual Property Rights of a third party in the Field of Use or any Intellectual Property Right is invalid is brought or threatened against Licensor or Licensee, such Party shall give the other Party prompt written notice of such Action, and Licensee, at its option, shall have the right to intervene and take over the sole defense of the Action at its own expense. Any resultant award shall be paid to Licensee to cover its related costs and expenses (including attorneys' fees) and then divided between the Parties with Licensee receiving [\*\*\*] ([\*\*\*]%) and Licensor receiving [\*\*\*] ([\*\*\*]%) consistent with <u>Section 7.3(c)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**If a third party claim of Intellectual Property Rights infringement or misappropriation is asserted, or if either Party believes one is reasonably likely, Licensor shall have the obligation to do any or all of the following as elected in writing by Licensee: (i) procure a license from the person or entity claiming or likely to claim Intellectual Property Rights

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infringement or misappropriation; or (ii) modify the Licensed Material to avoid the claim of Intellectual Property Rights infringement or misappropriation; or (ii) suspend the all Licensee payment obligations hereunder until the Intellectual Property Rights infringement or misappropriation claim has otherwise been resolved. In the event any such claim results in the payment of royalties or other payment obligations by Licensee to any such third party, Licensee shall deduct all such payments from its payment obligations to Licensor hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.4&nbsp;&nbsp;&nbsp;&nbsp;Licensee Rights After Term.** Except in the event of termination under <u>Section 12.2</u>, after the Term and effective immediately and automatically upon payment of all amounts Licensee owes Licensor, the license granted in <u>Section 2</u> shall become irrevocable and perpetual as to all material that was Licensed Material at the end of the Term. Upon termination, the license granted in <u>Section 2, if and to the extent it</u> <u>survives,</u> shall become nonexclusive. However, Licensee shall have no right, title, interest, or license whatsoever in any works, inventions, or intellectual property that Licensor develops or acquires after the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1&nbsp;&nbsp;&nbsp;&nbsp;Confidentiality Obligations.** Each Party hereby acknowledges that in connection with this Agreement it (the ***"Receiving Party"***) will gain access to Confidential Information of the other Party (the ***"Disclosing Party"***). As a condition to being provided with Confidential Information and as a covenant hereunder, each Receiving Party shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**not use the Disclosing Party's Confidential Information other than as necessary to exercise its rights and perform its obligations under this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**maintain the Disclosing Party's Confidential Information in confidence and, subject to the terms of this <u>Section 8</u>, not disclose the Disclosing Party's Confidential Information without the Disclosing Party's prior written consent, *provided*, however, the Receiving Party may disclose the Confidential Information to its Representatives who:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;have a need to know the Confidential Information for purposes of the Receiving Party's performance, or exercise of its rights concerning the Confidential Information, under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;have been apprised of this restriction; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;are bound by written nondisclosure and non-use obligations at least as restrictive as those set forth in <u>Section 8.1</u> by virtue of a legal duty or written agreement, *provided* further that the Receiving Party shall be responsible for ensuring its Representatives' compliance with, and shall be liable for any breach by its Representatives of <u>Section 8.1</u>.

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The Receiving Party shall use reasonable care, at least as protective as the efforts it uses for its own Confidential Information, to safeguard the Disclosing Party's Confidential Information from use or disclosure other than as permitted hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.2&nbsp;&nbsp;&nbsp;&nbsp;Exceptions.** Except as required by applicable Law, the obligations in <u>Section 8.1</u> do not apply to Confidential Information that the Receiving Party can demonstrate by documentation: (a) was already known to the Receiving Party without restriction on use or disclosure prior to the receipt of such information directly or indirectly from or on behalf of the Disclosing Party; (b) was or is independently developed by the Receiving Party without reference to or use of any Confidential Information; (c) was or becomes generally known by the public other than by breach of this Agreement by, or from any other wrongful act of, the Receiving Party, its Affiliates or any of its Representatives; provided that any future public availability of such Confidential Information shall not relieve the Receiving Party of liability for any prior act or omission of Receiving Party in violation of this Agreement; or (d) is or was received by the Receiving Party from a third party that, to the best of its knowledge, does not have an obligation of confidentiality to the Disclosing Party or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.3&nbsp;&nbsp;&nbsp;&nbsp;Legally Required Disclosure.** If the Receiving Party becomes legally compelled to disclose any Confidential Information, the Receiving Party shall:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**provide prompt written notice to the Disclosing Party so that the Disclosing Party may seek a protective order or other appropriate remedy; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**disclose only the portion of Confidential Information that it is legally required to furnish.

If a protective order or other remedy is not obtained, or the Disclosing Party waives compliance under <u>Section 8</u>, the Receiving Party shall, at the Disclosing Party's expense, use reasonable efforts to obtain assurance that confidential treatment will be afforded the Confidential Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.4&nbsp;&nbsp;&nbsp;&nbsp;Return or Destruction.** Each Party shall within [\*\*\*] ([\*\*\*]) [\*\*\*] after termination or expiration of this Agreement: (i) return to the other Party all documents and tangible materials (and any copies) containing, reflecting, incorporating or based on the other Party's Confidential Information; (ii) permanently erase such Confidential Information from its computer systems; and (iii) certify in writing to the other Party that it has complied with the requirements of this <u>Section 8.4</u>.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS AND WARRANTIES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.1&nbsp;&nbsp;&nbsp;&nbsp;Mutual Representations and Warranties.** Each Party represents and warrants to the other Party that as of the date of this Agreement:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**it is duly organized, validly existing and in good standing as a corporation or other entity as represented herein under the laws and regulations of its jurisdiction of incorporation, organization or chartering;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**it has, and throughout the Term shall retain, the full right, power and authority to enter into this Agreement and to perform its obligations hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**the execution of this Agreement by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary corporate action of the Party; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**when executed and delivered by such Party, this Agreement shall constitute the legal, valid and binding obligation of that Party, enforceable against that Party in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.2&nbsp;&nbsp;&nbsp;&nbsp;Licensor's Representation and Warranties.** Licensor additionally represents and warrants to Licensee that: (a) the Licensed Materials do not contain any virus or other malicious code; (b) the Licensed Materials and Services will be provided and performed (i) by persons with the proper skill, training and background; (ii) in a professional, workmanlike, timely and efficient manner; and (iii) in accordance with all applicable Laws; and (c) the Licensed Materials, Licensed Know-how or Data licensed to Licensee under <u>Section 4</u> do not and will not infringe, misappropriate, dilute, or otherwise violate any third party's Intellectual Property Rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.3&nbsp;&nbsp;&nbsp;&nbsp;Disclaimer of Representations and Warranties.** EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, EACH PARTY EXPRESSLY DISCLAIMS ALL REPRESENTATIONS AND WARRANTIES, WHETHER WRITTEN, ORAL, EXPRESS, IMPLIED STATUTORY OR OTHERWISE, CONCERNING THE LICENSED MATERIALS, LICENSED KNOW-HOW, DATA, AND ANY OTHER TECHNICAL INFORMATION, TECHNIQUES, MATERIALS, METHODS, PRODUCTS, SERVICES, PROCESSES OR PRACTICES AT ANY TIME MADE AVAILABLE BY SUCH PARTY INCLUDING ALL IMPLIED WARRANTIES OF MERCHANTABILITY, QUALITY, FITNESS FOR A PARTICULAR PURPOSE, AND WARRANTIES ARISING FROM A COURSE OF DEALING, COURSE OF PERFORMANCE, USAGE OR TRADE PRACTICE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;LIMITATIONS OF LIABILITY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.1&nbsp;&nbsp;&nbsp;&nbsp;Exclusion of Consequential and Other Indirect Damages.** TO THE FULLEST EXTENT PERMITTED BY LAW AND SUBJECT TO <u>SECTION 10.2</u>, (i) NEITHER PARTY SHALL BE LIABLE TO THE OTHER PARTY OR ANY OTHER

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PERSON FOR ANY INJURY TO OR LOSS OF GOODWILL, REPUTATION, BUSINESS, PRODUCTION, REVENUES, PROFITS, ANTICIPATED PROFITS, CONTRACTS OR OPPORTUNITIES (REGARDLESS OF HOW THESE ARE CLASSIFIED AS DAMAGES), OR FOR ANY CONSEQUENTIAL, INCIDENTAL, INDIRECT, EXEMPLARY, SPECIAL, PUNITIVE OR ENHANCED DAMAGES WHETHER ARISING OUT OF BREACH OF CONTRACT, TORT, STRICT LIABILITY, PRODUCT LIABILITY OR OTHERWISE, REGARDLESS OF WHETHER SUCH LOSS OR DAMAGE WAS FORESEEABLE OR THE PARTY AGAINST WHOM SUCH LIABILITY IS CLAIMED HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGE, AND NOTWITHSTANDING THE FAILURE OF ANY AGREED OR OTHER REMEDY OF ITS ESSENTIAL PURPOSE; AND (ii) IN NO EVENT SHALL A PARTY'S AGGREGATE LIABILITY HEREUNDER FROM ANY AND ALL CAUSES WHATSOEVER (INCLUDING, WITHOUT LIMITATION, NEGLIGENCE, STRICT LIABILITY, WARRANTY, INDEMNITY OR OTHERWISE) EXCEED THE TOTAL AMOUNT OF SERVICES FEES PAID OR PAYABLE BY LICENSEE UNDER THIS AGREEMENT. LICENSEE ACKNOWLEDGES AND AGREES THAT LICENSOR AND THE LICENSED MATERIALS DO NOT PROVIDE MEDICAL ADVICE OR RECOMMENDATIONS AND LICENSOR IS NOT RESPONSIBLE FOR ANY MEDICAL TREATMENT OR OTHER SERVICES PROVIDED TO AUTHORIZED USERS' PATIENTS. LICENSOR EXPRESSLY DISCLAIMS ANY LIABILITY FOR ANY AUTHORIZED USER'S INCORRECTLY ENTERED OR ANY INACCURATE INFORMATION THAT AN AUTHORIZED USER PROVIDES.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.2&nbsp;&nbsp;&nbsp;&nbsp;Exclusions.** Notwithstanding anything to the contrary in this Agreement, the limitations of liability and exclusions of certain types of damages contained in <u>Section 10.1</u> do not apply to: (a) indemnification obligations of a Party under <u>Section 10.3</u>, (b) the breach by either Party or its Representatives of the confidentiality obligations under <u>Section 8</u>, (c) the gross negligence or willful or reckless acts or omissions of either Party or its Affiliates, or (d) a Party's failure to comply with the BAA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.3&nbsp;&nbsp;&nbsp;&nbsp;Limited Liability for Data Services.** Notwithstanding any provision in this Agreement outside this Section 10, Licensor's liability for any breach of any duty or obligation related to the provision of Data Services under Section 3.3 and/or Exhibit B shall be limited to two times the amount Licensee had paid for such Data Services in the year preceding the breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;INDEMNIFICATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.1&nbsp;&nbsp;&nbsp;&nbsp;Indemnification Obligations**. Each Party shall indemnify, defend and hold harmless the other Party and its Affiliates and each of their respective directors, officers, employees, agents, successors, and assigns from and against any and all Losses as a consequence of third party Actions based upon: (a) any breach or failure to perform of any covenant, representation or warranty made by a Party in this Agreement; or (b) the gross negligence or willful or reckless acts or omissions of such Party or its Affiliates.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.2&nbsp;&nbsp;&nbsp;&nbsp;Indemnity Procedure.** The indemnifying Party's indemnity obligations under this <u>Section 10.3</u> are subject to the following conditions and procedure: (i) the indemnified Party must promptly notify the indemnifying Party in writing of the claim; however, the indemnifying Party shall not avoid its indemnity obligations except to the extent that the failure to so notify materially prejudices its ability to defend; (ii) the indemnifying Party shall have sole control of the defense and all related settlement negotiations; provided that the indemnified Party may participate in the defense and settlement negotiations using its own counsel at its own expense; and provided further that the indemnifying Party shall not resolve or settle any claim without the indemnified Party's consent unless the resolution or settlement provides for an unconditional release of the indemnified Party from all liability with respect to such claim, does not commit the indemnified Party to make any monetary payment or any other obligation, and admits no fault by the indemnified Party; and (iii) the indemnified Party, at the indemnifying Party's expense, shall reasonably cooperate with the indemnifying Party in the defense and settlement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.&nbsp;&nbsp;&nbsp;&nbsp;TERM AND TERMINATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.1&nbsp;&nbsp;&nbsp;&nbsp;Term.** This Agreement shall commence on the Effective Date and, unless terminated earlier in accordance with <u>Section 12.2</u>, remain in force (the ***"Term"***).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.2&nbsp;&nbsp;&nbsp;&nbsp;Termination for Cause.** Each Party shall have the right to terminate this Agreement immediately by giving written notice to the other Party if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**the other Party breaches a material provision of this Agreement and fails to cure such breach within [\*\*\*] ([\*\*\*]) [\*\*\*] of the non-breaching Party's written notice of such breach; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**the other Party: (i) becomes insolvent or admits its inability to pay its debts generally as they become due; (ii) becomes subject, voluntarily or involuntarily, to any proceeding under any domestic or foreign bankruptcy or insolvency Law, which is not dismissed or vacated within [\*\*\*] ([\*\*\*]) [\*\*\*] after filing; (iii) is dissolved or liquidated or takes any corporate action for such purpose; (iv) makes a general assignment for the benefit of creditors; or (v) has a receiver, trustee, custodian or similar agent appointed by order of any court of competent jurisdiction to take charge of or sell any material portion of its property or business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.3&nbsp;&nbsp;&nbsp;&nbsp;Effect of Termination.** Within [\*\*\*] ([\*\*\*]) [\*\*\*] after termination of this Agreement, Licensee shall: (a) submit a Payment Statement to Licensor; and (b) immediately cease all activities concerning, including all practice and use of, the Licensed Materials and Licensed Know-how. At no time after termination of this Agreement shall Licensee (i) expect or demand services of any sort (development, bug fixes, warranty-related work, or otherwise) from Licensor, except according to <u>Section 12.5</u>, (ii) state, suggest, agree, or indicate that Licensor is affiliated with or responsible in any way for Licensees products or services, or (iii) use, refer to, or rely in any way on government approvals (including without limitation any 510(k) clearance from the FDA)

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given, issued, or registered to Licensor. For clarity, after termination, Licensee shall be the manufacturer of record with the FDA for all Licensed Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.4&nbsp;&nbsp;&nbsp;&nbsp;Survival.** The rights and obligations of the Parties set forth in this <u>Section 12.4</u>, <u>Section 1</u> (Definitions), <u>Section 4</u> (Data Rights), <u>Section 5</u> (Royalties), <u>Section 6</u> (Records and Audits), <u>Section 7</u> (Intellectual Property Rights), <u>Section 8</u> (Confidentiality), <u>Section 9</u> (Representations and Warranties), <u>Section 10</u> (Limitations of Liability), <u>Section 10.3</u> (Indemnification), <u>Section 12.3</u> (Effect of Termination), <u>Section 12.5</u> (Wind Down), and <u>Section 13</u> (Miscellaneous), as well as the BAA and any right, obligation or required performance of the Parties in this Agreement which, by its express terms or nature and context is intended to survive termination or expiration of this Agreement, shall survive any such termination or expiration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.5&nbsp;&nbsp;&nbsp;&nbsp;Wind Down**. In the event this Agreement terminates:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Licensee may elect to extend the term of the licenses granted hereunder, pursuant to the terms and conditions of this Agreement, for a period of [\*\*\*] ([\*\*\*]) [\*\*\*] following the effective date of such termination. During any such extension period elected by Licensee, the Parties shall comply with all other terms and conditions of this Agreement. Any such election must be delivered in writing no later than [\*\*\*] ([\*\*\*]) [\*\*\*] after either Party provides notice that it intends to terminate this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Licensee shall continue to pay Licensor the Services Fees for Support Services and Medical Image Services for an additional [\*\*\*] ([\*\*\*]) [\*\*\*] after the effective date of such termination. Both the provision of these Support Services and Medical Image Services and the amount and frequency of such payments shall be on the same terms as just before the termination, except that all minimum payments shall be made in advance even if such minimum payments had been made in arrears during the Term.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.1&nbsp;&nbsp;&nbsp;&nbsp;Force Majeure.** Neither Party shall be in default hereunder by reason of any failure or delay in the performance of its obligations hereunder, except for Licensee's payment obligations, where such failure or delay (i) is due to any unforeseeable cause beyond its reasonable control, including strikes, labor disputes, civil disturbances, riot, rebellion, invasion, pandemic resulting in government-mandated travel restrictions, hostilities, war, terrorist attack, embargo, natural disaster, acts of God, flood, fire, sabotage, or any other circumstances or causes beyond such Party's reasonable control, and (ii) could not have been prevented by reasonable precautions or cannot be reasonably circumvented by the non-performing Party through the use of alternate sources, work-around plans or other means.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.2&nbsp;&nbsp;&nbsp;&nbsp;No Exports**. Licensee shall not, directly or indirectly, export (including any "deemed export"), nor re-export (including any "deemed re-export") the Licensed Products (including any associated products, items, articles, computer software, media, services, technical data, and other information) in violation of any applicable U.S.

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Laws. Licensee shall include a provision identical in substance to this <u>Section 13.2</u> in its agreements with its third-party wholesalers, distributors, customers and end-users requiring that these parties comply with all applicable U.S. Laws, including all applicable U.S. export Laws. For the purposes of this <u>Section 13.2.2</u>, the terms "deemed export" and "deemed re-export" have the meanings set forth in Section 734.13(a) and Section 734.14(b), respectively, of the Export Administration Regulations (EAR).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.3&nbsp;&nbsp;&nbsp;&nbsp;Further Assurances.** Each Party shall, and shall cause their respective Affiliates to, upon the reasonable request, and at the sole cost and expense of the other Party, promptly execute such documents and take such further actions as may be necessary to give full effect to the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.4&nbsp;&nbsp;&nbsp;&nbsp;Independent Contractors.** The relationship between the Parties is that of independent contractors. Nothing contained in this Agreement shall be construed as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between the Parties, and neither Party shall have authority to contract for or bind the other Party in any manner whatsoever.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.5&nbsp;&nbsp;&nbsp;&nbsp;Notices.** All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given in accordance with this <u>Section 13.5</u>:

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| | |
|:---|:---|
| If to Licensor: | Genesis Software Innovations, LLC<br>2851 Charlevoix Dr SE, Suite 327<br>Grand Rapids, MI 49546<br>Attn: CEO |
| If to Licensee: | Shoulder Innovations, Inc.<br>1535 Steele Ave SW, Suite B<br>Grand Rapids, MI 49507<br>Attn: CEO |

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Notices sent in accordance with this <u>Section 13.5</u> shall be deemed effectively given: (a) when received, if delivered by hand (with written confirmation of receipt); or (b) when received, if sent by a nationally recognized overnight courier (receipt requested).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.6&nbsp;&nbsp;&nbsp;&nbsp;Headings and Interpretation.** The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. As used in this Agreement, the term "or" shall be interpreted to mean "and/or" unless the context of the use plainly means otherwise. As used in this Agreement, the terms "includes" or "including" shall be interpreted to mean "includes without limitation" or

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"including without limitation," as applicable, and shall not be interpreted to limit the scope of the provisions directly preceding such terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.7&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement.** This Agreement is entered into by the Parties, together with <u>Exhibits A–D</u>, constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.8&nbsp;&nbsp;&nbsp;&nbsp;Assignment.** Neither Party may assign this Agreement without the prior written consent of the other Party; *provided*, however, either Party may assign this Agreement, or any of its rights hereunder or delegate any obligations hereunder, in whole or in part, without the other Party's consent to an Affiliate or a surviving entity in the case of a merger, acquisition, divestiture, consolidation or corporate reorganization (whether or not the contracting Party is the surviving entity). No delegation or other transfer will relieve Licensee or Licensor of any of its obligations or performance under this Agreement. Any purported assignment, delegation or transfer in violation of this <u>Section 13.8</u> is void. This Agreement is binding upon and inures to the benefit of the Parties and their respective permitted successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.9&nbsp;&nbsp;&nbsp;&nbsp;No Third-Party Beneficiaries.** This Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other third party any legal or equitable right, benefit or remedy of any nature whatsoever, under or by reason of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.10&nbsp;&nbsp;&nbsp;&nbsp;Amendment; Modification; Waiver.** This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the waiving Party. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising, any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.11&nbsp;&nbsp;&nbsp;&nbsp;Severability.** If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon a determination that any term or other provision is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.12&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Consent to Jurisdiction, Waiver of Jury Trial.** This Agreement shall be governed by and construed in accordance with the internal laws of the State of Delaware, without regard to its principles of conflicts of laws. Each of the Parties irrevocably submits to the exclusive jurisdiction of the state and federal courts located in the State of Delaware for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each Party anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. EACH OF THE PARTIES WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. In the event of any dispute, claim, question, or disagreement arising from or relating to this Agreement, or the breach thereof, the Parties shall use their best efforts to settle the dispute, claim, question, or disagreement. If the Parties do not reach such solution within a period of sixty (60) days, then, upon notice by either Party to the other Party, all disputes, claims, questions, or differences shall be finally settled by arbitration administered by the American Arbitration in accordance with the provisions of its Commercial Arbitration Rules. Any dispute or controversy shall be submitted to a single arbitrator with experience in commercial and intellectual property matters. The arbitrator will be chosen by mutual agreement of the Parties within five (5) days after the request for arbitration is received pursuant to above. If the Parties, within such time, cannot agree on an arbitrator, the arbitrator shall be chosen pursuant to the American Arbitration Association procedures from its panel of arbitrators with high technology commercial experience. Notwithstanding the process for choosing the arbitrator, an arbitrator shall be chosen by one method or another no later than ten (10) days after the date of the request for arbitration is received. The arbitration hearing shall be held in or near Delaware or Grand Rapids, Michigan or at such other place that the Parties and the arbitrator mutually agree upon. The place of the arbitration hearing will be established no later than thirty (30) days from the request/demand for arbitration. The arbitration shall commence not later than twenty (20) days from the date the place of arbitration hearing is established, and the arbitration shall be concluded in not more than three (3) days unless otherwise ordered by the arbitrator. The Parties shall exchange all documents they intend to submit to the arbitrator for consideration and shall be entitled to conduct a reasonable number of witness depositions in advance of the final arbitration hearing. The award on the hearing shall be made within fourteen (14) days after the close of the submission of evidence. An award rendered by the arbitrator shall be final and binding on all of the Parties to such proceeding and judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof. Either Party may apply to the arbitrator seeking injunctive relief until the arbitration award is rendered or the controversy is otherwise resolved. Either Party also may, without waiving any remedy under this Agreement, seek from any court having jurisdiction any interim or provisional relief that is necessary to protect the rights or property of that Party, pending the establishment of the arbitral tribunal (or pending the arbitral tribunal's determination of the merits of the controversy).

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.13&nbsp;&nbsp;&nbsp;&nbsp;Equitable Relief.** Each Party acknowledges that a breach by the other Party of this Agreement may cause the non-breaching Party irreparable harm, for which an award of damages would not be adequate compensation and, in the event of such a breach or threatened breach, the non-breaching Party shall be entitled to seek equitable relief, including in the form of a restraining order, orders for preliminary or permanent injunction, specific performance and any other relief that may be available from any court, and the Parties hereby waive any requirement for the securing or posting of any bond or the showing of actual monetary damages in connection with such relief. These remedies shall not be deemed to be exclusive but shall be in addition to all other remedies available under this Agreement at law or in equity, subject to any express exclusions or limitations in this Agreement to the contrary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.14&nbsp;&nbsp;&nbsp;&nbsp;Rights in Bankruptcy.** All licenses and rights to licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for purposes of Section 365(n) of the United States Bankruptcy Code (the ***"Code"***), licenses of rights to "intellectual property" as defined under Section 101(35A) of the Code, as each may be amended or modified from time to time. Each Party, as a recipient of such rights under this Agreement, shall retain and may fully exercise all of its rights and elections under the Code. Upon commencement of a bankruptcy proceeding by or against the other Party under the Code, such Party shall be entitled to a complete duplicate of, or complete access to (as such Party deems appropriate), any such intellectual property and all embodiments of such intellectual property. Such intellectual property and all embodiments thereof shall be promptly delivered to such Party (a) upon any such commencement of a bankruptcy proceeding upon written request therefor by such Party, unless Licensor elects to continue to perform all of its obligations under this Agreement or (b) if not delivered under (a) above, upon the rejection of this Agreement by or on behalf of the other Party upon written request therefor by such Party. The foregoing provisions are without prejudice to any rights such Party may have arising under the Code or other applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.15&nbsp;&nbsp;&nbsp;&nbsp;Attorneys' Fees.** In the event that any action, suit or other legal or administrative proceeding is instituted or commenced by either Party against the other Party arising out of or related to this Agreement, the prevailing Party shall be entitled to recover its actual attorneys' fees and court costs from the non-prevailing Party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.16&nbsp;&nbsp;&nbsp;&nbsp;Counterparts.** This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission (to which a PDF copy is attached) shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[Signatures on the following page]

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**IN WITNESS WHEREOF**, Licensor and Licensee have made this Agreement effective as of the Effective Date.

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| | | | |
|:---|:---|:---|:---|
| **LICENSOR:**<br>**GENESIS SOFTWARE INNOVATIONS, LLC** | **LICENSOR:**<br>**GENESIS SOFTWARE INNOVATIONS, LLC** | **LICENSEE:**<br>**SHOULDER INNOVATIONS, INC.** | **LICENSEE:**<br>**SHOULDER INNOVATIONS, INC.** |
| By: | /s/ Nathan Estruth | By: | /s/ Jeffrey Points |
| Name: | Nathan Estruth | Name: | Jeffrey Points |
| Title: | Bread Casting LLC | Title: | CFO |

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SIGNATURE PAGE TO SECOND RESTATED AND AMENDED LICENSE AGREEMENT

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**EXHIBIT A**

**Services Fees**

For the 2025 calendar year, the Services Fees for **Support Services** shall be **$1,700,000 annually, billed monthly**. The Support Services shall include, as to the Licensed Materials known as "ProVoyance Shoulder" or "ProVoyance Planning Software":

&nbsp;&nbsp;&nbsp;&nbsp;maintaining the QMS system software, performing required audits, and maintaining regulatory compliance requirements;

&nbsp;&nbsp;&nbsp;&nbsp;periodic third-party penetration testing;

&nbsp;&nbsp;&nbsp;&nbsp;CVE monitoring of software components and mitigating and correcting exposures;

&nbsp;&nbsp;&nbsp;&nbsp;backing up posted production systems;

&nbsp;&nbsp;&nbsp;&nbsp;all provided data storage, including pipeline maintenance, vendor management, backups, and backup testing;

&nbsp;&nbsp;&nbsp;&nbsp;software updates, base software transitions, AI-based shoulder segmentation model updates, regular and adaptive maintenance, and agreed customer-requested fixes, changes, and enhancements;

&nbsp;&nbsp;&nbsp;&nbsp;case support, second-tier ticket resolution, and customer service feedback collection for Licensee's client satisfaction.

These Support Services shall support up to [\*\*\*]% growth in Licensee's usage of the Licensed Materials over Licensee's 2024 usage. More than [\*\*\*]% growth in 2025 may require a proportional increase in fees. Support Services Fees for subsequent years can be agreed with an update of this Exhibit A or in a separate annual agreement addendum.

The Services Fees for **Medical Image Services** will be charged hourly and billed at the rate of $[\*\*\*]/hour, such rate to be adjusted at the beginning of each calendar year as agreed by the Parties, or in the absence of such agreement by a proportion equal to the greater of [\*\*\*]% or the increase over the preceding year in the Consumer Price Index – All Urban Consumers (Current Series) published by the U.S. Bureau of Labor Statistics. For reference, Licensee currently performs [\*\*\*]% of medical image services in-house. At such time that Licensor launches its medical image processing product, integrated with the ProVoyance Planning Software, Licensor shall propose, and Licensee may agree to, a flat monthly medical image processing fee for the Medical Image Services, to be invoiced monthly. Such medical image processing fee shall accommodate monthly volume up to [\*\*\*]% greater than Licensee's 2024 average monthly image processing volume.

Licensor shall invoice the Service Fees for additional development work by Licensor under an "**innovation budget**" to support Licensor's further development of Licensed Materials as requested, scoped, and agreed by Licensee (as of the Amendment Effective Date, this is expected

EXHIBIT A - 1

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to include work on software known as the Glenoid Guide, Robotics Integration, and Cloud Registry Database) as described in Exhibit D.

EXHIBIT A - 2

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**EXHIBIT B**

**Hosted Services Terms**

EXHIBIT B - 1

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**EXHIBIT C**

**Business Associate Agreement**

EXHIBIT C - 1

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**Exhibit D**

**Innovation Budget Terms**

For each Innovation Budget initiative, a Statement of Work will be developed and signed by both Parties outlining at least the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i.&nbsp;&nbsp;&nbsp;&nbsp;Description of the Services (including scope, timing, and change control process)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ii.&nbsp;&nbsp;&nbsp;&nbsp;Project compensation terms, including a flat rate project cost

All Innovation Budget initiatives and respective Statements of Work shall be listed in Exhibit E, which the Parties may amend from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;**Changes**

If any of Licensee's goals change during the term of a Statement of Work, Licensee agrees to provide such changes in a written notice to Licensor according to <u>Section 13.5</u> of the Agreement. Licensor shall identify any perceived impacts on the dedicated staffing level required to achieve the change of scope and inform Licensee. The Parties shall evaluate and, if agreed in writing, implement all such changes.

EXHIBIT D - 1

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**Exhibit E**

**Innovation Budget Statements of Work**

Statements of Work agreed upon by both Parties for each Innovation Budget initiative are listed in this Exhibit E, which shall be updated from time to time as new Statements of Work are developed under this Agreement.

---

| | | | |
|:---|:---|:---|:---|
| **Innovation Budget Item Description** | **Signed Statement of Work Reference** | **Effective Date** | **Flat-Fee Compensation Terms** |
| *Example*<br>*New Amazing Feature* | *Example SI_1234_5678* | *Example*<br>*03/14/2025* | *Example*<br>*$[\*\*\*] due 03/14/2025*<br>*$[\*\*\*] due [\*\*\*] after delivery* |

---

EXHIBIT E - 1

## Exhibit 10.5

**Exhibit 10.5**

**LOAN AND SECURITY AGREEMENT**

**DATED AS OF**

**August 7, 2023**

**between**

**SHOULDER INNOVATIONS, INC.,**

as Borrower,

**THE LENDERS FROM TIME TO TIME PARTY HERETO,**

as Lenders, and

**TRINITY CAPITAL INC.**

as Administrative Agent and Collateral Agent

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**LOAN AND SECURITY AGREEMENT**

THIS LOAN AND SECURITY AGREEMENT is made as of August 7, 2023 (the "<u>Closing Date</u>"), by and among SHOULDER INNOVATIONS, INC., a Delaware corporation ("<u>Borrower</u>"), the lenders from time to time party hereto (each, a "<u>Lender</u>" and collectively, the "<u>Lenders</u>") and TRINITY CAPITAL INC., a Maryland corporation, as administrative agent and collateral agent for the Lenders ("<u>Administrative</u> <u>Agent"</u>).

**<u>RECITALS</u>**

**WHEREAS**, Borrower may, from time to time, desire to borrow from Lenders, and Lenders, may, from time to time, make available to Borrower, term loans (each a "<u>Loan</u>" and collectively the "<u>Loans</u>"); and

**WHEREAS**, Borrower and Lenders desire that this Agreement shall serve as a master agreement which sets forth the terms and conditions governing any Loan by Lenders to Borrower.

**NOW, THEREFORE**, in consideration of the agreements and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

**ARTICLE 1**

**<u>DEFINITIONS</u>**

As used herein, all capitalized terms shall have the meanings set forth below. All other capitalized terms used but not defined herein shall have the meaning given to such terms in the UCC. Any accounting term used but not defined herein shall be construed in accordance with GAAP and all calculations shall be made in accordance with GAAP. The term "financial statements" shall include the accompanying notes and schedules.

"<u>Account Control Agreement</u>" means any deposit account control agreement or securities account control agreement in a form acceptable to Administrative Agent required to perfect Administrative Agent's security interest in all Deposit Accounts and Securities Accounts of Borrower and each of its Subsidiaries.

"<u>Administrative Agent</u>" means Trinity Capital Inc., in its capacity as administrative agent and collateral agent under the Loan Documents, or any successor administrative agent and collateral agent appointed in accordance with Article 5.

"<u>Administrative Agent's Account</u>" means an account at a bank designated by the Administrative Agent from time to time in a written notice to Borrower as the account into which the Borrower shall make all payments to the Administrative Agent for the benefit of the Administrative Agent and the Lenders under this Agreement and the other Loan Documents.

"<u>Administrative Agent's Expenses</u>" means all reasonable and documented costs or expenses (including reasonable and documented attorneys' fees and expenses) incurred by Administrative Agent in connection with the preparation, negotiation, documentation, drafting, amendment, modification, administration, perfection and funding of the Loan Documents; and all of Administrative Agent's attorneys' documented fees, costs and expenses incurred in enforcing or defending the Loan Documents (including documented fees and expenses of appeal or review) and the rights of Administrative Agent in and to the Loans and the Collateral or otherwise hereunder, including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including all fees and costs incurred by Administrative Agent in connection with its enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower, any Subsidiary or their respective Property.

"<u>Advance</u>" means any Loan funds advanced under this Agreement.

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"<u>Affiliate</u>" means, with respect to any Person, any other Person that owns or controls directly or indirectly ten percent (10%) or more of the stock of another entity of such Person, any other Person that controls or is controlled by or is under common control with such Person and each of such Person's senior executive officers, directors, managers, joint venturers or partners. For purposes of this definition, the term "control" of a Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting Equity Securities, by contract or otherwise and the terms "controlled by" and "under common control with" shall have correlative meanings.

"<u>Agreement</u>" means this Loan and Security Agreement and all Schedules and Exhibits annexed hereto and made a part hereof, as the same may be amended, supplemented and or modified from time to time by the parties hereto.

"<u>Amortization Date</u>" has the meaning provided in <u>Section 2.1(a)</u>.

"<u>Amortization Schedule</u>" has the meaning provided in <u>Section 2.1(a)</u>.

"<u>Annualized Revenue</u>" means Borrower's revenue measured in accordance with GAAP for the trailing six (6) month period ending as of the date of determination multiplied by two (2).

"<u>Anti-Terrorism Laws</u>" means any laws relating to terrorism or money laundering, including Executive Order No. 13224 (effective September 24, 2001), the USA PATRIOT Act, the laws comprising or implementing the Bank Secrecy Act, and the laws administered by OFAC.

"<u>Applicable Rate</u>" means a variable annual interest rate equal to the greater of (i) the Prime Rate plus three and one-half of one percent (3.50%) and (ii) eleven and one-half of one percent (11.50%).

"<u>Assignment and Acceptance</u>" means an assignment and acceptance entered into by an assigning Lender and an eligible assignee and, to the extent required, consented to by the Administrative Agent and Borrower in accordance with Section 5.4 hereof and substantially in form reasonably acceptable to the Administrative Agent and Borrower.

"<u>Blocked Person</u>" means any Person: (a) listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (b) owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224, (c) with which any Lender is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law, (d) that commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order No. 13224, or (e) that is named a "specially designated national" or "blocked person" on the most current list published by OFAC or other similar list.

"<u>Business Day</u>" means a day when the banks in Phoenix, Arizona are open for business.

"<u>Cash Flow Milestone</u>" means the receipt by Administrative Agent of evidence satisfactory to Administrative Agent in its sole discretion, confirming that Borrower has achieved positive cash flow, calculated on a trailing twelve (12) months basis ending December 31, 2026, of an amount greater than Five Million Dollars ($5,000,000) (which, for the avoidance of doubt, shall not include any amounts received by Borrower under or in connection with this Agreement or any other debt financing or equity financing).

"<u>Change of Control</u>" means the closing of any transaction or series of transactions by which Borrower shall merge with (whether or not Borrower is the surviving entity) or consolidate into any other Person or lease or sell substantially all of its and its subsidiaries' assets substantially as an entirety to any other Person or by which any Person, entity or group (within the meaning of Rule 13d-5 under the Securities Exchange Act of 1934) acquires, directly or indirectly, forty percent (40%) or more of Borrower's outstanding capital stock.

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"<u>Closing Date</u>" has the meaning set forth in the preamble hereto.

"<u>Code</u>" means the Internal Revenue Code of 1986, as amended.

"<u>Collateral</u>" has the meaning provided in <u>Article 3</u>.

"<u>Commitments</u>" means, with respect to each Lender, such Lender's obligation to make Loans to the Borrower hereunder in a principal amount equal to the amount set forth under the heading "Commitment" opposite such Lender's name on <u>Schedule 1</u>.

"<u>Commitment Fee</u>" is for each Advance the fully earned and non-refundable commitment fee equal to one percent (1.0%) of the aggregate principal amount of such Advance.

"<u>Compliance Certificate</u>" is that certain certificate in substantially the form attached hereto as Exhibit D.

"<u>Debt</u>" means (a) all indebtedness for borrowed money; (b) all indebtedness for the deferred purchase price of property or services (other than (i) trade payables and accrued expenses incurred in the Ordinary Course of Business, (ii) any earn-out, purchase price adjustment or similar obligation until such obligation appears in the liabilities section of the balance sheet and (iii) any amounts being disputed in good faith by Borrower where such dispute would not cause, or be reasonably expected to cause, a Material Adverse Change); (c) all obligations evidenced by notes, bonds, debentures or other similar instruments; (d) all indebtedness created or arising under any conditional sale or other title retention agreement with respect to property acquired (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (e) equity securities subject to repurchase or redemption, (f) all obligations, contingent or otherwise, as an account party or applicant under acceptance, letter of credit or similar facilities in respect of obligations of the kind referred to in subsections (a) through (e) of this definition; and (g) all obligations of the kind referred to in subsections (a) through (f) above secured by (or which the holder of such obligation has an existing right, contingent or otherwise, to be secured by) any Lien on property (including accounts and contract rights).

"<u>Default Rate</u>" has the meaning set forth in <u>Section 2.2(c)</u>.

"<u>Defaulting Lender</u>" means any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent and the Borrower in writing that such failure is the result of such Lender's determination that one or more conditions precedent to funding (each of which conditions precedent, together with any applicable default, shall be specifically identified in such writing) has not been satisfied, or (ii) pay to the Administrative Agent or any other Lender any other amount required to be paid by it hereunder within two Business Days of the date when due, (b) has notified the Borrower, or the Administrative Agent in writing that it does not intend to comply with its funding obligations hereunder, or has made a public statement to that effect (unless such writing or public statement relates to such Lender's obligation to fund a Loan hereunder and states that such position is based on such Lender's determination that a condition precedent to funding (which condition precedent, together with any applicable default, shall be specifically identified in such writing or public statement) cannot be satisfied), (c) has failed, within three Business Days after written request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative Agent and the Borrower that it will comply with its prospective funding obligations hereunder (<u>provided</u> that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or has a direct or indirect parent company that has, (i) become the subject of a proceeding under any debtor relief law, (ii) had appointed for it a receiver, custodian, conservator, trustee, administrator, assignee for the benefit of creditors or similar Person charged with reorganization or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any other state or federal regulatory authority acting in such a capacity or (iii) become the subject of a bail-in action. Notwithstanding anything to the contrary herein, a Lender shall not be a Defaulting Lender solely by virtue of the ownership or acquisition of any Equity Security in that Lender or any direct or indirect parent company thereof by a Governmental Authority so

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long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permits such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender. Any determination by the Administrative Agent that a Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding absent manifest error, and such Lender shall be deemed to be a Defaulting Lender upon delivery of written notice of such determination to the Borrower and each Lender.

"<u>Deposit Account</u>" means any "deposit account" as defined in the UCC with such additions to the term as may hereafter be made, and includes any checking account, savings account, or certificate of deposit.

"<u>Documentation and Funding Expenses</u>" has the meaning set forth in <u>Section 2.1(c)</u>.

"<u>End of Term Payment</u>" has the meaning set forth in <u>Section 2.10</u>.

"<u>Equity Securities</u>" of any Person means (a) all common stock, preferred stock, participations, shares, partnership interests, membership interests or other equity interests in and of such Person (regardless of how designated and whether or not voting or non-voting) and (b) all warrants, options and other rights to acquire any of the foregoing.

"<u>Event of Default</u>" means any of the following events and conditions at any time, unless waived in writing by Administrative Agent, and shall constitute an Event of Default:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;failure on the part of Borrower to remit to Administrative Agent any (i) payment of principal or interest on any Loan when due, or (ii) other Obligations within three (3) Business Days after such Obligations are due and payable and required to be remitted under this Agreement or any Loan Documents (which three (3) Business Day grace period shall not apply to amounts due on the Maturity Date);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;failure on the part of Borrower: (A) to perform any obligation arising under <u>Section 4.2</u> (other than <u>Sections</u> <u>4.2(k)</u>, <u>(l)</u>, <u>(m)</u>, <u>(p)</u>, <u>(q), (r)(i)</u>, <u>(r)(iii)</u>, <u>(s)</u> and <u>(u)(ii)</u>) or to comply with any covenants of <u>Section 4.3</u> or (B) duly to observe or perform in any other of its respective covenants or agreements in this Agreement or any other Loan Document, which failure continues for a period of ten (10) Business Days after the occurrence of such breach; provided, however, that if any foregoing default cannot by its nature be cured within the ten (10) Business Day period or cannot after diligent efforts by Borrower be cured within such period, then Borrower shall have an additional period (which shall not in any case exceed ten (10) Business Days) to cure such default as determined in Administrative Agent's sole discretion to cure such default and within such additional time period, the failure to cure such default shall not be deemed an Event of Default (but no Advances will be made during such cure period), provided, further, that, the additional cure period provided under this clause (b) shall not apply, among other things, to financial covenants or any other covenants that are required to be satisfied, completed or tested by a certain date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;there is (a) a default in any agreement to which Borrower or any of its Subsidiaries is a party with a third party or parties resulting in a right by such third party or parties, whether or not exercised, to accelerate the maturity of any Debt in an amount in excess of Five Hundred Thousand Dollars ($500,000) or that could reasonably be expected to have a Material Adverse Change; (b) any default under a Material Agreement that permits the counterparty thereto to accelerate the payments owed thereunder or (c) a revocation or termination of a Material Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;if any representation or warranty of Borrower made in this Agreement or in any certificate or other writing delivered pursuant hereto or any other related document is materially incorrect or misleading as of the time when the same shall have been made;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;any provision of this Agreement or any Lien or security interest of Administrative Agent in the Collateral ceases for any reason to be valid, binding and in full force and effect other than as expressly permitted hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;any bankruptcy, insolvency or other similar proceeding is filed by Borrower or any of its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;any involuntary bankruptcy, insolvency or other similar proceeding is filed against Borrower or any of its Subsidiaries and such proceeding or petition shall not be dismissed within forty-five (45) days after filing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;any assignment is made by Borrower or any attempt by Borrower to assign any of its duties or rights hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;[Reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;(a) If any material portion of Borrower's or any of its Subsidiaries' assets (i) is attached, seized, subjected to a writ or distress warrant, or is levied upon or (ii) comes into the possession of any trustee, receiver or person acting in a similar capacity and such attachment, seizure, writ or distress warrant or levy has not been removed, discharged or rescinded within ten (10) days, (b) if Borrower or any of its Subsidiaries is enjoined, restrained or in way prevented by court order from continuing to conduct all or any material part of its business affairs, (c) if a judgment or other claim becomes a Lien or encumbrance upon any material portion of Borrower's or any of its Subsidiaries' assets or (d) if a notice of Lien, levy or assessment if filed of record with respect to any of Borrower's or any of its Subsidiaries' assets by the United States Government, or any department agency or instrumentality thereof, or by any state, county municipal, or governmental agency, and the same is not paid within ten (10) days after Borrower or any Subsidiary receives notice thereof; *provided* that none of the foregoing shall constitute an Event of Default where such action or event is stayed or an adequate bond has been posted pending a good faith contest by Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;if Borrower is not Solvent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;[Reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;If any of the Loan Documents shall cease to be, or Borrower shall assert that any of the Loan Documents is not, a legal, valid and binding obligation of Borrower enforceable in accordance with its terms;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;if there occurs a Material Adverse Change to Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;there is (i) a Change of Control, unless, as a condition to the closing of such change of control the Obligations will be paid in full, (ii) there is a resignation of one or more directors from Borrower's board of directors in anticipation of the Borrower's or any of its Subsidiary's insolvency, or (iii) a change on Borrower's board of directors which results in the failure of at least one partner of each of Coöperatieve Gilde Healthcare V U.A, U.S. Venture Partners, and Lightstone Ventures or their respective Affiliates to serve as a voting member of Borrower's board of directors (unless such change occurs in connection with (x) an initial public offering or (y) a bona fide venture equity financing transaction not otherwise prohibited by this Agreement with gross cash proceeds of more than $20,000,000), in each case without the prior written consent of Administrative Agent which may be withheld in Administrative Agent's sole discretion;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;the imposition on Borrower of any corrective action plan, resolution agreement, corporate integrity agreement, deferred prosecution agreement or settlement agreement that is: (A) material, and (B) involves any ongoing oversight or monitoring by any Governmental Authority; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;a final, non-appealable judgment against Borrower or any Subsidiary for an amount in excess of Five Hundred Thousand Dollars ($500,000) (not covered by insurance by a solvent independent third party insurance carrier that has confirmed coverage in writing) which is not paid or bonded within ten (10) days of entry.

"<u>Excluded Taxes</u>" means any of the following Taxes imposed on or with respect to a Lender or Administrative Agent or required to be withheld or deducted from a payment to a Lender or Administrative Agent: (a) Taxes imposed on or measured by net income (however denominated), franchise Taxes and branch profits Taxes, in each case, (i) imposed as a result of such Lender or Administrative Agent being organized under the laws of, or having its principal office or, in the case of any Lender, its applicable lending office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (ii) that are Other Connection Taxes, (b) in the case of a Lender, any U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which such Lender acquires the applicable interest in such Loan or Commitment or changes its lending office, except in each case to the extent that, pursuant to <u>Section 2.12</u>, additional amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changes its lending office, (c) Taxes attributable to such Lender's or Administrative Agent's failure to comply with Section 2.12(g), and (d) any Taxes imposed under FATCA.

"<u>Existing Debt</u>" means the Debt disclosed in the Perfection Certificate dated as of the Closing Date owing to Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)) in the amount of $3,876,321.38 as of the Closing Date.

"<u>FATCA</u>" means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version to the extent such version is substantively comparable and not materially more onerous to comply with), any current or future Treasury Regulations or official administrative interpretations thereof, any agreements entered into pursuant to current Section 1471(b)(1) of the Code (or any amended or successor version described above), any intergovernmental agreement, treaty or convention among Governmental Authorities (and any related fiscal or regulatory legislation, rules or official practices) implementing the foregoing.

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"<u>GAAP</u>" means generally accepted accounting principles, consistently applied, as in effect from time to time in the United States.

"<u>Good Faith Deposit</u>" is the fully earned and non-refundable deposit in the amount of One Hundred Thousand Dollars ($100,000) paid to Administrative Agent prior to the Closing Date, which will be applied toward Administrative Agent's Expenses on the Closing Date.

"<u>Governmental Approval</u>" is any consent, authorization, approval, order, license, franchise, permit, certificate, accreditation, registration, filing or notice, of, issued by, from or to, or other act by or in respect of, any Governmental Authority.

"<u>Governmental Authority</u>" is any nation or government, any state or other political subdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any securities exchange and any self-regulatory organization.

"<u>Health Care Laws</u>" means (a) any applicable federal, state, local or foreign Law, statute, standard, ordinance, code, rule, regulation or any governmental Order, or any license, registration, permit or similar right granted under any of the foregoing, or any similar provision having the force or effect of law, relating in each of the foregoing cases to health care and other third party payor rules and policies, and in each case applicable to Borrower including: Title XVIII of the Social Security Act, 42 U.S.C. §§ 1395-1395lll (the Medicare statute); Title XIX of the Social Security Act, 42 U.S.C. §§ 1396-1396w-5 (the Medicaid statute); TRICARE, 10 U.S.C. § 1071; Veterans Health Administration programs (including, without limitation, 38 U.S.C. Chapter 17); the Federal Health Anti-Kickback Statute; the civil False Claims Act, 31 U.S.C. §§ 3729-3733; the criminal False Claims Acts (18 U.S.C. §§ 286, 287 and 1001); the False Statements Relating to Health Care Matters Law (18 U.S.C. § 1035); the Civil Monetary Penalties Law, 42 U.S.C. §§ 1320a-7a and 1320a-7b; the Exclusion Laws, 42 U.S.C. § 1320a 7; HIPAA and Other Privacy Law; the Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h); the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010; the Federal Health Care Fraud Law, 18 U.S.C. § 1347; the Federal Program Fraud Civil Remedies Act (31 U.S.C. § 3801 *et seq*.)the Federal Food, Drug, and Cosmetic Act (21 U.S.C. § 301 et seq.); the 21st Century Cures Act and the Interoperability and Patient Access Final Rule; the Public Health Service Act, (42 U.S.C. § 201 et seq.); any and all amendments thereto; and any similar state and local Laws that are applicable to Borrower and address the subject matter of any of the foregoing including but not limited to Laws governing the privacy, confidentiality, security or integrity of Personal Information and any state or local Laws regulating interactions with health care professionals and reporting thereof.

"<u>HIPAA and Other Privacy Laws</u>" means, collectively, the Health Insurance Portability and Accountability Act of 1996, as amended, and the Health Information Technology for Economic and Clinical Health Act, all rules and regulations promulgated under such acts, and other laws applicable to Borrower regulating, governing or relating to the privacy and/or security of patient, protected health or personally identifiable information.

"<u>Indemnified Taxes</u>" means (a) all Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Borrower under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

"<u>Intellectual Property</u>" means any and all intellectual property, including copyrights, copyright licenses, patents, patent licenses, trademarks, trademark licenses, technology, know-how and processes, all rights therein, and all rights to sue at law or in equity for any past present or future infringement, violation, misuse, misappropriation or other impairment thereof, whether arising under United States, multinational or foreign laws or otherwise, including the right to receive injunctive relief and all proceeds and damages therefrom.

"<u>Interest Only Period</u>" means, the period from and including the Closing Date and through but excluding the forty-ninth (49<sup>th</sup>) Payment Date following the Closing Date; <u>provided</u> that if Borrower achieves

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the Cash Flow Milestone with no further action required by the parties hereto, the Interest Only Period shall be the period beginning on the Closing Date and through but excluding the sixty-first (61<sup>st</sup>) Payment Date following the Closing Date.

"<u>Investment</u>" means the purchase or acquisition of any capital stock, equity interest, or any obligations or other securities of, or any interest in, any Person, or the extension of any advance, loan, extension of credit or capital contribution to, or any other investment in, or deposit with, any Person.

"<u>IP Security Agreement</u>" means the Intellectual Property Security Agreement, dated as of the date hereof, by and among Lender and each grantor party thereto (as amended, amended and restated, supplemented or otherwise modified from time to time).

"<u>Key Person</u>" is each of Borrower's (i) Chief Executive Officer, who is Robert Ball as of the Closing Date, (ii) Chief Operating Officer, who is Matt Ahearn as of the Closing Date, and (iii) David Blue, who is Chief Commercial Officer as of the Closing Date.

"<u>Knowledge" or "Knowledge of Borrower</u>" means the actual knowledge of the chief executive officer, chief operating officer or chief financial officer of Borrower and such knowledge that would be obtained upon due inquiry and reasonable investigation by such Persons.

"<u>Lender's Expenses</u>" means all reasonable and documented costs or expenses (including reasonable and documented attorneys' fees and expenses) incurred in connection with the preparation, negotiation, documentation, drafting, amendment, modification, administration, perfection and funding of the Loan Documents; and all of Lenders' attorneys' documented fees, costs and expenses incurred in enforcing or defending the Loan Documents (including fees and expenses of appeal or review) and the rights of a Lender in and to the Loans and the Collateral or otherwise hereunder, including the exercise of any rights or remedies afforded hereunder or under applicable law, whether or not suit is brought, whether before or after bankruptcy or insolvency, including all fees and costs incurred by a Lender in connection with a Lender's enforcement of its rights in a bankruptcy or insolvency proceeding filed by or against Borrower, any Subsidiary or their respective Property.

"<u>Lender Shares</u>" shall mean the shares or preferred shares of the stock or other securities of Borrower that a Lender has the right to purchase and may purchase under the terms of the Warrant.

"<u>Lien</u>" means a claim, mortgage, deed of trust, levy, charge, pledge, security interest or other encumbrance of any kind, whether voluntarily incurred or arising by operation of law or otherwise against any property.

<u>"Loan Advance Request Form</u>" is that certain form attached hereto as <u>Exhibit E</u>.

"<u>Loan Documents</u>" means this Agreement and any schedules, exhibits, certificates, notices, and any other documents related to this Agreement, the Notes (if any), the Warrant, every Account Control Agreement, the IP Security Agreement and any other intercreditor agreement, or subordination agreement, any documents pertaining to a mortgage, any landlord waivers and bailee waivers, the Perfection Certificate, each Compliance Certificate, each Loan Advance Request Form and every other document evidencing, securing or relating to the Loans, in each case as amended, amended and restated, supplemented or otherwise modified from time to time.

"<u>Loans</u>" has the meaning set forth in the preamble above.

"<u>Material Adverse Change</u>" means (i) a materially adverse effect on the business, financial condition, operations, performance or Property of Borrower, or (ii) a material impairment of the ability of Borrower to perform its obligations under or remain in compliance with this Agreement and the other Loan Documents, or any documents executed in connection therewith.

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"<u>Material Agreement</u>" means each (a) license, agreement or other contractual arrangement with a Person or Governmental Authority whereby Borrower or any of its Subsidiaries is reasonably likely to be required to transfer, either in-kind or in cash, prior to the Maturity Date, assets or property valued (book or market) at more than Two Hundred Fifty Thousand Dollars ($250,000) per year in the aggregate and (b) agreement or contract to which Borrower is a party, the termination of which could cause a material adverse effect on the operations, business, assets, properties or condition of Borrower.

"<u>Maturity Date</u>" means September 1, 2028.

"<u>Notes</u>" means a promissory note or notes in the form of <u>Exhibit A</u> hereto.

"<u>Obligations</u>" means all present and future obligations owing by Borrower to Administrative Agent and the Lenders governed or evidenced by the Loan Documents whether or not for the payment of money, whether or not evidenced by any note or other instrument, whether direct or indirect, absolute or contingent, due or to become due, joint or several, primary or secondary, liquidated or unliquidated, secured or unsecured, original or renewed or extended, whether arising before, during or after the commencement of any bankruptcy case in which Borrower is a debtor (specifically including interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding with respect to Borrower, whether or not a claim for such post-commencement interest is allowed), including but not limited to any obligations arising pursuant to letters of credit or acceptance transactions or any other financial accommodations.

"<u>OFAC</u>" means the United States Department of the Treasury's Office of Foreign Assets Control.

"<u>Operating Documents</u>" are, for any Person, such Person's formation documents, as certified by the Secretary of State (or equivalent agency) of such Person's jurisdiction of organization on a date that is no earlier than thirty (30) days prior to the Closing Date, and, (a) if such Person is a corporation, its bylaws in current form, (b) if such Person is a limited liability company, its limited liability company agreement (or similar agreement), and (c) if such Person is a partnership, its partnership agreement (or similar agreement), each of the foregoing with all current amendments or modifications thereto.

"<u>Ordinary Course of Business</u>" means, in respect of any transaction involving any Person, the ordinary course of such Person's business as conducted by any such Person in accordance with the usual and customary customs and practices in the kind of business in which such Person is engaged, undertaken by such Person in good faith and not for purposes of evading any covenant or restriction in any Loan Document.

"<u>Other Connection Taxes</u>" means, with respect to any Lender or Administrative Agent, Taxes imposed as a result of a present or former connection between such Lender or Administrative Agent and the jurisdiction imposing such Tax (other than connections arising from such Lender or Administrative Agent having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document).

"<u>Other Taxes</u>" means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment.

"<u>Owned Intellectual Property</u>" has the meaning set forth in <u>Section 4.1(t)(i).</u>

"<u>Payment Date</u>" means the first (1st) day of each month, or if such day is not a Business Day, the next Business Day.

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"<u>Perfection Certificate</u>" means the perfection certificate delivered to Administrative Agent dated as of the Closing Date, as updated from time to time in accordance with this Agreement.

"<u>Permitted Debt</u>" means and includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Debt of Borrower to Lenders under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Debt of Borrower secured by Liens permitted under clause (f) of the definition of Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Debt of Borrower existing on the date hereof and set forth on the Perfection Certificate dated as of the Closing Date (other than the Existing Debt);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Debt in respect of netting services, overdraft protections and otherwise in connection with deposit accounts, in each case, in the Ordinary Course of Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Debt consisting of the financing of insurance premiums in the Ordinary Course of Business and provided such financing arrangement has been approved in writing by Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;unsecured Indebtedness in respect of corporate credit card incurred in the Ordinary Course of Business in an aggregate amount outstanding at any time not to exceed $500,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Debt to carriers, warehousemen, mechanics, and materialmen, in each case arising in the Ordinary Course of Business, for sums not yet due and payable or, if due and payable, those being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in accordance with GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;to the extent constituting Debt, judgments not constituting an Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Debt representing taxes and assessments not yet due and payable without penalty or, if due and payable, being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained (i) in accordance with GAAP pursuant to Section 4.1(q) and (ii) in a Deposit Account of Borrower over which Administrative Agent has a first priority perfected Lien;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Debt issued in connection with Permitted Investments pursuant to clause (b) or (c) which is recourse solely against such Permitted Investments in an aggregate amount not to exceed $3,000,000 at any time outstanding; provided that such Debt is extinguished within ten (10) days of its incurrence;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;other unsecured Debt in not to exceed Fifty Thousand Dollars ($50,000) in the aggregate at any time outstanding; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;extensions, refinancings, modifications, amendments and restatements of any items of Permitted Debt under subsections (a)-(g) above; *provided* that the principal amount thereof is not increased or the terms thereof are not modified to impose materially more burdensome terms upon Borrower.

"<u>Permitted Investment</u>" means

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Deposits and Deposit Accounts (which shall be subject to Account Control Agreements as required herein) with commercial banks organized under the laws of the United States or a state thereof to the extent: (i) the Deposit Accounts of each such institution are insured by the Federal Deposit Insurance Corporation up to the legal limit; and (ii) each such institution has an aggregate capital and surplus of not less than One Hundred Million Dollars ($100,000,000);

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Investments in marketable obligations issued or fully guaranteed by the United States and maturing not more than one (1) year from the date of issuance;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Investments in open market commercial paper rated at least "A1" or "P1" or higher by a national credit rating agency and maturing not more than one (1) year from the creation thereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Investments consisting of the endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Investments outstanding on the date hereof and set forth on the Perfection Certificate dated as of the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Investments by Borrower in Subsidiaries not to exceed Fifty Thousand Dollars ($50,000) in the aggregate in any fiscal year;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Investments (including debt obligations) received in connection with the bankruptcy or reorganization of customers or suppliers and in settlement of delinquent obligations of, and other disputes with, customers or suppliers arising in the Ordinary Course of Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;Investments consisting of notes receivable of, or prepaid royalties and other credit extensions, to customers and suppliers who are not Affiliates, in the Ordinary Course of Business; provided that this paragraph shall not apply to Investments of Borrower in any Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Investments constituting ownership of the equity interests of Subsidiaries as of the Closing Date or as otherwise permitted by Section 4.2(t); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Other Investments aggregating not in excess of Fifty Thousand Dollars ($50,000) at any time.

"<u>Permitted Liens</u>" means any of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Liens of the Administrative Agent pursuant to this Agreement or the other Loan Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Liens outstanding on the date hereof and set forth on the Perfection Certificate dated as of the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Liens for taxes and assessments not yet due or payable without penalty or, if due and payable, those being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in accordance with GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Liens arising in the Ordinary Course of Business (such as Liens of carriers, warehousemen, mechanics, and materialmen) and other similar Liens imposed by law for sums not yet due and payable or, if due and payable, those being contested in good faith by appropriate proceedings and for which appropriate reserves are maintained in accordance with GAAP;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;easements, rights of way, restrictions, minor defects or irregularities in title or other similar Liens which alone or in the aggregate do not interfere in any material way with the ordinary conduct of the business of Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;Liens consisting of purchase money security interests for new equipment financing not to exceed Two Hundred Fifty Thousand Dollars ($250,000) in the aggregate at any time outstanding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Leases or subleases of real property, and leases, subleases, non-exclusive licenses or sublicenses of personal property (other than Intellectual Property), in each case granted in the

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in the Ordinary Course of Business of Borrower's or another Person's business, if the leases, subleases, licenses and sublicenses do not prohibit granting Administrative Agent a security interest therein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;non-exclusive licenses of Intellectual Property granted to third parties in the Ordinary Course of Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Liens arising from attachments or judgments, orders or decrees in circumstances not constituting an Event of Default;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;customary Liens in favor of other financial institutions in connection with statutory, common law and contractual rights of setoff and recoupment arising in connection with Borrower's deposit and/or securities accounts held at such institutions, provided that each such account shall be subject to Account Control Agreements as required herein;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;Liens on insurance policies and the proceeds thereof granted to secure the financing of insurance premiums with respect thereto to the extent permitted under clause (e) of the definition of Permitted Debt; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;other Liens not to exceed Ten Thousand Dollars ($10,000) in the aggregate at any time.

"<u>Person</u>" means and includes any individual, any partnership, any corporation, any business trust, any joint stock company, any limited liability company, any unincorporated association or any other entity and any domestic or foreign national, state or local government, foregoing.

"<u>Potential Event of Default</u>" means any event or circumstance, which, with the giving of notice or lapse of time or both, would become an Event of Default.

"<u>Prime Rate</u>" means, at any time, the greater of (i) the rate of interest noted in The Wall Street Journal, Money Rates section, as the "Prime Rate", and (ii) eight percent (8.0%). In the event that The Wall Street Journal quotes more than one rate, or a range of rates, as the Prime Rate, then the Prime Rate shall mean the average of the quoted rates. In the event that The Wall Street Journal ceases to publish a Prime Rate, then the Prime Rate shall be as announced by Lender.

"<u>Pro Rata Share</u>" means, with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;a Lender's obligation to make Loans and the right to receive payments of interest, fees and principal with respect thereto, the percentage obtained by dividing (i) such Lender's Commitments, by (ii) the Total Commitments, <u>provided</u> that if the Total Commitments have been reduced to zero, the numerator shall be the aggregate unpaid principal amount of such Lender's portion of the Loans and the denominator shall be the aggregate unpaid principal amount of the Loans, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;all other matters (including, without limitation, the indemnification obligations arising under <u>Section 5.7</u>, the percentage obtained by dividing (i) the sum of the unpaid principal amount of such Lender's portion of the Loans, by (ii) the sum of the aggregate unpaid principal amount of the Loans.

"<u>Property</u>" means any interest in any kind of property or asset, whether real, personal or mixed, whether tangible or intangible.

"<u>Responsible Officer</u>" means each of the chief executive officer, the chief operating officer, the chief financial officer, president, treasurer, vice president of finance and the controller of Borrower, as well as any other officer or employee identified as an authorized officer in the corporate resolution delivered by Borrower to Administrative Agent in connection with this Agreement.

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"<u>Restricted License</u>" means any license or other agreement with respect to which Borrower is a party and that prohibits or otherwise restricts Borrower from granting a security interest in Borrower's interest in such license or agreement or any other property.

"<u>Required Lenders</u>" means Lenders (other than Defaulting Lenders) whose Pro Rata Shares (without giving effect to the Pro Rata Share of Defaulting Lenders) aggregate at least 50.1%; provided that such Lenders must include Administrative Agent (unless Administrative Agent is a Defaulting Lender).

"<u>Secured Parties</u>" means the Lenders, Administrative Agent, each other Indemnified Person and any other holder of any Obligation.

"<u>Securities Account</u>" means any "securities account" as defined in the UCC with such additions to such term as may hereafter be made.

"<u>Solvent</u>" with respect to any person or entity as of any date of determination, means that on such date (a) the present fair salable value of the property and assets of such person or entity exceeds the debts and liabilities, including contingent liabilities, of such person or entity, (b) the present fair salable value of the property and assets of such person or entity is greater than the amount that will be required to pay the probable liability of such person or entity on its debts and other liabilities, including contingent liabilities, as such debts and other liabilities become absolute and matured, (c) such person or entity is able to pay its debts and liabilities, including contingent liabilities, as they become absolute and matured, and (d) such person or entity does not have unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed to be conducted. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

"<u>Subsidiary</u>" as to any Person, means any corporation, partnership, limited liability company, joint venture, trust or estate of or in which more than fifty percent (50%) of (a) the issued and outstanding capital stock having ordinary voting power to elect a majority of the board of directors of such corporation (irrespective of whether at the time capital stock of any other class of such corporation may have voting power upon the happening of a contingency), (b) the interest in the capital or profits of such partnership, limited liability company, or joint venture or (c) the beneficial interest in such trust or estate is at the time directly or indirectly owned or controlled through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower.

"<u>Taxes</u>" means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges in the nature of a tax imposed by any Governmental Authority, including any interest, additions to tax or penalties applicable thereto.

"<u>Tranche A Loan</u>" shall have the meaning provided in <u>Section 2.1(b).</u>

"<u>Tranche B Loan</u>" shall have the meaning provided in <u>Section 2.1(b).</u>

"<u>Tranche B Loan Termination Date</u>" means December 31, 2024.

"<u>Tranche C Loan</u>" shall have the meaning provided in <u>Section 2.1(b).</u>

"<u>Tranche C Loan Termination Date</u>" means December 31, 2025.

"<u>Tranche B Milestone</u>" means the receipt by Administrative Agent in its sole discretion, confirming that Borrower has achieved, on or prior to the Tranche B Loan Termination Date, Annualized Revenue of at least Thirty Million Dollars ($30,000,000).

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"<u>Tranche C Milestone</u>" means the receipt by Administrative Agent in its sole discretion, confirming that Borrower has achieved, on or prior to the Tranche C Loan Termination Date, Annualized Revenue of at least Forty-Five Million Dollars ($45,000,000).

"<u>Total Commitments</u>" means the sum of the amounts of the Lenders' Commitments.

"<u>Transfer</u>" means to convey, sell, lease, transfer, assign, or otherwise dispose of.

"<u>UCC</u>" means the Uniform Commercial Code as the same may from time to time be in effect in the State of New York; provided, however, in the event, by reason of mandatory provisions of law, any and all of the attachment, perfection or priority of the security interest of Administrative Agent in and to the Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term "UCC" shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions relating to such attachment, perfection or priority and for purposes of definitions related to such provisions; provided, further, that the term "UCC" shall include Article 9 thereof as in effect on the Closing Date.

"<u>U.S. Person</u>" means any Person that is a "United States person" as defined in Section 7701(a)(30) of the Code.

"<u>Warrant</u>" means (a) the Warrant to Purchase Preferred Stock, dated as of the date hereof, issued by Borrower in favor of each Lender and (b) any other warrant or warrants issued by Borrower during the term of any Loans, in favor of Lender to purchase securities of Borrower.

**ARTICLE 2**

**<u>THE LOANS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>The Loans</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Subject to the terms and conditions of this Agreement, each Lender severally hereby agrees to make a Loan to the Borrower in a principal amount not to exceed the amount of such Lender's Commitments. If the aggregate outstanding principal amount of Loans at any time exceeds the Total Commitments, Borrower shall immediately repay such excess in full. The Obligations of Borrower under this Agreement shall at all times be absolute and unconditional. Borrower acknowledges and agrees that any obligation of any Lender to make any Loan hereunder is strictly contingent upon the satisfaction of the conditions set forth in <u>Sections 2.4</u>, <u>2.5</u>, <u>2.6</u> and <u>2.7</u> (as applicable). For each Loan, Borrower shall make (i) monthly payments of interest only in arrears at the Applicable Rate during the Interest Only Period, and (ii) beginning on the first Payment Date after expiration of the Interest Only Period (the "<u>Amortization Date</u>"), equal monthly payments on each subsequent Payment Date in an amount determined through a calculation fully amortizing the outstanding principal balance due under each Loan at the Applicable Rate over the period from the Amortization Date through (and including) the Maturity Date. For clarity, the payment schedule with respect to the Tranche A Loan as of the Closing Date is reflected in Exhibit B attached hereto, and Administrative Agent may update such payment schedule from time to time in accordance with the terms of the Loan Documents (as amended from time to time, the "<u>Amortization Schedule</u>"). In the event of any inconsistency between the Amortization Schedule and the terms of the Loan Documents (including this <u>Section 2.1</u>), the terms of the Loan Documents shall prevail. Borrower shall continue to comply with all of the terms and provisions hereof until all of the Obligations are paid and satisfied in full. After the Closing Date, no further Tranche A Loans shall be available from Lender. After the Tranche B Loan Termination Date, no further Tranche B Loans shall be available from Lender. After the Tranche C Loan Termination Date, no further Tranche C Loans shall be available from Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The initial Advance hereunder, to be funded on the date hereof upon satisfaction of the conditions in <u>Sections 2.4</u> and <u>2.5</u>, shall be an amount equal to Fifteen Million Dollars ($15,000,000) (the "<u>Tranche A Loan</u>"). Thereafter, upon satisfaction of the conditions set forth in <u>Sections 2.4</u> and <u>2.6</u> 

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Borrower may request an additional Advance equal to Fifteen Million Dollars ($15,000,000) (the "<u>Tranche</u> <u>B Loan</u>"). Thereafter, upon satisfaction of the conditions set forth in <u>Sections 2.4</u> and <u>2.7</u> Borrower may request an additional Advance equal to Fifteen Million Dollars ($15,000,000) (the "<u>Tranche C Loan</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;At the time of the Advance of the Tranche A Loan, Borrower will pay Administrative Agent and the Lenders for all reasonable costs related to the Tranche A Loan including travel, UCC search, filing, insurance, and legal costs for the Tranche A Loan (the "<u>Tranche A</u> <u>Documentation and Funding Expenses</u>"). At the time of any additional Advance of any Loans, Borrower will pay Administrative Agent and the Lenders for all reasonable costs related to such additional Loans, including travel, UCC search, filing, insurance, and legal costs. The Tranche A Documentation and Funding Expenses and any such additional costs due related to additional Loans shall be collectively referred to hereunder as "<u>Documentation and Funding Expenses</u>."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Advances and Interest</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;All Loans requested by Borrower must be requested by 11:00 A.M. Arizona time, five (5) Business Days prior to the date of such requested Loan. All requests or confirmations of requests for a Loan are to be in writing to Administrative Agent and may be sent by telecopy or facsimile transmission or by email provided that Administrative Agent shall have the right to require that receipt of such request not be effective unless confirmed via telephone with Lender. Borrower may not request more than one (1) Loan per calendar month. As express conditions precedent to Lender making each Loan to Borrower, Borrower shall deliver to Administrative Agent the documents, instruments and agreements required pursuant to <u>Sections 2.4</u>, <u>2.5</u>, <u>2.6</u> and <u>2.7</u> (as applicable) of this Agreement (including, without limitation, the Loan Advance Request Form). Except as otherwise provided in this Section <u>2.2(a)</u>, all Loans under this Agreement shall be made by the Lenders simultaneously and proportionately to their Pro Rata Shares of the Total Commitments, as the case may be, it being understood that no Lender shall be responsible for any default by any other Lender in that other Lender's obligations to make a Loan requested hereunder, nor shall the Commitment of any Lender be increased or decreased as a result of the default by any other Lender in that other Lender's obligation to make a Loan requested hereunder, and each Lender shall be obligated to make the Loans required to be made by it by the terms of this Agreement regardless of the failure by any other Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The following amounts shall be deducted from each Loan advanced hereunder: (i) as to the Tranche A Loan advanced hereunder, the applicable Commitment Fee and the Tranche A Documentation and Funding Expenses, (ii) as to the Tranche B Loan, the applicable Commitment Fee and the Documentation and Funding Expenses and (iii) as to the Tranche C Loan, the applicable Commitment Fee and the Documentation and Funding Expenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Beginning on the date of each Advance, the unpaid principal balance of all advanced Loans and all other Obligations hereunder shall bear interest, subject to the terms hereof, at the Applicable Rate. All payments shall be due to Administrative Agent on the applicable Payment Date, or if such day is not a Business Day, the next succeeding Business Day. If Borrower fails to make a monthly payment due within five (5) Business Days after the date such payment is due, Administrative Agent, on behalf of the Lenders, shall have the right to require Borrower to pay to Lender a late charge equal to five percent (5.0%) of the past due payment. After the occurrence and during the continuance of an Event of Default hereunder, Administrative Agent, on behalf of the Lenders, shall have the right to increase the per annum effective rate of interest on all Loans outstanding hereunder to a rate equal to 500 basis points in excess of the Applicable Rate (the "<u>Default Rate</u>"), which Default Rate shall be payable solely after the occurrence of an Event of Default. All contractual rates of interest chargeable on outstanding Loans, shall continue to accrue and be paid even after default, maturity, acceleration, judgment, bankruptcy, insolvency proceedings of any kind or the happening of any event or occurrence similar or dissimilar. In no contingency or event whatsoever shall the aggregate of all amounts deemed interest hereunder and charged or collected pursuant to the terms of this Agreement exceed the highest rate permissible under any law which a court of competent jurisdiction shall, in a final determination, deem applicable hereto. In the event that such court determines Lenders have charged or received interest hereunder in excess of the highest applicable rate, Administrative Agent, shall in its sole discretion and acting on behalf of the

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Lenders, apply and set off such excess interest received by Lenders against other Obligations hereunder due or to become due and such rate shall automatically be reduced to the maximum rate permitted by such law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Interest shall be computed on the basis of a 360-day year, and twelve 30-day months. For any partial month interest periods, interest will be charged for the actual number of days elapsed. In computing interest, (i) all payments received after 12:00 p.m. Arizona time on any day shall be deemed received at the opening of business on the next Business Day, and (ii) the date of the making of the Loans shall be included and the date of payment shall be excluded. Changes to the Applicable Rate based on changes to the Prime Rate, shall be effective as of the day immediately following the date of such change, and to the extent, of such change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Upon the occurrence and during the continuance of an Event of Default and/or the maturity of any portion of the Obligations, any moneys on deposit with Administrative Agent may, at the direction of the Required Lenders, be applied against the Obligations in such order and manner as Administrative Agent may elect or as may otherwise be required under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Administrative Agent Accounts</u>. Administrative Agent shall maintain accounts in which it shall record (i) the amount of each Loan made hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder, and (iii) the amount of any sum received by Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions Precedent to Each Advance</u>. It shall be an express condition precedent to each Lender's obligation to make an Advance of each Loan that (i) the representations and warranties contained in Section 4.1 shall be true and correct in all material respects (or true and correct in all respects for those representations and warranties that are by their terms already qualified as to materiality) as of the date of such Advance (provided, however, that those representations and warranties expressly referring to another date shall be true and correct as of such other date), (ii) no Event of Default or Potential Event of Default shall have occurred and be continuing, (iii) receipt by Administrative Agent of an executed Loan Advance Request Form in the form of Exhibit E attached hereto, (iv) no circumstance shall exist that could reasonably be expected to have a Material Adverse Change, (v) all material governmental and third party approvals reasonably necessary in connection with the Loan and this Agreement shall have been obtained and be in full force and effect, and (vi) Administrative Agent's satisfaction, in Administrative Agent's reasonable discretion, with the results of Administrative Agent's due diligence investigation, including, without limitation, review of the financial statements of Borrower dated no more than thirty (30) days prior to the funding of such Advance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions Precedent to the Tranche A Loan</u>. It shall be an express condition precedent to a Lender's obligation to make the Advance of the Tranche A Loan that Borrower shall provide or cause to be provided to Administrative Agent all of the following items:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;UCC-1 financing statements designating Borrower, as debtor, and Administrative Agent, as secured party for the benefit of Lenders, for filing in the state of Borrower's incorporation or formation, as applicable, the state of Borrower's chief executive office, the place where Borrower transacts business or in any other state required by Administrative Agent with respect to all Collateral which may be perfected under the UCC by the filing of a UCC-1 financing statement, together with any other documents Administrative Agent deems necessary to evidence or perfect Lenders' security interest with respect to the Collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;a certificate as to authorizing resolutions and Operating Documents of Borrower with specimen signatures, substantially in the form of <u>Exhibit C</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;the Operating Documents of Borrower and good standing certificates from each of Borrower's jurisdiction of organization and chief executive office location, and the following jurisdictions

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in which Borrower is qualified to conduct business: California, Colorado, Massachusetts, Nevada and Utah;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;deliver landlord waivers and bailee waivers in the form reasonably acceptable to Administrative Agent for each location where the Collateral with a value in excess of Five Hundred Thousand Dollars ($500,000) is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;insurance certificates and endorsements evidencing that the Borrower, its Subsidiaries, and the Collateral are insured in accordance with the requirements of <u>Section 4.2(q)</u> hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;a recent Lien search in each of the jurisdictions where the Borrower and each Subsidiary is organized and the assets of Borrower and each Subsidiary are located, and such searches reveal no Liens on any of the assets of Borrower or any Subsidiary, except for Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;payment in full of the applicable Commitment Fee and the Tranche A Documentation and Funding Expenses, in each case, to the extent in excess of the Good Faith Deposit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;a fully executed copy of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;the fully executed Warrant;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;a fully executed Account Control Agreement in respect of each of Borrower's Deposit Accounts with JPMorgan Chase Bank, N.A. disclosed on the Perfection Certificate dated as of the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;fully executed copies of each other Loan Document;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;a duly executed legal opinion of counsel to Borrower dated as of the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;a copy of each applicable stockholders' agreement, investors rights agreement, voting agreement, or other similar equity financing documents of Borrower, and any amendments thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;a completed Perfection Certificate dated as of the Closing Date for Borrower and each of its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;a payoff letter executed by Silicon Valley Bank, a division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as Receiver for Silicon Valley Bridge Bank, N.A. (as successor to Silicon Valley Bank)) together with a release of any Liens created in connection therewith on Borrower, its Subsidiaries and any of their assets and properties, in each case in form and substance satisfactory to Administrative Agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;such other documents and completion of such other matters as Administrative Agent may reasonably deem necessary and appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions Precedent to the Tranche B Loan</u>. It shall be an express condition precedent to a Lender's obligation to make the Advance of the Tranche B Loan that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Advance under the Tranche B Loan shall occur on or prior to the Tranche B Loan Termination Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The amount of such Advance shall be $15,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent shall have received payment in full of the Documentation and Funding Expenses and the applicable Commitment Fee;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall have executed and delivered to each Lender a Warrant in respect of the Tranche B Loan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall have achieved the Tranche B Milestone.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Conditions Precedent to the Tranche C Loan</u>. It shall be an express condition precedent to a Lender's obligation to make the Advance of the Tranche C Loan that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Advance under the Tranche C Loan shall occur on or prior to the Tranche C Loan Termination Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The amount of such Advance shall be $15,000,000.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent shall have received payment in full of the Documentation and Funding Expenses and the applicable Commitment Fee;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall have executed and delivered to each Lender a Warrant in respect of the Tranche C Loan; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall have achieved the Tranche C Milestone.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Voluntary Prepayment</u>. Borrower may prepay in whole or in part, the Loans at any time, subject to payment of the premium set forth below ("Prepayment Premium"). The calculated pre-payment amount shall include the outstanding principal due under each Loan at the time of retirement, any partially accrued interest thereon, and a Prepayment Premium based on the following schedule:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;On or before the first anniversary of the Closing Date the Prepayment Premium shall be equal to two and one-half of one percent (2.50%) of the principal amount then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;After the first anniversary of the Closing Date and on or before the second anniversary of the Closing Date the Prepayment Premium shall be equal to one and one-half of one percent (1.50%) of the principal amount then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;After the second anniversary of the Closing Date and before the Maturity Date the Prepayment Premium shall be equal to one percent (1.0%) of the principal amount then outstanding.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Mandatory Prepayment</u>. If a Change of Control occurs or the Loans are accelerated following the occurrence of an Event of Default, Borrower shall immediately pay to Administrative Agent, for the benefit of Lenders, an amount equal to the sum of: (i) all outstanding principal of the Loans plus accrued and unpaid interest thereon through the prepayment date, (ii) the Prepayment Premium, plus (iii) all other Obligations that are due and payable, including, without limitation, Administrative Agent Expenses and Lender's Expenses and interest at the rate set forth in Section 2.2(c) with respect to any past due amounts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.10&nbsp;&nbsp;&nbsp;&nbsp;<u>End of Term Payment</u>. On the Maturity Date or on the date of the earlier prepayment of the Loans by Borrower pursuant to <u>Section 2.8</u> or <u>Section 2.9</u> or acceleration of the balance of the Loans by Administrative Agent pursuant to <u>Section 7.1</u>, Borrower shall pay to Administrative Agent, for the benefit of Lenders, the amount equal to three percent (3.0%) of the original principal amount of the Loans in addition to all sums payable hereunder (the "<u>End of Term Payment</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Proceeds of Collateral</u>. Following the occurrence and during the continuance of an Event of Default, upon the written notice of Administrative Agent, all proceeds from the Collateral shall be immediately delivered to Administrative Agent, at the direction of the Required Lenders, may apply such proceeds and payments to any of the Obligations in such order as Administrative Agent may decide in its sole discretion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Withholding</u>. Payments received by the Administrative Agent or a Lender from Borrower hereunder will be made free and clear of and without deduction for any and all Taxes. Specifically, however, (i) if at any time any Governmental Authority, applicable law, regulation or international agreement requires Borrower to make any withholding or deduction from any such payment or other sum payable hereunder to the Administrative Agent or a Lender, and (ii) such Tax is an Indemnified Tax, Borrower hereby covenants and agrees that the amount due from Borrower with respect to such payment or other sum payable hereunder will be increased to the extent necessary to ensure that, after the making of such required withholding or deduction for Indemnified Taxes, Administrative Agent or such Lender receives a net sum equal to the sum which it would have received had no withholding or deduction for Indemnified Taxes been required and Borrower shall pay the full amount withheld or deducted to the relevant Governmental Authority. Borrower will, upon request, furnish the Administrative Agent with proof reasonably satisfactory to the Administrative Agent indicating that Borrower has made such withholding payment; provided, however, that Borrower need not make any withholding payment if the amount or validity of such withholding payment is contested in good faith by appropriate and timely proceedings and as to which payment in full is bonded or reserved against by Borrower. The agreements and obligations of Borrower contained in this <u>Section 2.12</u> shall survive the termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall timely pay to the relevant Governmental Authority in accordance with applicable law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Borrower shall indemnify each Lender and Administrative Agent, within 10 days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable under this <u>Section 2.12</u>) payable or paid by such Lender or Administrative Agent, or required to be withheld or deducted from a payment to such Lender or Administrative Agent, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. The relevant Lender or Administrative Agent shall notify the Borrower of the imposition of any Indemnified Tax reasonably promptly after becoming aware of the imposition of such Tax. A certificate as to the amount of such payment or liability delivered to the Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of Borrower to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of <u>Section 8.4</u> relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this <u>Section 2.12(d)</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;As soon as practicable after any payment of Taxes by Borrower to a Governmental Authority pursuant to this <u>Section 2.12</u>, Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;If any Lender or the Administrative Agent determines, in its sole discretion exercised in good faith, that it has received a refund of any Indemnified Taxes as to which it has been indemnified pursuant to <u>Section 2.12</u> (including by the payment of additional amounts pursuant to <u>Section</u> <u>2.12(a))</u>, it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under <u>Section 2.12</u> with respect to the Indemnified Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnifying party and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund). Such indemnifying party, upon the request of such indemnified party, shall promptly repay to such indemnified party the amount paid over pursuant to this <u>Section 2.12(f)</u> (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) in the event that such indemnified party is required to repay such refund to such Governmental Authority. Notwithstanding anything to the contrary in this <u>Section 2.12(f)</u>, in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this <u>Section 2.12(f)</u> the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This <u>Section 2.12(f)</u> shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to any payments made under any Loan Document shall deliver to the Borrower and the Administrative Agent, at the time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in <u>Section 2.12(g)(ii)(A)</u>, <u>(ii)(B)</u>, <u>(ii)(D)</u> and <u>(ii)(E)</u> below) shall not be required if in the Lender's reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Without limiting the generality of the foregoing,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent) copies of executed Internal Revenue Service ("<u>IRS</u>") Form W-9 (or any successor form) certifying that such Lender is exempt from U.S. federal backup withholding Tax;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;any lender that is not a U.S. Person (a "<u>Non-U.S. Lender</u>") shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever of the following is applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;in the case of a Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party, (x) with respect to payments of interest under any Loan Document, copies of executed IRS Form W-8BEN or IRS Form

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W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "interest" article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN or IRS Form W-8BEN-E establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the "business profits" or "other income" article of such tax treaty;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;copies of executed IRS Form W-8ECI (or any successor form);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;in the case of a Non-U.S. Lender claiming the benefits of the exemption for portfolio interest under Section 871(h) or Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit G-1 to the effect that such Non-U.S. Lender is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, a "10-percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B) of the Code, or a "controlled foreign corporation" related to Borrower as described in Section 881(c)(3)(C) of the Code (a "U.S. Tax Compliance Certificate") and (y) copies of executed IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable (or any successor form); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;to the extent a Non-U.S. Lender is not the beneficial owner, copies of executed IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN, IRS Form W-8BEN-E, a certificate substantially in the form of Exhibit G-2 or Exhibit G-3, IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such Non-U.S. Lender may provide a certificate substantially in the form of Exhibit G-4 on behalf of each such direct and indirect partner;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;any Non-U.S. Lender shall, to the extent it is legally entitled to do so, deliver to the Borrower and the Administrative Agent (in such number of copies as shall be reasonably requested by the recipient) on or prior to the date on which such Non-U.S. Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Borrower or the Administrative Agent), executed copies of any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable law to permit the Borrower or the Administrative Agent to determine the withholding or deduction required to be made;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)&nbsp;&nbsp;&nbsp;&nbsp;each Lender and the Administrative Agent shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to (i) comply with their obligations under FATCA and (ii) determine whether such Lender (or the Administrative Agent, as applicable) has complied with such Lender's (or the Administrative Agent's, as applicable) obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), "FATCA" shall include any amendments made to FATCA after the date of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)&nbsp;&nbsp;&nbsp;&nbsp;the Administrative Agent, and any successor or supplemental Administrative Agent, shall deliver to the Borrower (in such number of copies as shall be requested by the recipient) on or prior to the date on which the Administrative Agent becomes the administrative agent hereunder or under any other Loan Document (and from time to time thereafter upon the reasonable request of the Borrower) executed copies of either (i) IRS Form W-9 (or any successor form) or (ii) a U.S. branch withholding certificate on IRS Form W-8IMY (or any successor form) evidencing its agreement with the Borrower to be treated as a U.S. Person (with respect to

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amounts received on account of any Lender) and IRS Form W-8ECI (with respect to amounts received on its own account), with the effect that, in either case, the Borrower will be entitled to make payments hereunder to the Administrative Agent without withholding or deduction on account of U.S. federal withholding Tax.

Each Lender and the Administrative Agent agrees that if any documentation it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall promptly update and deliver such form or certification to the Borrower and the Administrative Agent or promptly notify the Borrower and the Administrative Agent in writing of its legal ineligibility to do so.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;For the avoidance of doubt, the term "applicable law" includes FATCA.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Each Party's obligations under this <u>Section 2.12</u> shall survive the termination of this Agreement, the resignation and/or replacement of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all obligations under any Loan Document.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;Borrower and the Lenders hereby acknowledge and agree that, for U.S. federal income tax purposes, the issue price (within the meaning of Section 1273(b) of the Code) of the Loan will be determined pursuant to Section 1272 through 1275 of the Code and the Treasury Regulations thereunder, including Section 1.1273-2(h)(1) of the Treasury Regulations. Furthermore, within sixty (60) days of the Closing Date (or such longer period of time as Administrative Agent or Borrower may decide) Borrower and the Lenders shall mutually agree as to the fair market value of the property right represented by the Warrants with respect to the Loan. The parties hereto agree to report all income tax matters with respect to the Warrant consistent with the provisions of this <u>Section 2.12(j</u>) unless otherwise required due to a change in applicable law or pursuant to a "determination" within the meaning of Section 1313 of the Internal Revenue Code.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Apportionment of Payments</u>. All payments of principal and interest in respect of outstanding Loans, all payments of fees and all other payments in respect of any other Obligations, shall be allocated by the Administrative Agent among such of the Lenders as are entitled thereto, in proportion to their respective Pro Rata Shares, or as otherwise provided herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.14&nbsp;&nbsp;&nbsp;&nbsp;<u>Defaulting Lenders</u>. Notwithstanding anything to the contrary contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Such Defaulting Lender's right to approve or disapprove any amendment, waiver or consent with respect to this Agreement shall be restricted as set forth in <u>Section 5.10</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent shall not be obligated to transfer to such Defaulting Lender any payments made by Borrower to Administrative Agent for such Defaulting Lender's benefit, and, in the absence of such transfer to such Defaulting Lender, the Administrative Agent shall transfer any such payments to each other non-Defaulting Lender ratably in accordance with their Pro Rata Shares (without giving effect to the Pro Rata Shares of such Defaulting Lender) (but only to the extent that such Defaulting Lender's Loans were funded by the other Lenders).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The operation of this Section shall not be construed to increase or otherwise affect the Commitments of any Lender, to relieve or excuse the performance by such Defaulting Lender or any other Lender of its duties and obligations hereunder, or to relieve or excuse the performance by the Borrower of its duties and obligations hereunder to Administrative Agent or to the Lenders other than such Defaulting Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Post-Closing Conditions</u>. Notwithstanding any provision herein or in any other Loan Document to the contrary, to the extent not actually delivered on or prior to the Closing Date:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall deliver to Administrative Agent, within one (1) Business Day of the Closing Date (or such longer period of time as Administrative Agent may agree to in its sole discretion), a fully executed Account Control Agreement in respect of Borrower's Deposit Account maintained with Silicon Valley Bank, a division of First-Citizens Bank & Trust Company disclosed on the Perfection Certificate dated as of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall deliver to Administrative Agent, within two (2) Business Days of the Closing Date (or such longer period of time as Administrative Agent may agree to in its sole discretion), a fully executed Account Control Agreement in respect of each of Borrower's Securities Accounts with JPMorgan Chase Bank, N.A. disclosed on the Perfection Certificate dated as of the Closing Date.

Failure by the Borrower to comply with this <u>Section 2.15</u> shall constitute an immediate Event of Default for which no grace or cure period shall apply.

**ARTICLE 3**

**<u>CREATION OF SECURITY INTEREST; COLLATERAL</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Grant of Security Interests</u>. Borrower grants to Administrative Agent, for the benefit of the Lenders, a valid, continuing security interest in all presently existing and hereafter acquired or arising Collateral in order to secure prompt, full and complete payment of any and all Obligations and in order to secure prompt, full and complete performance by Borrower of each of its covenants and duties under each of the Loan Documents. The "Collateral" shall mean and include all right, title, interest, claims and demands of Borrower in the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;All goods (and embedded computer programs and supporting information included within the definition of "goods" under the UCC) and equipment now owned or hereafter acquired, including all laboratory equipment, computer equipment, office equipment, machinery, fixtures, vehicles (including motor vehicles and trailers), and other equipment and any interest in any of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;All inventory now owned or hereafter acquired, including all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and finished products including such inventory as is temporarily out of Borrower's custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing and any documents of title representing any of the above, and Borrower's books relating to any of the foregoing;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;All contract rights and general intangibles (including Intellectual Property), now owned or hereafter acquired, including goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims, payments of insurance and rights to payment of any kind;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;All now existing and hereafter arising accounts, contract rights, royalties, license rights, license fees and all other forms of obligations owing to Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower (subject, in each case, to the contractual rights of third parties to require funds received by Borrower to be expended in a particular manner), whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all merchandise returned to or reclaimed by Borrower and Borrower's books relating to any of the foregoing;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;All documents, cash, Deposit Accounts, letters of credit and letters of credit rights (whether or not the letter of credit is evidenced by a writing) and other supporting obligations, certificates of deposit, instruments, promissory notes, chattel paper (whether tangible or electronic) and investment property, including all securities, whether certificated or uncertificated, security entitlements, Securities Accounts, commodity contracts and commodity accounts, and all financial assets held in any Securities Account or otherwise, wherever located, now owned or hereafter acquired and Borrower's books relating to the foregoing; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;To the extent not covered by clauses (a) through (e), all other personal property of the Borrower, whether tangible or intangible, and any and all rights and interests in any of the above and the foregoing and, any and all claims, rights and interests in any of the above and all substitutions for, additions and accessions to and proceeds thereof, including insurance, condemnation, requisition or similar payments and proceeds of the sale or licensing of Intellectual Property and all of Borrower's books and records related to any items of other Collateral.

Notwithstanding the foregoing, Excluded Property shall not constitute Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>After-Acquired Property</u>. If Borrower shall at any time acquire a commercial tort claim, as defined in the UCC, Borrower shall immediately notify Administrative Agent in writing signed by Borrower of the brief details thereof and grant to Administrative Agent in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Location and Possession of Collateral</u>. The Collateral (other than Collateral that is (a) out for repair or in-transit between Permitted Locations, (ii) mobile equipment such as laptop computers which are in the possession of individual employees or (iii) that is in the possession of customers pursuant to contractual arrangements with sales agencies entered into in the Ordinary Course of Business) is and shall remain in the possession of Borrower at its locations as set forth in Section 3 of the Perfection Certificate (the "<u>Permitted Locations</u>") or as otherwise approved by Administrative Agent in its sole discretion in writing ten (10) days prior to relocation. In the event that the Collateral at any new location is valued in excess of Five Hundred Thousand Dollars ($500,000) in the aggregate, at Administrative Agent's election, such bailee or landlord, as applicable, must use commercially reasonable efforts to execute and deliver a bailee waiver or landlord waiver, as applicable, in form and substance reasonably satisfactory to Administrative Agent prior to the addition of any new offices or business locations, or any such storage with or delivery to any such bailee, as the case may be. Borrower shall remain in full possession, enjoyment and control of the Collateral (except only as may be otherwise required by Administrative Agent for perfection of the security interests therein created hereunder) and so long as no Event of Default has occurred and is continuing, shall be entitled to manage, operate and use the same and each part thereof with the rights and franchises appertaining thereto; *provided* that the possession, enjoyment, control and use of the Collateral shall at all times be subject to the observance and performance of the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Additional Documentation Required</u>. Borrower shall from time to time execute and deliver to Administrative Agent, at the request of Administrative Agent, all financing statements and other documents Administrative Agent may reasonably request, in form satisfactory to Administrative Agent, to perfect and continue Lender's perfected security interests in the Collateral and in order to consummate fully all of the transactions contemplated under the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Right to Inspect</u>. Administrative Agent (through any of its officers, employees, or agents) shall have the right, upon reasonable prior notice, from time to time during Borrower's usual business hours, to visit and inspect the any of Borrower's or its Subsidiaries' assets and properties and examine and make abstracts from any of such books and records and to make copies thereof and to inspect, test, and appraise the Collateral in order to verify Borrower's financial condition or the amount, condition of, or any other matter relating to, the Collateral, in each case, at any time with or without prior written notice and as often as may be reasonably desired at any time during an Event of Default or upon prior written notice at reasonable times when no Event of Default is continuing up to two (2) times per year, and to

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discuss its business operations, properties and financial and other conditions with its officers and employees and accountants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Intellectual Property</u>. Borrower shall promptly execute and deliver to Administrative Agent, on behalf of the Lenders, any grants of security interests in any patents, patent applications, trademarks and trademark applications, copyrights, and copyright applications registered or filed by Borrower, in a form acceptable to Administrative Agent, to file with the United States Patent and Trademark Office or the United States Copyright Office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Protection of Intellectual Property</u>. Borrower shall and shall cause its Subsidiaries to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;use commercially reasonable efforts to protect, defend and maintain the validity and enforceability of its Intellectual Property that is material to Borrower's or its Subsidiaries' business and promptly advise Administrative Agent in writing of material infringements;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;not allow any Intellectual Property material to Borrower's or its Subsidiaries business to be abandoned, forfeited or dedicated to the public without Administrative Agent's written consent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;provide written notice to the Administrative Agent within thirty (30) days of entering or becoming bound by any Restricted License (other than over-the-counter software or other software, in each case, that is commercially available to the public); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;take such commercially reasonable steps as Administrative Agent requests to obtain the consent of, or waiver by, any person whose consent or waiver is necessary for (i) any Restricted License to be deemed "Collateral" and for Administrative Agent to have a security interest in it that might otherwise be restricted or prohibited by law or by the terms of any such Restricted License, whether now existing or entered into in the future, and (ii) Administrative Agent to have the ability in the event of a liquidation of any Collateral to dispose of such Collateral in accordance with the Administrative Agent's rights and remedies under this Agreement and the other Loan Documents.

**ARTICLE 4**

**<u>REPRESENTATIONS, WARRANTIES AND COVENANTS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Warranties</u>. Borrower hereby warrants, represents and covenants that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Borrower and each Subsidiary is duly organized, validly existing and in good standing under the laws of the state set forth in the Perfection Certificate. Borrower and each Subsidiary is duly qualified to do business and is in good standing in every other jurisdiction where the nature of its business requires it to be qualified, except where failure to be so qualified would not result in a Material Adverse Change, and is not subject to any bankruptcy, insolvency or other similar proceedings. Borrower's and each Subsidiary's chief executive office, principal place of business and the place where Borrower maintains its records concerning the Collateral are located at the addresses set forth in the Perfection Certificate. The Collateral (other than Collateral that is (i) out for repair or in-transit between Permitted Locations, (ii) mobile equipment such as laptop computers which are in the possession of individual employees or (iii) that is in the possession of customers pursuant to contractual arrangements with sales agencies entered into in the Ordinary Course of Business) is presently located at the address set forth on the Perfection Certificate dated as of the Closing Date or as otherwise agreed by Administrative Agent pursuant to <u>Section 3.3</u>;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Borrower and each Subsidiary has full power, authority and legal right to execute, deliver and perform each Loan Document to which it is a party, and the execution, delivery and performance hereof and thereof have been duly authorized by all necessary action;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Each Loan Document has been duly executed and delivered by Borrower and each constitutes a legal, valid and binding obligation of Borrower and each Subsidiary party thereto, enforceable in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or other laws affecting enforcement of creditors' rights generally and general equitable principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The execution, delivery and performance of the Loan Documents (i) is not in contravention of any material agreement or indenture by which Borrower or any Subsidiary is bound, or by which its properties may be affected, (ii) does not require any shareholder approval, or any approval or consent of, or filing or registration with, any governmental body or regulatory authority or agency (other than the filing of UCC financing statements and filings with the United States Patent and Trademark Office and United States Copyright Office, in connection with the registration of the security interest granted hereunder), or any approval or consent of any trustees or holders of any of its indebtedness or obligations, in each case, unless such approval or consent has been obtained and (iii) does not contravene any law, regulation, judgment or decree applicable to it in any material respect or its Operating Documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;None of Borrower nor any Subsidiary is a "bank holding company" or a direct or indirect subsidiary of a "bank holding company" as defined in the Bank Holding Company Act of 1956, as amend, and Regulation Y thereunder of the Board of Governors of the Federal Reserve System. None of Borrower nor any Subsidiary is an "investment company" or a company controlled by an "investment company" under the Investment Company Act of 1940. None of Borrower nor any Subsidiary is engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System) and no proceeds of any Loan will be used to purchase or carry margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;To Borrower's Knowledge, Borrower and each Subsidiary is in compliance, in all material respects, with all requirements of law and orders, rules or regulations of any regulatory authority applicable to Borrower or any Subsidiary or to the business or assets of Borrower or any Subsidiary and no such requirement applicable to Borrower or any Subsidiary or any item of Collateral could reasonably be expected to cause a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Borrower is the owner and holder of all right, title and interest in and to the Collateral (other than the right, title and interests granted under the Permitted Liens), and Borrower has not assigned or pledged and hereby covenants that it will not assign or pledge, so long as this Agreement shall remain in effect, the whole or any part of the rights in the Collateral hereby and thereby assigned, to anyone other than Administrative Agent, its designee, its successors or assigns, other than Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;Borrower has good and marketable title to the Collateral, and the Collateral is free and clear of all Liens, claims and encumbrances, other than Permitted Liens;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Borrower has delivered to Administrative Agent copies of the most recent annual reviewed financial statements and most recent monthly and quarterly unaudited financial statements required to be delivered pursuant to <u>Section 4.2(f)</u> hereof, or as may hereafter be delivered in connection with the Loans (the "<u>Financial Statements</u>"). Since the date of the last Financial Statement provided to Lender, no event has occurred which would have a Material Adverse Change on Borrower or any Subsidiary. The Financial Statements are true and correct and fairly present the financial condition of Borrower and its Subsidiaries;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;No default or event of default has occurred and is continuing under or with respect to any Material Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;No action, suit, litigation, or proceeding of or before any arbitrator or governmental or regulatory authority is pending or, to the Knowledge of Borrower threatened, by or against Borrower, any Subsidiary or against any of their property or assets, which action, suit, litigation or proceeding could,

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individually or in the aggregate, could be reasonably expected to result in liabilities to Borrower or its Subsidiaries in excess of Five Hundred Thousand Dollars ($500,000);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;To Borrower's Knowledge, no facilities or properties leased or operated by Borrower contains any "hazardous materials" in amount or concentrations that could constitute a violation of any federal, state or local law, rule, regulation, order or permit (the "<u>Environmental Laws</u>"). Borrower has not received notice of any suspected or actual violations of any Environmental Laws and Borrower's business has been operated in conformity with all Environmental Laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;Borrower has no Subsidiaries other than those listed on the Perfection Certificate. Neither Borrower nor any Subsidiary has done business under any name other than that specified on the Perfection Certificate dated as of the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;To the best of Borrower's Knowledge, as of the date hereof and at all times throughout the term of this Agreement, including after giving effect to any transfers of interests permitted pursuant to the Loan Documents, (a) none of the funds or other assets of Borrower, its Subsidiaries, any of their Affiliates constitute (or will constitute) property of, or are (or will be) beneficially owned, directly or indirectly, by any Blocked Person; (b) no Blocked Person has (or will have) any interest of any nature whatsoever in Borrower, in their Affiliates, with the result that the investment in the respective party (whether directly or indirectly), is prohibited by applicable law or the Loans are in violation of applicable law; and (c) none of the funds of Borrower, or of their Affiliates have been (or will be) derived from any unlawful activity with the result that the investment in the respective party (whether directly or indirectly), is prohibited by applicable law or the Loans are in violation of applicable law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;To Borrower's Knowledge, the Property of Borrower and the Collateral are insured with financially sound and reputable insurance companies in such amounts, with such deductibles and covering such risks as are customarily carried by companies engaged in similar businesses and owning similar properties in localities where the Borrower operates. The Perfection Certificate sets forth a description of all insurance maintained by or on behalf of the Borrower. Each insurance policy listed on the Perfection Certificate is in full force and effect and all premiums in respect thereof that are due and payable have been paid;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;To Borrower's Knowledge, Borrower owns, or is licensed to use, all Intellectual Property necessary for the conduct of its business as currently conducted or proposed to be conducted. No material claim has been asserted and is pending by any other person or entity challenging the use, validity or effectiveness of any Owned Intellectual Property or, to Borrower's Knowledge, any other Intellectual Property, nor does the Borrower have Knowledge of any basis for any such claim;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;Borrower and each Subsidiary has filed all federal and state income and other material tax returns that are required to be filed and has paid all taxes shown thereon to be due, together with applicable interest, penalties and other charges imposed on it or any of its property by any governmental or regulatory authority except (i) to the extent such Taxes are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor, or (ii) if such Taxes, assessments, deposits and contributions do not, individually or in the aggregate, exceed One Hundred Thousand Dollars ($100,000). No tax Liens (other than Permitted Liens) have been filed by any governmental or regulatory authority against a Loan Party, and, to the Knowledge of Borrower, no governmental or regulatory authority is asserting a claim, in each case, with respect to any such Tax. Neither Borrower nor any Subsidiary is a party to any tax sharing agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;This Agreement creates in favor of Administrative Agent, for the benefit of the Lenders, a legal, valid and continuing and enforceable security interest in the Collateral, the enforceability of which is subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditor's rights generally and subject to general principles of equity. To the Knowledge of Borrower, upon Administrative Agent filing UCC-1 financing statements with the central filing location in the state of Borrower's formation or incorporation and/or the State of Borrower's chief executive office and/or the

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obtaining of "control" (as defined under the UCC) through an Account Control Agreement or otherwise, Administrative Agent, for the benefit of the Lenders, will have a perfected first priority Lien on and security interest in the Collateral, subject only to Permitted Liens that are specifically designated as being senior in priority;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;Each of Borrower and each Subsidiary is, and after giving effect to the incurrence of the debt evidenced by this Agreement and all obligations hereunder will be, Solvent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;(i) The Perfection Certificate lists all Intellectual Property registered or filed by Borrower and each Subsidiary with the United States Patent and Trademark Office or the United States Copyright Office, including patents and pending applications, registered trademarks and pending applications, registered domain names, registered copyrights and pending applications and material Intellectual Property licenses owned by Borrower and each Subsidiary ("<u>Owned Intellectual Property</u>"); (ii) all of Borrower's and each Subsidiary's Owned Intellectual Property that is registered or issued is valid and enforceable, and with respect to all of Borrower's and each Subsidiary's Owned Intellectual Property subsisting and unexpired, and has not been abandoned; (iii) except as described on the Perfection Certificate, Borrower and each Subsidiary is the exclusive owner of all right, title and interest in and to all Owned Intellectual Property, or has the right to use, all of such Borrower's or Subsidiary's Intellectual Property that is not exclusively owned by such Borrower or Subsidiary; (iv) consummation and performance of this Agreement will not result in the invalidity, unenforceability or impairment of any of Borrower's or any Subsidiary's Intellectual Property, or in default or termination of any material Intellectual Property license of Borrower or any Subsidiary; (v) except as described on the Perfection Certificate, there are no outstanding holdings, decisions, consents, settlements, decrees, orders, injunctions, rulings or judgments that would limit, cancel or question the validity or enforceability of any of Borrower's or any Subsidiary's Owned Intellectual Property or Borrower's or such Subsidiary's rights therein or use thereof; (vi) to Borrower's Knowledge, except as described on the Perfection Certificate, the operation of Borrower's and each Subsidiary's business and Borrower's or such Subsidiary's use of Owned Intellectual Property in the manner currently used in the business of Borrower and each Subsidiary, does not infringe or misappropriate the Intellectual Property rights of any other person or entity; (vii) except as described in the Perfection Certificate, no action or proceeding is pending or, to Borrower's Knowledge, threatened (1) seeking to limit, cancel or question the validity of any of Borrower's or any Subsidiary's Owned Intellectual Property, (2) which, if adversely determined, could be reasonably expected to cause a Material Adverse Change on the value of any such Owned Intellectual Property or (3) alleging that any such Owned Intellectual Property, or Borrower's or such Subsidiary's use thereof in the operation of its business as currently conducted, infringes or misappropriates the Intellectual Property rights of any person or entity and (viii) to Borrower's Knowledge, there has been no Material Adverse Change on Borrower's or any Subsidiary's rights in its material trade secrets as a result of any unauthorized use, disclosure or appropriation by or to any person, including Borrower's and each Subsidiary's current and former employees, contractors and agents

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;Borrower has disclosed on the Perfection Certificate all agreements, instruments and corporate or other restrictions to which it and each Subsidiary is subject, and all other matters to Borrower's Knowledge that, individually or in the aggregate, could reasonably be expected to cause a Material Adverse Change. No statement or information contained in this Agreement or any document or certificate executed or delivered, or hereafter delivered, in connection with this Agreement or the Loans contains or will contain any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein not misleading;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;The Lender Shares issuable under the Warrant are the same price and have the same registration rights, anti-dilution rights, and other shareholder rights granted to other holders of preferred stock in Borrower's last round of investments in preferred stock; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w)&nbsp;&nbsp;&nbsp;&nbsp;Borrower and each Subsidiary is in compliance, in all material respects, with all applicable Health Care Laws and is not in material violation of any order of any Governmental Authority or other board or tribunal regulating, enforcing or overseeing compliance with Health Care Laws. None of

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Borrower nor any Subsidiary has received a subpoena or other written notice that it is currently or will in the future be subject to any investigation by any Governmental Authority with respect to any Health Care Law, nor, to the knowledge of Borrower, is any investigation threatened in writing or are there circumstances, which, if known to such Governmental Authority, could reasonably be expected to lead such Governmental Authority to investigate Borrower or such Subsidiary. Borrower has established a compliance plan, the purpose of which is to assure that Borrower is in compliance in all material respects with applicable Health Care Laws. Borrower and each Subsidiary have received and maintain accreditation in good standing and without limitation or impairment by all applicable accrediting organizations, to the extent required by applicable Health Care Laws or any third-party payor programs. Borrower has not reported any material "breach" of "unsecured protected health information" (as such terms are defined in HIPAA) affecting 500 or more individuals to the Office for Civil Rights of the Department of Health and Human Services or any state agency or to the Knowledge of Borrower had any security or data breaches compromising or otherwise involving individually identifiable information, and no material violation of Health Care Laws has occurred that required Borrower or any Subsidiary thereof to provide notification to any Governmental Authority under any federal or state privacy and/or breach notification laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Affirmative Covenants of Borrower</u>. Borrower shall, and shall cause each of its Subsidiaries to, do all of the following, so long as any of the Loan Documents remain outstanding:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;maintain its corporate existence and its good standing in its jurisdiction of incorporation and maintain qualification in each jurisdiction in which the failure to so qualify could reasonably be expected to cause a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;maintain in force all licenses, approvals, agreements and Governmental Approvals, the loss of which could reasonably be expected to cause a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;comply with all statutes, laws, ordinances and government rules and regulations to which it is subject, noncompliance with which could reasonably be expected to cause a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;without duplication with <u>Section 4.2(k)</u>, if required by applicable law, pay and discharge or cause to be paid and discharged, all material sales, use, rental and personal property or similar material taxes and fees (excluding any taxes on any Lender's net income) which arise and are due prior to each Advance in connection with the Collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;[reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;deliver the following to Administrative Agent:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;as soon as available, but no later than thirty (30) days after the last day of each month:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;unaudited financial statements pertaining to the results of operations for the month then ended covering the consolidated operations of Borrower and its Subsidiaries for such month and certified as true and correct by a Responsible Officer of Borrower, consisting of a balance sheet, income statement and cash flow statement, prepared in accordance with GAAP applied on a consistent basis;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;together with the monthly financial reports, reports as to the following, in a form acceptable to Administrative Agent: accounts receivable, accounts payable aging, and primary key performance indicators, including dollar volume, unit volume, unit mix analysis and average selling price, in each case, in form and substance satisfactory to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;copies of Borrower's bank statements on all Deposit Accounts;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(D)&nbsp;&nbsp;&nbsp;&nbsp;written notice of any material development in, the proceedings contemplated by <u>Section 4.2(i)</u> hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(E)&nbsp;&nbsp;&nbsp;&nbsp;a duly completed Compliance Certificate signed by a Responsible Officer of Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(F)&nbsp;&nbsp;&nbsp;&nbsp;[reserved]; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(G)&nbsp;&nbsp;&nbsp;&nbsp;written notice of all returns, recoveries, disputes and claims regarding Inventory outside of the Ordinary Course of Business;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;(x) as soon as available but no later than thirty (30) days after Borrower's biannual investor meeting, which shall occur at least two (2) times per twelve (12) month period and (y) upon Administrative Agent's reasonable request:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(A)&nbsp;&nbsp;&nbsp;&nbsp;an updated Perfection Certificate to reflect any amendments, modifications and updates to information in the Perfection Certificate after the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(B)&nbsp;&nbsp;&nbsp;&nbsp;copies of any material Governmental Approvals obtained by Borrower or any of its Subsidiaries; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(C)&nbsp;&nbsp;&nbsp;&nbsp;a copy of Borrower's capitalization table, as of the last day of the fiscal quarter then ended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;[reserved];

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;(x) within two hundred seventy-five (275) days following the end of the fiscal year ending December 31, 2022 and (y) within two hundred twenty-five (225) days following the end of each fiscal year thereafter, a copy of Borrower's annual, audited financial statements consisting of a balance sheet, income statement and cash flow statement prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year and presenting fairly Borrower's financial condition as at the end of that fiscal year and the results of its operations for the twelve (12) month period then ended and certified as true and correct by Borrower's chief financial officer ("<u>Annual Financial Statements</u>"), together with an unqualified opinion on the financial statements from an independent certified public accounting firm acceptable to Administrative Agent in its reasonable discretion (it being understood that Borrower's accounting firm disclosed to Administrative Agent on or prior to the Closing Date and any other public accounting firm of nationally recognized standing, is acceptable to Administrative Agent); <u>provided</u> however, if Borrower's board of directors does not require audited Annual Financial Statements for any fiscal year, Borrower may instead deliver company prepared Annual Financial Statements to Lender within sixty (60) days of such fiscal year end and Administrative Agent shall waive the opinion requirement in connection therewith for such fiscal year only;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;within thirty (30) days of its completion, a copy of Borrower's most recent 409A valuation report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi)&nbsp;&nbsp;&nbsp;&nbsp;within thirty (30) days of the effective date or filing date thereof, a copy of any amendment to Borrower's Operating Documents; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii)&nbsp;&nbsp;&nbsp;&nbsp;such other information (financial or otherwise in respect of the business, condition, operations, performance, properties or prospects of Borrower) as Administrative Agent shall reasonably request from time-to-time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;within ten (10) days after approval by the Borrower's board of directors, and in any event no later than within sixty (60) days after the end of each fiscal year of Borrower, provide Administrative Agent with annual operating budgets and financial projections approved by the Borrower's board of directors, in a form acceptable to Administrative Agent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;as requested by Administrative Agent, make Borrower's chief financial or chief operating officer available to participate in monthly management update calls with Administrative Agent to discuss such information about the operations and financial condition of the business of the Borrower as Administrative Agent shall reasonably inquire into, at such times reasonably scheduled by Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;from and after such time as Borrower becomes a publicly reporting company, promptly as they are available and in any event: (i) at the time of filing of Borrower's Form 10-K with the Securities and Exchange Commission after the end of each fiscal year of Borrower, provide Administrative Agent with the financial statements of Borrower filed with such Form 10-K; and (ii) at the time of filing of Borrower's Form 10-Q with the Securities and Exchange Commission after the end of each of the first three fiscal quarters of Borrower, provide Administrative Agent with the consolidated financial statements of Borrower filed with such Form 10-Q; *provided* that to the extent the foregoing documents are included in materials otherwise filed with the Securities and Exchange Commission, such documents shall be deemed to have been delivered on the date on which Borrower posts such documents, or provides a link thereto, on Borrower's website;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;(A) promptly upon becoming available, provide Administrative Agent with copies of all statements, reports and notices sent or made available generally by Borrower to its security holders and (B) immediately upon receipt of written notice thereof, provide Administrative Agent with a report of any material legal actions pending or threatened in writing against Borrower or any of its Subsidiaries or the commencement of any action, litigation or governmental proceeding or governmental investigation involving Borrower or any of its Subsidiaries is commenced that is reasonably expected to result in damages or costs to Borrower or any of its Subsidiaries in excess of Five Hundred Thousand Dollars ($500,000);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp; promptly upon receipt of the same, provide Administrative Agent with copies of all notices, requests and other documents received by any other party pursuant to any other material contract, instrument, indenture regarding or relating to any breach or default alleged by or against any party thereto or any other event that could materially impair the value of the interests or rights of Administrative Agent or any Lender or could otherwise be reasonably expected to cause a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;make due and timely payment or deposit of all federal and state income, and other material taxes, assessments, or contributions required of it by law or imposed upon any Property belonging to it, and will execute and deliver to Administrative Agent, on demand, appropriate certificates attesting to the filing of federal income, state income and franchise tax returns; *provided* that Borrower need not make any payment if the amount or validity of such payment is contested in good faith by appropriate proceedings which suspend the collection thereof (provided that such proceedings do not involve any substantial danger of the sale, forfeiture or loss of any material item of Collateral or Collateral which in the aggregate is material to Borrower and that Borrower has adequately reserved such amounts or made other appropriate provision therefor, if any, as shall be required in conformity with GAAP; provided further that Borrower shall not change its respective jurisdiction of residence for taxation purposes, without the prior written consent of Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;make or cause to be made all filings in respect of all material assessments, fines, fees and other liabilities unless being contested in good faith and for which Borrower maintains adequate reserves;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;perform all of Borrower's and each Subsidiary's obligations imposed by applicable law, rule or regulation with respect to the Collateral in all material respects;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;as soon as possible, and in any event within three (3) Business Days after Borrower having obtained Knowledge of the occurrence of any Event of Default or Potential Event of Default, provide a written notice setting forth the details of such Event of Default or Potential Event of Default and the action, if any is permitted, which is proposed to be taken by Borrower with respect thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;as soon as possible, and in any event, no later than three (3) Business Days after receipt, provide Administrative Agent with a copy of any notice of default, notice of termination or similar notice pertaining to a lease of real property where any Collateral is located;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;from time to time execute and deliver such further documents and do such further acts and things as Administrative Agent may reasonably request in order to fully effect the purposes of this Agreement and to protect Administrative Agent's security interest in the Collateral, and Borrower hereby authorizes Administrative Agent to execute and deliver on behalf of Borrower and to file such financing statements (including an indication that the financing statement covers "all assets or all personal property" of Borrower in accordance with Section 9-504 of the UCC), collateral assignments, notices, control agreements, security agreements and other documents without the signature of Borrower either in Administrative Agent's name or in the name of Administrative Agent as agent and attorney-in-fact for Borrower;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;keep Borrower's and its Subsidiaries' business and the Collateral insured for risks and in amounts standard for companies in Borrower's and its Subsidiaries' industry and location and as Administrative Agent may reasonably request, including, but not limited to, D&O insurance reasonably satisfactory to Administrative Agent. Insurance policies shall be in a form, with companies, and in amounts that are reasonably satisfactory to Administrative Agent. All property policies shall have a lender's loss payable endorsement showing Administrative Agent as lender loss payee and waive subrogation against Administrative Agent, and all liability policies shall show, or have endorsements showing Administrative Agent, as additional insured. Administrative Agent shall be named as lender loss payee and/or additional insured with respect to any such insurance providing coverage in respect of any Collateral, and each provider of any such insurance shall agree, by endorsement upon the policy or policies issued by it or by independent instruments furnished to Administrative Agent, that it will give Administrative Agent thirty (30) days prior written notice before any such policy or policies shall be materially altered or canceled (other than cancellation for non-payment of premiums, for which ten (10) days' prior written notice shall be required). At Administrative Agent's request, Borrower shall deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy shall, at Administrative Agent's option, be payable to Administrative Agent, on account of the Obligations. If Borrower or any of its Subsidiaries fails to obtain insurance as required under this <u>Section 4.2(q)</u> or to pay any amount or furnish any required proof of payment to third persons, Administrative Agent may make (but has no obligation to do so), at Borrower's expense, all or part of such payment or obtain such insurance policies required in this <u>Section 4.2(q)</u>, and take any action under the policies Administrative Agent deems prudent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r)&nbsp;&nbsp;&nbsp;&nbsp;during all times any amounts remain due from Borrower to Administrative Agent or Lenders under this Agreement or Borrower has any Obligations under the Loan Documents, (i) take all reasonable action to maintain all rights, privileges and franchises material to the business of Borrower; (ii) perform and observe all the terms and provisions of any material contract, instrument, or indenture to be performed or observed by it, maintain each such contract, instrument, or indenture in full force and effect, and enforce such rights under any material contract instrument, or indenture, unless the failure to do so could not be reasonably expected to cause a Material Adverse Change; and (iii) in each case in all material respects, keep proper books and records and accounts in which full, true and correct entries in conformity with GAAP and all requirements of any governmental or regulatory authorities shall be made of all dealings and transactions and assets in relations to its business and activities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s)&nbsp;&nbsp;&nbsp;&nbsp;make available to the Administrative Agent, without expense to the Administrative Agent, Borrower and each of Borrower's officers, employees and agents and Borrower's books, to the extent that the Administrative Agent may reasonably deem them necessary to prosecute or defend any third party suit or proceeding instituted by or against the Administrative Agent or any Lender with respect to any Collateral or relating to Borrower;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t)&nbsp;&nbsp;&nbsp;&nbsp;if, after the Closing Date, any Borrower intends to form any direct or indirect Subsidiary, or acquire any direct or indirect Subsidiary, the Borrower shall (or shall cause such Borrower to): (i) ten (10) Business Days prior to such formation or acquisition, provide written notice to Administrative Agent of the formation of such Subsidiary, and, upon Administrative Agent's request, copies of the Operating Documents of such Subsidiary, and (ii) promptly, and in any event within thirty (30) days (or such later date as Administrative Agent may agree in its sole discretion) of such formation or creation: (A) take all such action as may be reasonably required by Administrative Agent to cause such new Subsidiary to either: (x) provide to Administrative Agent a joinder to this Agreement pursuant to which such Subsidiary becomes a Borrower hereunder, or (y) guarantee the Obligations of Borrowers under the Loan Documents, (B) grant a security interest in and to the assets which constitute Collateral of such Subsidiary (substantially in accordance with this Agreement), in each case together with such Account Control Agreements and other documents, instruments and agreements reasonably requested by Administrative Agent in accordance with the terms of this Agreement, all in form and substance reasonably satisfactory to Administrative Agent (including being sufficient to grant Administrative Agent a first priority Lien, subject to Permitted Liens) and (C) to pledge all of the direct or beneficial Equity Securities in such Subsidiary;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u)&nbsp;&nbsp;&nbsp;&nbsp;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall comply with all applicable Health Care Laws, except to the extent the failure to so comply could not reasonably be expected to have a Material Adverse Change, and shall cause each Subsidiary to do the same, except to the extent the failure to so comply could not reasonably be expected to have a Material Adverse Change.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall maintain a compliance program that addresses the material requirements pursuant to applicable Health Care Laws, and shall cause each Subsidiary to do the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Borrower shall, to the extent permitted by applicable law and so long as no privilege is compromised, notify Administrative Agent promptly after Borrower or any Subsidiary becomes aware of any violation by Borrower or any Subsidiary of the Anti-Kickback Statute, Stark Law or False Claims Act, or any violation of other Health Care Law, in each case, that could reasonably likely result in a claim, fine or settlement against Borrower or such Subsidiary in excess of Five Hundred Thousand Dollars ($500,000); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;to the extent permitted by applicable law, promptly forward to Administrative Agent any notice of any subpoena or other investigation by a Governmental Authority with respect to a possible material violation of any Health Care Laws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v)&nbsp;&nbsp;&nbsp;&nbsp;use the proceeds of the Loan solely to repay the Existing Debt, as working capital and to fund its general corporate purposes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Negative Covenants of Borrower</u>. Borrower shall not, and shall not permit any of its Subsidiaries to, do any of the following without the prior written consent of the Administrative Agent, which may be conditioned or withheld in its sole discretion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;change its name, jurisdiction of incorporation, chief executive office, or principal place of business without thirty (30) days' prior written notice to Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;(i) create, incur, assume, or permit to exist any Lien or security interest on any Property or Collateral now or hereafter acquired by Borrower or any Subsidiary or on any income or rights in respect of any thereof, except Liens and security interests created pursuant to this Agreement or Permitted Liens or (ii) or enter into any agreement with any Person other than Administrative Agent not to grant a security interest in. or otherwise encumber, any of its property, or permit any Subsidiary to do so;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;(i) merge into or consolidate with any other entity, or permit any other entity to merge or consolidate with Borrower or any Subsidiary, (ii) liquidate or dissolve, (iii) acquire, or permit any

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of its Subsidiaries to acquire, all or substantially all of the capital stock, shares or property of another Person or (iv) engage in any business other than the business of the type conducted by Borrower on the date hereof and business reasonably related thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Transfer any of its Property, whether now owned or hereafter acquired except: (i) dispositions of worn-out, obsolete or surplus Equipment in the Ordinary Course of Business that is, in the reasonable judgment of such Borrower or Subsidiary as applicable, no longer economically practicable to maintain or useful; (ii) the sale of Inventory of Borrower or its Subsidiaries in the Ordinary Course of Business; (iii) transfers of accounts receivable (including write-offs, discounts and compromises) in connection with the compromise, settlement or collection thereof, in each case, without recourse and in the Ordinary Course of Business; (iv) Transfers consisting of Permitted Liens; or (v) the abandonment, lapse, expiration or other disposition of Intellectual Property that is in the reasonable business judgment of Borrower no longer material or useful in or to the business of the Borrower and not disadvantageous to the interests of the Lenders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;amend, supplement or otherwise modify (pursuant to waiver or otherwise) its Operating Documents or any material contract, instrument, or indenture, in any respect that would result in a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;move any Collateral from the Permitted Locations except in compliance with <u>Section 3.3</u> above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;(i) pay any dividends or make any distributions, on its Equity Securities; (ii) purchase, redeem, retire, defease or otherwise acquire, for value any of its Equity Securities (other than repurchases pursuant to the terms of employee stock purchase plans, employee restricted stock agreements or similar arrangements in an aggregate amount not to exceed One Hundred Thousand Dollars ($100,000) in any fiscal year); (iii) return any capital to any holder of its Equity Securities as such; (iv) make, any distribution of Property, Equity Securities, obligations or securities to any holder of its Equity Securities; or (v) set apart any sum for any such purpose; provided, however, that Borrower may (A) convert any of its convertible securities into other securities pursuant to the terms of such convertible securities or otherwise in exchange thereof, (B) pay dividends solely in the form of common stock; (C) pay cash in lieu of fractional shares upon exercise or conversion of any option, warrant or other convertible security;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;any Key Person to cease to be actively engaged in the management of Borrower unless written notice thereof is provided to Administrative Agent within ten (10) days;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;enter into any contractual obligation with any Affiliate or engage in any other transaction with any Affiliate except upon terms at least as favorable to Borrower as an arms-length transaction with Persons who are not Affiliates of Borrower other than that certain Consulting Agreement dated as of April 30, 2015, by and between Borrower and Genesis Innovation Group LLC;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;(i) prepay, redeem, purchase, defease or otherwise satisfy in any manner prior to the scheduled repayment thereof any Debt for borrowed money (other than amounts due or permitted to be prepaid under this Agreement or otherwise agreed in writing by Administrative Agent), or (ii) amend, modify or otherwise change the terms of any Debt for borrowed money or lease obligations so as to accelerate the scheduled repayment thereof or (iii) repay any notes to officers, directors or shareholders, provided that Borrower may convert any such notes into Borrower's Equity Securities or repay or otherwise satisfy such notes by the issuance of Borrower's Equity Securities;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;create, incur, assume or permit to exist any Debt except Permitted Debt; provided however, notwithstanding any Debt that is permitted under the definition of Permitted Debt, Borrower shall not create, incur, assume to exist any Debt involving the sale or financing of its accounts receivables or any Debt secured or supported by its accounts receivables without the prior written consent of Administrative Agent;

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;make, or permit any Subsidiary to make, any Investment except for Permitted Investments;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;(i) become an "investment company" or a company controlled by an "investment company" under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock (as defined in Regulation U of the Board of Governors of the Federal Reserve System), or use the proceeds of any Loan for that purpose; (ii) become subject to any other federal or state law or regulation which purports to restrict or regulate its ability to borrow money; or (iii) fail to meet the minimum funding requirements of the Employment Retirement Income Security Act of 1974, and its regulations, as amended from time to time ("<u>ERISA</u>"), permit, or permit any Subsidiary to permit, a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; (iv) fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could reasonably be expected to have a Material Adverse Change;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;(x) directly or indirectly, enter into any documents, instruments, agreements or contracts with any Blocked Person or (y) directly or indirectly, (A) conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person, (B) deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order No. 13224, any similar executive order or other Anti-Terrorism Law or (C) engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in Executive Order No. 13224 or other Anti-Terrorism Law. Each Lender hereby notifies Borrower that pursuant to the requirements of Anti-Terrorism Laws and such Lender's policies and practices, such Lender is required to obtain, verify and record certain information and documentation that identifies Borrower and its principals, which information includes the name and address of Borrower and its principals and such other information that will allow each Lender to identify such party in accordance with Anti-Terrorism Laws. Borrower shall immediately notify Administrative Agent if Borrower has knowledge that Borrower or any Subsidiary is listed on the OFAC Lists or (i) is convicted on, (ii) pleads nolo contendere to, (iii) is indicted on or (iv) is arraigned and held over on charges involving money laundering or predicate crimes to money laundering; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;(i) maintain any Deposit Account or Securities Account except accounts with respect to which Administrative Agent is able to take such actions as Administrative Agent deems necessary to obtain a perfected security interest in such accounts through one or more Account Control Agreements or other agreements giving Administrative Agent "control" as defined under the UCC or (ii) grant or allow any other Person (other than a Lender) to perfect a security interest in, or enter into any agreements with any Persons (other than Lender) accomplishing perfection via control as to, any of its Deposit Accounts or Securities Accounts; provided that for any Deposit Account or Securities Account opened after the Closing Date, Borrower shall have fifteen (15) days from the opening of such account to comply with the terms of this Section.

**ARTICLE 5**

**<u>AGENT</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Appointment.</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Each Lender hereby irrevocably designates and appoints Trinity Capital Inc., or its successor or assignee, as Administrative Agent under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents (including without limitation any subordination and intercreditor agreements (or similar agreements)) and to exercise such rights, powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents (including without limitation any subordination and intercreditor agreements (or similar agreements)), together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall

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not have any duties or responsibilities, except those expressly set forth herein and in the other Loan Documents, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Lenders hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any Borrower to secure any of the Obligations and to take all other actions, exercise all powers and perform such duties as are delegated to Administrative Agent under the Loan Documents, together with such powers and discretion as are reasonably incidental thereto. In furtherance thereof, the Administrative Agent and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to <u>Section 5.2</u> for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under this Agreement or any other Loan Document, or for exercising any rights and remedies thereunder (at the direction of the Administrative Agent), shall be entitled to the benefits of all provisions of this <u>Article 5</u>, as though such co-agents, sub-agents and attorneys-in-fact were the "collateral agent" under the Loan Documents as if set forth in full herein with respect thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Delegation of Duties</u>. Administrative Agent may execute any of its duties under this Agreement and the other Loan Documents by or through its agents or attorneys-in-fact shall be entitled to advice of counsel concerning all matters pertaining to such duties. The exculpatory and indemnification provisions of this Article 5 shall apply to attorney-in-fact and shall apply to their respective activities in connection with the syndication of the Loans as well as activities as the Administrative Agent. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Exculpatory Provisions</u>. Neither Administrative Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents, advisors or attorneys-in-fact shall be (i) liable for any action taken or omitted to be taken, (including the making of (or omitting to make) any determination, calculations, selection, request or providing any approval or consent or enter into any amendments, modifications or supplements) by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable judgment of a court of competent jurisdiction to have resulted from its or such Person's own gross negligence or willful misconduct; provided, that no action taken or not taken in accordance with the directions of the Required Lenders or such other percentage of Lenders as shall be necessary hereunder, as applicable, shall be deemed to constitute gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for (A) any recitals, statements, representations or warranties made by Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, instrument, statement or other document referred to or provided for in, or received by the Administrative Agent or Lenders under or in connection with, this Agreement or any other Loan Document or the transactions contemplated herein or therein, (B) the value, validity, effectiveness, genuineness, enforceability, execution, collectability or sufficiency of this Agreement or any other Loan Document or for any failure of any Borrower a party thereto to perform its obligations hereunder or thereunder, (C) the financial condition or business affairs of Borrower or any other Person liable for the payment of any Obligations or (D) the attachment, creation and/or perfection of the Liens granted or purported to be granted in the Collateral pursuant to this Agreement or the continuation and/or amendment of any financing statements filed to perfect the Liens in the applicable Collateral (other than to the extent expressly directed by the Required Lenders). The Administrative Agent shall not be under any obligation to any Lender (i) to ascertain or to inquire as to the observance or performance of any of the agreements, terms, covenants or provisions contained in, or conditions of, this Agreement or any other Loan Document, (ii) to inspect the properties, books or records of any Borrower, (iii) to ascertain or to inquire as to the use of the proceeds of the Loans, (iv) to ascertain or to inquire as to the existence or possible existence of any Event of Default, (v) to ascertain or to inquire as to any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (vi) to ascertain or to inquire as to the contents of any certificate, report or other document delivered hereunder or under any Loan Documents or in connection herewith or therewith, (vii) to ascertain or to inquire as to the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Reliance by the Administrative Agent</u>. Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon (and shall not be liable for so relaying upon) any communication, request, instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy or email message, internet or intranet website posting, statement, order or other document (or other writing) or conversation believed by it to be genuine and correct and to have been signed, sent or made (or authenticated) by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts and professional advisors selected by the Administrative Agent. In determining compliance with any condition hereunder to the making of a Loan, that by its terms must be fulfilled to the satisfaction of a Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender unless the Administrative Agent shall have received notice to the contrary from such Lender prior to the making of such Loan. The Administrative Agent may request instructions from the Required Lenders (or such number or percentage of the Lenders as shall be necessary under the circumstances as provided for herein or in the other Loan Documents) prior to taking any action or enter into any amendments, modifications or supplements, making any determination (including as to whether any agreement, document or instrument is in form and substance satisfactory to the Administrative Agent), making any calculation (which may be confirmed by the Required Lenders), sending any notice, making a selection or request (including failing to make a selection or request), exercising any voting rights or powers (including failing to exercise any voting rights or powers) or providing any consent or approval (including failing to provide any consent or approval) in connection with this Agreement or any of the other Loan Documents and may refrain (and shall incur no liability from so refraining) from taking or omitting to take any act or making any such determination, calculation, selection, request, exercising such voting rights or powers or providing such notice, approval or consent or entering into or any amendments, modifications or supplements until it receives such instruction (or calculation, as applicable) from the Required Lenders (or such number or percentage of the Lenders as shall be necessary under the circumstances as provided for herein or in the other Loan Documents), in each case as it reasonably deems appropriate (and until such instructions and indemnity, as applicable, are received, the Administrative Agent may (but shall not be obligated to) act, or refrain from acting, as it deems advisable in good faith in the interests of the Lenders). The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or such number or percentage of the Lenders as shall be necessary under the circumstances as provided for herein or in the other Loan Documents), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. Notwithstanding any other provisions set forth in this Agreement or any other Loan Documents, the Administrative Agent shall not be required to take any action that is in its opinion contrary to applicable requirement of law (including, for the avoidance of doubt, any action that may be in violation of the automatic stay under the Bankruptcy Code (or any similar laws)) or that may effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of Bankruptcy Code (or any similar laws) or the terms of any of the Loan Documents or that would in its reasonable opinion subject

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it or any of its officers, employees or directors to personal liability. Each Lender, by delivering its signature page to this Agreement, an Assignment and Acceptance and/or funding its Loans, shall be deemed to have acknowledged receipt of, and consented to and approved, each Loan Document and each other document required to be approved by the Administrative Agent, Required Lenders or Lenders, as applicable on the Closing Date or as of the date of funding such Loan. On any applicable date of determination, upon request, the Administrative Agent shall be required to calculate whether a particular group of Lenders constitutes the Required Lenders. The Administrative Agent shall not be required to remit payments, the proceeds of Collateral or any other funds to the Lenders or any other Secured Parties herein except in accordance with the Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice of Default</u>. Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Potential Event of Default or Event of Default unless the Administrative Agent has received written notice from a Lender or the Borrower referring to this Agreement, describing such Potential Event of Default or Event of Default and stating that such notice is a "notice of default". In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Potential Event of Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or such number or percentage of the Lenders as shall be necessary under the circumstances as provided for herein or in the other Loan Documents); provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Potential Event of Default or Event of Default as it shall deem advisable in good faith in the interests of the Lenders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Non-Reliance on Administrative Agent and Other Lenders</u>. Each Lender expressly acknowledges that neither the Administrative Agent nor any of its Affiliates nor any of their respective officers, directors, employees, agents, advisors or attorneys in fact have made any representations or warranties to it and that no act by the Administrative Agent hereafter taken, including any review of the affairs of a Borrower or any affiliate of a Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of an investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and its affiliates and made its own decision to make its Loans and other extensions of credit hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and its affiliates. Except for notices, reports and other documents expressly required hereunder or otherwise requested by the Borrower in writing to be furnished to the Lenders by the Administrative Agent, the Administrative Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of Borrower or any affiliate of Borrower that may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, advisors, attorneys in fact or affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnification</u>.&nbsp;&nbsp;&nbsp;&nbsp;The Lenders agree to indemnify, hold harmless and defend the Administrative Agent and its Affiliates and their respective officers, directors, employees, agents, advisors and controlling persons (each, an "Agent Indemnitee") (to the extent not timely reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Pro Rata Shares in effect on the date on which indemnification is sought under this <u>Section 5.7</u> (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with such Pro Rata Shares immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against such Agent Indemnitee in any way

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relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent Indemnitee under or in connection with any of the foregoing including without limitation, exercising any of the Administrative Agent's powers, rights, and remedies and performing their duties hereunder and thereunder (or omitting to do the same); provided that no Lender shall be liable to any Agent Indemnitee for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent Indemnitee's bad faith, gross negligence or willful misconduct, provided, however, no action taken or not taken in accordance with the directions of the Administrative Agent, Required Lenders or such other percentage of Lenders as shall be necessary hereunder, as applicable, shall be deemed to constitute gross negligence or willful misconduct. The agreements in this <u>Section 5.7</u> shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Administrative Agent in Its Individual Capacity</u>. Administrative Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with Borrower as though the Administrative Agent were not the Administrative Agent. With respect to its Loans made or renewed by it, the Administrative Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Administrative Agent, and the terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Successor Administrative Agent</u>. Administrative Agent may resign as Administrative Agent (which shall include the Administrative Agent's capacities as administrative agent and collateral agent) upon 30 days' notice to the Lenders and the Borrower. If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent shall (unless an Event of Default with respect to the Borrower shall have occurred and be continuing) be subject to written approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent (other than any rights to indemnity payments or other amounts owed to the retiring Administrative Agent as of the Resignation Effective Date), and the term "Administrative Agent" shall mean such successor agent effective upon such appointment and approval, and the former Administrative Agent's rights, powers and duties as Administrative Agent shall be terminated, without any other or further act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans. Any successor Administrative Agent appointed pursuant to this <u>Section 5.9</u> shall, upon its acceptance of such appointment, become the successor Administrative Agent for all purposes hereunder unless otherwise agreed. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent's delivery of its notice of resignation, the retiring Administrative Agent may (but shall not be obligated to), on behalf of the Lenders and with the written consent of the Borrower (such consent not to be unreasonably withheld or delayed or required if an Event of Default shall have occurred and be continuing) appoint a successor Administrative Agent, which shall be a commercial bank organized or licensed under the laws of the United States of America or of any State thereof and having a combined capital and surplus of at least $500,000,000. If no successor agent has accepted appointment as Administrative Agent by the date that is 30 days following a retiring Administrative Agent's notice of resignation ("<u>Resignation Effective Date</u>"), the retiring Administrative Agent's resignation shall nevertheless thereupon become effective in accordance with such notice, and (i) the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above, (ii) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (iii) except for any indemnity payments or other amounts then owed to the retiring Administrative Agent, all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender directly, until such time, if any, as the successor Administrative Agent is appointed as provided for above. After any retiring Administrative Agent's resignation as Administrative Agent, the provisions of this Article 5 shall continue to inure to its benefit as

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to any actions taken or omitted to be taken by it while it was Administrative Agent. Notwithstanding anything to the contrary, in no event shall a successor agent be a Defaulting Lender.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Authorization for Intercreditor Agreement and Subordination Agreement</u>. The Lenders irrevocably authorize the Administrative Agent to enter into and perform its obligations under any Subordination Agreement or other similar arrangement permitted under this Agreement and any amendments, restatements, supplements or other modifications thereto approved in accordance with the terms thereof (without limiting the provisions set forth in Section 5.4 hereof).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Administrative Agent May File Proofs of Claim</u>. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to any Borrower, the Administrative Agent (on behalf of the Lenders) (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;To file a verified statement pursuant to rule 2019 of the Federal Rules of Bankruptcy Procedure that, in its sole opinion, complies with such rule's disclosure requirements for entities representing more than one creditor;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;To file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Obligations that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Secured Parties (including any claim for the reasonable compensation, expenses, disbursements and advances of the Secured Parties and their respective agents and counsel and all other amounts due the Secured Parties hereunder) allowed in such judicial proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;To collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each applicable Lender to make such payments to the Administrative Agent, as applicable, and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and their respective agents and counsel, and any other amounts due to the Administrative Agent.

Each Lender further agrees that it shall not propose, vote in favor of, or otherwise support any plan of reorganization that is in contravention of any plan of reorganization that is proposed or supported by the Administrative Agent, and shall affirmatively vote to "reject" any plan of reorganization that is not affirmatively supported by the Administrative Agent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Collateral Matters</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent is hereby authorized on behalf of the Lenders, without the necessity of any notice to or further consent from the Lenders, from time to time (but without any obligation) to take any action with respect to the Collateral and this Agreement or any other Loan Document that may be necessary to perfect and maintain perfected Liens upon the Collateral granted pursuant to this Agreement or any other Loan Document if required or expressly permitted under the terms of any of the other Loan Documents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Each of the Lenders hereby irrevocably authorize and instruct the Administrative Agent to, and the Administrative Agent shall:

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Release (or confirm any release) any Lien granted to or held by the Administrative Agent upon any Collateral (A) upon the date on which all Obligations have been repaid in full, (B) constituting property sold or to be sold or otherwise disposed of as part of or in connection with any disposition permitted hereunder or under any other Loan Document or to which the Required Lenders have consented, (C) that does not constitute (or ceases to constitute) Collateral, (D) otherwise pursuant to and in accordance with the provisions of any applicable Loan Document or (E) subject to <u>Section 5.11</u>, if approved, authorized or ratified in writing by the Required Lenders, provided, however, that if any action is required by the Administrative Agent to so release such Lien, upon the request of the Administrative Agent, the Borrower shall have delivered to the Administrative Agent a certificate certifying to the permissibility of such release hereunder (and the Administrative Agent shall be permitted to rely upon such certificate without incurring any liability therefor);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;Enter into any Subordination Agreement and/or similar agreement contemplated hereunder, including with respect to Debt that is (i) required or permitted to be subordinated in right of payment hereunder and/or (ii) secured by Liens and required or permitted to be pari passu with or junior to the Liens securing the Obligations, and with respect to which Debt, a Subordination Agreement or similar agreement is contemplated under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrower, the Administrative Agent and each Lender hereby agree that (i) no Lender (other than the Administrative Agent) shall have any right individually to realize upon any of the Collateral, (ii) no Lender shall have any right to enforce the Obligations, it being understood and agreed that all powers, rights and remedies hereunder and under any of the Loan Documents may be exercised solely by the Administrative Agent for the benefit of the Lenders in accordance with the terms hereof and thereof, and (iii) in the event of a foreclosure or similar enforcement action by the Administrative Agent on any of the Collateral pursuant to a public or private sale or other disposition (including pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), the Administrative Agent (or any Lender, except with respect to a "credit bid" pursuant to Section 363(k), Section 1129(b)(2)(a)(ii) or otherwise of the Bankruptcy Code), may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition and the Administrative Agent, as agent for and representative of Lenders (but not any Lender or the Lenders in its or their respective individual capacities) shall be entitled, upon instructions from Required Lenders, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such sale or disposition, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Administrative Agent at such sale or other disposition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent shall not be responsible for or have a duty to ascertain or inquire into any representation or warranty regarding the existence or collectability of the Collateral, the existence, priority or perfection of the Administrative Agent's Lien thereon, or any certificate prepared by Borrower in connection therewith, nor shall the Administrative Agent be responsible or liable to the Lenders for any failure to monitor or maintain any portion of the Collateral, Liens therein or financing statements filed in connection therewith. Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent's authority to release or subordinate its interest in particular types or items of property, or to release any Borrower from its obligations under the Loan Documents or its Lien on any Collateral pursuant this <u>Section 5.12</u>. In each case as specified in this Article 5, the Administrative Agent will (and each Lender hereby authorizes the Administrative Agent to, at the Borrower's expense, promptly execute and deliver to Borrower such documents, filings and recordings as Borrower may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under this Agreement or any other Loan Document or to subordinate its interest therein, in accordance with the terms of the Loan Documents and this Article 5. Additionally, upon the reasonable request of the Borrower, the Administrative Agent will return possessory Collateral held by it that is released from the security interests of the Loan Documents pursuant to this Article 5; provided that, in the event that any possessory collateral in the possession of the Administrative Agent gets lost or misplaced upon the reasonable request of the Borrower, the Administrative Agent shall provide a loss affidavit to the Borrower in the form customarily provided by the Administrative Agent in such circumstances.

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**ARTICLE 6**

**<u>BORROWER'S INDEMNITY</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Indemnity By Borrower</u>. Borrower covenants and agrees, at its sole cost and expense and without limiting any other rights which Administrative Agent and Lenders have hereunder, to indemnify, protect and save Administrative Agent, each Lender, and each of their directors, officers, employees, consultants, agents, attorneys, or any other Person affiliated with or representing Administrative Agent or any Lender (each, an "<u>Indemnified Person</u>") harmless against and from any and all claims, damages, losses, liabilities, obligations, demands, defenses, judgments, costs, disbursements or expenses of any kind or of any nature whatsoever (collectively, "<u>Claims</u>") which may be imposed upon, incurred by or asserted or awarded against Administrative Agent or a Lender and related to or arising from the following, unless such claim, loss or damage shall be based upon the gross negligence or willful misconduct of Administrative Agent or such Lender:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;the transactions contemplated by the Loan Documents (including reasonable and documented attorneys' fees and expenses);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;any investigative, response, remedial, administrative or judicial matter or proceeding, whether or not such Indemnified Person shall be designated a party thereto and including any such proceeding initiated by or on behalf of Borrower, and the reasonable and documented out-of-pocket expenses of investigation by engineers, environmental consultants and similar technical personnel and any commission, fee or compensation claimed by any broker (other than any broker retained by a Lender) asserting any right to payment for the transactions contemplated hereby which may be imposed on, incurred by or asserted against such Indemnified Person as a result of or in connection with the transactions contemplated hereby and the use or intended use of the proceeds of the loan proceeds;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;any breach by Borrower of the representations, warranties, covenants, or other obligations or agreements made by Borrower in this Agreement or in any agreement related hereto or thereto;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;the violation by Borrower of any applicable state or federal law, rule or regulation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;a material misrepresentation made by Borrower to Administrative Agent or a Lender; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;without duplication of any Claims under clause (c) above, any governmental fees, charges, taxes or penalties levied or imposed in respect to any Collateral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Defense of Claims</u>. Borrower agrees to pay all amounts due under this Article 6 promptly on notice thereof from Administrative Agent. To the extent that Borrower may make or provide, to Administrative Agent's satisfaction, for payment of all amounts due under this Article 6, Borrower shall be subrogated to Administrative Agent's rights with respect to such events or conditions. So long as no Event of Default has occurred and is continuing, Borrower may defend any claims with counsel of its own choosing reasonably acceptable to Administrative Agent, provided if the claim creates a significant exposure for the Lenders in Administrative Agent's its sole judgment, or attempts to establish legal principle adverse to any Lender or Administrative Agent, Administrative Agent, on behalf of Lenders, shall select the defense counsel. Borrower may settle any claims against Administrative Agent or a Lender, provided such settlement includes a complete release of Administrative Agent and Lenders from any claims at no cost to Administrative Agent or Lenders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Survival</u>. All of the indemnities and agreements contained in this Article 6 shall survive and continue in full force and effect notwithstanding termination of this Agreement, the full payment of any Loans or Borrower's performance of all Obligations.

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**ARTICLE 7**

**<u>DEFAULT</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Lender's Rights on Default</u>. If an Event of Default occurs, Administrative Agent, on behalf of Lenders, shall be entitled to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;declare the unpaid balance of the Loans and this Agreement immediately due and payable, whether then due or thereafter arising;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;immediately and automatically terminate any further obligations to make Loans under this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;require Borrower to, and Borrower hereby agrees that it will at its expense and upon request of Administrative Agent, assemble the Collateral or any part thereof, as directed by Administrative Agent and make it available to Administrative Agent at a place and time to be designated by Administrative Agent, for cash, on credit or for future delivery, and upon such other terms as the Administrative Agent deems commercially reasonable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral. Administrative Agent and its agents and any purchasers at or after foreclosure are hereby granted a non-exclusive, irrevocable, perpetual, fully paid, royalty-free license or other right, solely pursuant to the provisions of this <u>Section 7.1</u>, to use, without charge, Borrower's Intellectual Property, including labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, and advertising matter, or any Property of a similar nature, now or at any time hereafter owned or acquired by Borrower or in which Borrower now or at any time hereafter has any rights; *provided* that such license shall only be exercisable in connection with the disposition of Collateral upon Administrative Agent's exercise of its remedies hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;without notice except as specified below, sell, resell, assign and deliver or grant a license to use or otherwise dispose of the Collateral or any part thereof, in one or more parcels at public or private sale, at any place designated by Administrative Agent;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;occupy any premises owned or leased by Borrower where the Collateral or any part thereof is assembled or located for a reasonable period in order to effectuate its rights and remedies hereunder or under law, without obligation to Borrower in respect of such occupation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;commence and prosecute any bankruptcy, insolvency or other similar proceeding or consent to Borrower commencing any bankruptcy, insolvency or other similar proceeding;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;place a "hold" on any account maintained with Administrative Agent and/or deliver a notice of exclusive control, any entitlement order, or other directions or instructions pursuant to any Account Control Agreement or similar agreements providing control of any Collateral;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;exercise any and all rights and remedies of Borrower under or in connection with the Collateral, or otherwise in respect of the Collateral, including without limitation, (A) any and all rights of Borrower to demand or otherwise require payment of any amount under, or performance of any provision of, the accounts receivables and the other Collateral, (B) withdraw, or cause or direct the withdrawal, of all funds with respect to any Deposit Accounts, (C) exercise all other rights and remedies with respect to the accounts receivables and the other Collateral, including without limitation, those set forth in Section 9-607 of the UCC and (D) exercise any and all voting, consensual and other rights with respect to any Collateral; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j)&nbsp;&nbsp;&nbsp;&nbsp;exercise all rights and remedies available to Administrative Agent and Lenders under the Loan Documents or at law or equity, including all remedies provided under the UCC (including disposal of the Collateral pursuant to the terms thereof).

Borrower agrees that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Borrower of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification. At any sale of the Collateral, if permitted by applicable law, the Administrative Agent and Lenders may be the purchaser, licensee, assignee or recipient of the Collateral or any part thereof and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold, assigned or licensed at such sale, to use and apply any of the Obligations as a credit on account of the purchase price of the Collateral or any part thereof payable at such sale. To the extent permitted by applicable law, Borrower waives all claims, damages and demands it may acquire against the Administrative Agent and Lenders arising out of the exercise by it of any rights hereunder. Borrower hereby waives and releases to the fullest extent permitted by law any right or equity of redemption with respect to the Collateral, whether before or after sale hereunder, and all rights, if any, of marshalling the Collateral and any other security for the Obligations or otherwise. The Administrative Agent and Lenders shall not be liable for failure to collect or realize upon any or all of the Collateral or for any delay in so doing nor shall it be under any obligation to take any action with regard thereto. The Administrative Agent and Lenders shall not be obligated to make any sale of the Collateral regardless of notice of sale having been given. The Administrative Agent and Lenders may adjourn any public or private sale from time to time by announcement at the time and place fixed therefore, and such sale may, without further notice, be made at the time and place to which it was so adjourned. The Administrative Agent and Lenders shall not be obligated to clean-up or otherwise prepare the Collateral for sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k)&nbsp;&nbsp;&nbsp;&nbsp;all payments received by Borrower in respect of the Collateral shall be received in trust for the benefit of the Administrative Agent and Lenders, shall be segregated from other funds of Borrower and shall be forthwith paid over the Administrative Agent, for the benefit of the Lenders, in the same form as so received (with any necessary endorsement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l)&nbsp;&nbsp;&nbsp;&nbsp;the Administrative Agent may, without notice to Borrower except as required by law and at any time or from time to time, charge, set off and otherwise apply all or part of the Obligations against any funds deposited with it or held by it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m)&nbsp;&nbsp;&nbsp;&nbsp;upon the written demand of the Administrative Agent, Borrower shall execute and deliver to the Administrative Agent a collateral assignment or assignments of any or all of Borrower's Intellectual Property and such other documents and take such other actions as are necessary or appropriate to carry out the intent and purposes hereof;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n)&nbsp;&nbsp;&nbsp;&nbsp;if Borrower fails to pay any amounts or furnish any required proof of payment due to third persons or entities, as required under the terms of this Agreement, then Administrative Agent may do any or all of the following: (a) make payment of the same or any part thereof; or (b) obtain and maintain insurance policies of the type discussed in <u>Section 4.2(q)</u> of this Agreement, and take any action with respect to such policies as Administrative Agent deems prudent. Any amounts paid or deposited by Administrative Agent shall constitute Administrative Agent's Expenses, shall be immediately due and payable, shall bear interest at the Default Rate and shall be secured by the Collateral. Any payments made by Administrative Agent shall not constitute an agreement by Administrative Agent to make similar payments in the future or a waiver by Administrative Agent of any Event of Default under this Agreement. Borrower shall pay all reasonable fees and expenses, including Administrative Agent's Expenses, incurred by Administrative Agent in the enforcement or attempt to enforce any of the Obligations hereunder not performed when due;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o)&nbsp;&nbsp;&nbsp;&nbsp;Lenders' rights and remedies under this Agreement, the Loan Documents, and all other agreements shall be cumulative. Lenders shall have all other rights and remedies not inconsistent herewith as provided under the UCC, by law, or in equity. No exercise by Administrative Agent or any Lender of one right or remedy shall be deemed an election, and no waiver by Administrative Agent or any

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Lender of any Event of Default on Borrower's part shall be deemed a continuing waiver. No delay by Administrative Agent or any Lender shall constitute a waiver, election, or acquiescence by it. The Obligations of Borrower to any Lender may be enforced against Borrower in accordance with the terms of this Agreement and the other Loan Documents and, to the fullest extent permitted by applicable law, it shall not be necessary for any other party to be joined as an additional party in any proceeding to enforce such Obligations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p)&nbsp;&nbsp;&nbsp;&nbsp;the proceeds and/or avails of the Collateral, or any part thereof, and the proceeds and the avails of any remedy hereunder (as well as any other amounts of any kind held by Administrative Agent, for the benefit of Lenders, at the time of or received by Administrative Agent after the occurrence of an Event of Default hereunder) shall be paid to and applied as follows:

<u>First</u>, to the payment of out-of-pocket costs and expenses, including all amounts expended to preserve the value of the Collateral, of foreclosure or suit, if any, and of such sale and the exercise of any other rights or remedies, and of all proper fees, expenses, liability and advances, including reasonable legal expenses and attorneys' fees, incurred or made hereunder by Administrative Agent, including Administrative Agent's Expenses;

<u>Second</u>, to the payment to Administrative Agent, on behalf of the Lenders of the amount then owing or unpaid on the Loans for any accrued and unpaid interest, the amounts which would have otherwise come due under <u>Sections 2.8</u>, <u>2.9</u> or <u>2.10</u>, if the Loans had been voluntarily prepaid, the principal balance of the Loans, and all other Obligations with respect to the Loans (provided, however, if such proceeds shall be insufficient to pay in full the whole amount so due, owing or unpaid upon the Loans, then first, to the unpaid interest thereon ratably, second, to the amounts which would have otherwise come due under <u>Section 2.8</u>, <u>2.9</u>, or <u>2.10</u> ratably, if the Loans had been voluntarily prepaid, third, to the principal balance of the Loans ratably, and fourth, to the ratable payment of other amounts then payable to Lenders under any of the Loan Documents); and

<u>Third</u>, to the payment of the surplus, if any, to Borrower, its successors and assigns or to the Person lawfully entitled to receive the same;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q)&nbsp;&nbsp;&nbsp;&nbsp;Administrative Agent shall have proceeded to enforce any right under this Agreement or any other of the Loan Documents by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case (unless otherwise ordered by a court of competent jurisdiction), Administrative Agent shall be restored to its former position and rights hereunder with respect to the Property subject to the security interest created under this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;7.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Rights Cumulative; Waivers</u>. All rights, remedies and powers granted to Administrative Agent and Lenders hereunder are irrevocable and cumulative, and not alternative or exclusive, and shall be in addition to all other rights, remedies and powers given hereunder, or in or by any other instrument, or available in law or equity. Administrative Agent's and Lender's knowledge at any time of any breach of, or non-compliance with, any representations, warranties, covenants or agreements hereunder shall not constitute or be deemed a waiver of any of such rights or remedies hereunder, and any waiver of any default shall not constitute a waiver of any other default. Notwithstanding any foreclosure or sale of any item of Collateral by Administrative Agent as permitted under this Agreement, Borrower shall remain liable for any deficiency. All amounts realized by Administrative Agent in furtherance of its rights to sell or foreclose upon the Collateral shall first be applied to all costs of the action and all costs of enforcement or interpretation of this Agreement, including any court costs, legal or expert fees and filing fees, then to any outstanding interest or penalties payable under this Agreement, then to repayment of principal of all Loans.

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**ARTICLE 8**

**<u>MISCELLANEOUS</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Costs and Expenses</u>. Borrower will pay all Administrative Agent's Expenses and Lender's Expenses on demand.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Power of Attorney</u>. Borrower hereby irrevocably constitutes and appoints Administrative Agent as Borrower's attorney-in-fact with full power of substitution, for Borrower and any of its Subsidiary's and in Borrower's or any of its Subsidiary's name to do, at Administrative Agent's option and at Borrower's expense upon the occurrence and during the continuance of an Event of Default, to (a) ask, demand, collect (including, but not limited to the execution, in Borrower's or any Subsidiary's name, of notification letters), sue for, compound and give acquittance for any and all payments assigned hereunder and to endorse, in writing or by stamp, Borrower's name or otherwise on all checks for any monies in respect of the Collateral; (b) sign Borrower's or any of its Subsidiaries' name on any invoice or bill of lading for any account or drafts against Account Debtors; (c) settle and adjust disputes and claims about any accounts directly with Account Debtors, for amounts and on terms Administrative Agent determines reasonable; (d) make, settle, and adjust all claims under Borrower's insurance policies; (e) pay, contest or settle any Lien, charge, encumbrance, security interest, and adverse claim in or to the Collateral, or any judgment based thereon, or otherwise take any action to terminate or discharge the same; and (f) transfer the Collateral into the name of Administrative Agent or a third party as the UCC or any applicable law permits. Borrower hereby appoints Administrative Agent as its lawful attorney-in-fact to sign Borrower's or any of its Subsidiaries' name on any documents necessary to perfect or continue the perfection of Administrative Agent's security interest in the Collateral regardless of whether an Event of Default has occurred until all Obligations (other than inchoate indemnity obligations) have been satisfied in full and Lenders are under no further obligation to make extend Loans hereunder. Administrative Agent's foregoing appointment as Borrower's or any of its Subsidiaries' attorney in fact, and all of Administrative Agent's and Lenders' rights and powers, coupled with an interest, are irrevocable until all Obligations (other than inchoate indemnity obligations) have been fully repaid and performed and Lenders' obligation to provide Loans terminates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Survival</u>. All representations, warranties and indemnities contained in this Agreement (and any and each other agreement or instrument delivered pursuant hereto) shall survive (i) the execution and delivery of this Agreement, (ii) the consummation of the transactions contemplated hereby, (iii) the payment of the Loans, (iv) the performance of all Obligations, and (v) termination of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Assignments</u>. Except as herein provided, this Agreement shall be binding upon and inure to the benefit of Administrative Agent, Lenders, and Borrower and their respective representatives, successors and assigns.

The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices a copy of each assignment and assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amounts (and stated interest) of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "<u>Register</u>"). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

Any Lender may assign this Agreement and the Notes (if any) in whole or in part or sell participations therein without notice to Borrower or Borrower's consent. Notwithstanding the foregoing, Borrower may not assign, transfer or otherwise convey this Agreement, in whole or in part, without Administrative Agent's and each Lender's prior written consent and, so long as no Event of Default exists, no Lender may assign its interest in this Agreement to any Person who is known to such Lender as a direct

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competitor of the Borrower, whether as an operating company or direct or indirect parent with voting control over such operating company. Each Lender that sells a participation to a participant (each, a "<u>Participant</u>") in accordance with this <u>Section 8.4</u> (shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations under the Loan Documents (the "<u>Participant Register</u>"); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.5&nbsp;&nbsp;&nbsp;&nbsp;<u>No Brokers</u>. Borrower represents to Lenders that no brokers or advisors have been or will be retained in connection with the transactions contemplated herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice</u>. All notices, consents, requests, instructions, approvals and communications provided herein shall be validly given, made or served, effective only if in writing, except as otherwise provided herein, and sent by overnight courier, certified U.S. mail, postage prepaid, or by electronic mail, and shall be deemed received within five (5) Business Days from the date of posting if sent by mail, one Business Day after delivery thereto if sent by overnight courier service, or on the day of transmission if sent by electronic mail with a confirmation receipt obtained, or if such day is not a Business Day, then on the following Business Day. All such notices, consents, requests, instructions, approvals and communications shall be sent to a party at the address set forth for such party on the signature pages hereto, or to such other address as such party may designate in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law; Consent to Jurisdiction and Service of Process</u>. THIS AGREEMENT SHALL BE SUBJECT TO AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAW PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE LAWS OF SUCH STATE). IN THE EVENT THAT ADMINISTRATIVE AGENT OR ANY LENDER INITIATES AGAINST BORROWER ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY RELATED ASSIGNMENT OR ANY OF BORROWER'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER, EACH PARTY DOES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING A LOCATION IN THE STATE OF NEW YORK. IN THE EVENT THAT BORROWER INITIATES AGAINST ADMINISTRATIVE AGENT OR ANY LENDER ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY RELATED ASSIGNMENT OR ANY OF BORROWER'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER, EACH PARTY DOES HEREBY IRREVOCABLY SUBMIT TO THE JURISDICTION AND VENUE OF ANY COURTS (FEDERAL, STATE OR LOCAL) HAVING A LOCATION IN THE STATE OF NEW YORK. EACH PARTY EXPRESSLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE PREPAID, DIRECTED TO ITS LAST KNOWN ADDRESS WHICH SERVICE SHALL BE DEEMED COMPLETED WITHIN FIVE (5) DAYS AFTER THE DATE OF MAILING THEREOF. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE STATE OF NEW YORK IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED TO PRECLUDE THE ENFORCEMENT BY EITHER PARTY OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR THE TAKING OF ANY ACTION BY SUCH PARTY TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE JURISDICTION.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Other Documents</u>. Borrower shall execute such other documents and shall otherwise cooperate with Administrative Agent as Administrative Agent reasonably requires to effectuate the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Severability</u>. If any part of this Agreement shall be contrary to any law which a party might seek to apply or enforce or should otherwise be defective, the other provisions hereof shall not be affected thereby but shall continue in full force and effect, to which end they are hereby declared severable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Entirety; Amendments</u>. This Agreement and the Exhibits referred to herein constitute the entire agreement between Administrative Agent, Lenders, and Borrower as to the subject matter contemplated herein, and supersedes all prior agreements and understandings relating thereto. Each of the parties hereto acknowledges that no party hereto nor any agent of any other party whomsoever has made any promise, representation or warranty whatsoever, express or implied, not contained herein, concerning the subject matter hereof, to induce it to execute this Agreement. No other agreements will be effective to change, modify or terminate this Agreement in whole or in part unless such agreement is in writing and duly executed by the party to be charged except as expressly set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Jury Trial</u>. EACH PARTY HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY RELATED DOCUMENTS, ANY DEALINGS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BY THE PARTIES. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, TRANSACTION CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE AND MAY NOT BE MODIFIED ORALLY OR IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS AND MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY THE COURT.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Publicity</u>. Each Lender will have the right to (a) make a public announcement and include on its website, social media sites, and other marketing materials information related to this transaction, and (b) include information about this transaction, including but not limited to Borrower's name, the type of investment, principal amount, interest rate and maturity date, in its periodic reports with the Securities and Exchange Commission ("SEC"), to the extent required by SEC rules and regulations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Demand Waiver</u>. Borrower waives, to the fullest extent permitted by law, demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts, documents, instruments, chattel paper, and guarantees held by the Lenders on which Borrower or any Subsidiary is liable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.14&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, is an original, and all taken together, constitute one Agreement. Delivery of an executed counterpart of a signature page of this Agreement by facsimile, portable document format (.pdf) or other electronic transmission will be as effective as delivery of a manually executed counterpart hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Electronic Execution of Certain Other Documents</u>. The words "execution," "execute", "signed," "signature," and words of like import in or related to any document to be signed in connection with this Agreement and the transactions contemplated hereby (including without limitation assignments, assumptions, amendments, waivers and consents) shall be deemed to include electronic signatures, the electronic matching of assignment terms and contract formations on electronic platforms approved by the Administrative Agent, or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal

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Electronic Signatures in Global and National Commerce Act, the New York Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.16&nbsp;&nbsp;&nbsp;&nbsp;<u>Correction of Loan Documents</u>. Administrative Agent, on behalf of Lenders, may correct patent errors and fill in any blanks in the Loan Documents consistent with the agreement of the parties so long as Administrative Agent provides Borrower with notice of such correction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.17&nbsp;&nbsp;&nbsp;&nbsp;<u>Right of Set Off</u>. Borrower hereby grants to Administrative Agent, for the benefit of Lenders, a Lien, security interest and right of set off as security for all Obligations to Lenders hereunder, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of the Administrative Agent or any entity under the control of the Lenders (including a Lender affiliate) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, the Administrative Agent, on behalf of Lenders, may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE LENDERS TO EXERCISE THEIR RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING THEIR RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY BORROWER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.18&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidentiality</u>. Subject to Section 8.12, in handling any Confidential Information, Administrative Agent, Lender and Borrower and all employees and agents of such party shall exercise the same degree of care that such party exercises with respect to its own proprietary information of the same types to maintain the confidentiality of any non-public information thereby received or received pursuant to this Agreement except that disclosure of such information may be made (i) in the case of any party, to its subsidiaries or Affiliates, (ii) in the case of any Lender, to prospective transferees or purchasers of any interest in the Loans, provided that such Lender shall use its best efforts to obtain any prospective transferee's or purchaser's agreement to the confidentiality obligations comparable to those under this Section 8.18, (iii) as required by law, regulations, rule or order, subpoena, judicial order or similar order, (iv) in the case of Administrative Agent or Lender, to Administrative Agent's or Lender's regulators or as otherwise may be required in connection with the examination, audit or similar investigation of Administrative Agent or Lender, (v) to third party service providers of Administrative Agent or any Lender who are subject to confidentiality obligations comparable to those under this Section 8.18, and (vi) as Administrative Agent or any Lender may determine is needed in connection with the enforcement of any remedies hereunder. Confidential Information hereunder shall not include information that either: (a) is in the public domain or in the knowledge or possession of the receiving party when disclosed to such party, or becomes part of the public domain after disclosure to such receiving party through no fault of such receiving party; or (b) is disclosed to such receiving party by a third party, provided such receiving party does not have actual knowledge that such third party is prohibited from disclosing such information. For purposes of this Section 8.18, "Confidential Information" means business, marketing, and technical information (in whatever form, whether written, oral, or electronic) of the disclosing party that is confidential or proprietary in nature, including, but not limited to, proprietary ideas, patentable ideas or trade secrets, existing or contemplated products and services, research and development, production, costs, profit and margin information, finances and financial projections, customers, clients, current and future business plans and models and other documents prepared by or for the receiving party or any of its employees and agents that contain or are generated from such documents. For the avoidance of doubt, information does not need to be marked or identified as "Confidential" or "Proprietary" to be deemed Confidential Information under this Agreement.

**[SIGNATURES ON FOLLOWING PAGE]**

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**IN WITNESS WHEREOF**, the parties hereto have caused this Loan and Security Agreement to be duly executed as of the day and year first above written.

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| | |
|:---|:---|
| **LENDER:** | **LENDER:** |
| **TRINITY CAPITAL INC.**, | **TRINITY CAPITAL INC.**, |
| a Maryland corporation | a Maryland corporation |
| By: | /s/ Sarah Stanton |
| Name: Sarah Stanton | Name: Sarah Stanton |
| Its: General Counsel and Chief Compliance Officer | Its: General Counsel and Chief Compliance Officer |
| Address for Notices: | Address for Notices: |
| Trinity Capital Inc. | Trinity Capital Inc. |
| 1 N. 1st Street, Floor 3 | 1 N. 1st Street, Floor 3 |
| Phoenix, AZ 85004 | Phoenix, AZ 85004 |
| Attention: Legal Department | Attention: Legal Department |
| Telephone: [\*\*\*] | Telephone: [\*\*\*] |
| Email: [\*\*\*] | Email: [\*\*\*] |
| **BORROWER**: | **BORROWER**: |
| **SHOULDER INNOVATIONS, INC.**,  | **SHOULDER INNOVATIONS, INC.**,  |
| a Delaware corporation | a Delaware corporation |
| By: | /s/ Matthew Ahearn |
| Name: Matthew Ahearn | Name: Matthew Ahearn |
| Its: Chief Operating Officer | Its: Chief Operating Officer |
| Address for Notices: | Address for Notices: |
| 1535 Steele Ave SW, Suite B | 1535 Steele Ave SW, Suite B |
| Grand Rapids, MI 49507 | Grand Rapids, MI 49507 |
| Attention: | Attention: |
| Telephone: | Telephone: |
| Email Address: | Email Address: |
| _____________________________ | _____________________________ |

---

**[Signature Page to Loan And Security Agreement]**

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| | |
|:---|:---|
| **ADMINISTRATIVE AGENT:** | **ADMINISTRATIVE AGENT:** |
| **TRINITY CAPITAL INC.**, | **TRINITY CAPITAL INC.**, |
| a Maryland corporation | a Maryland corporation |
| By: | /s/ Sarah Stanton |
| Name: Sarah Stanton | Name: Sarah Stanton |
| Its: General Counsel and Chief Compliance Officer | Its: General Counsel and Chief Compliance Officer |
| Address for Notices: | Address for Notices: |
| Trinity Capital Inc. | Trinity Capital Inc. |
| 1 N. 1st Street, Floor 3 | 1 N. 1st Street, Floor 3 |
| Phoenix, AZ 85004 | Phoenix, AZ 85004 |
| Attention: Legal Department | Attention: Legal Department |
| Telephone[\*\*\*] | Telephone[\*\*\*] |
| Email: [\*\*\*] | Email: [\*\*\*] |

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**[Signature Page to Loan And Security Agreement]**

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 **THE FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT** 

This **FIRST AMENDMENT TO LOAN AND SECURITY AGREEMENT** (this "**Amendment**") is entered into as of April 23, 2024, by and among the lenders from time to time party hereto (each, a "**Lender**" and collectively, the "**Lenders**") and **TRINITY CAPITAL INC.,** a Maryland corporation, as administrative agent and collateral agent for the Lenders ("**Administrative Agent**"), with its principal office at with its principal office at 1 N 1<sup>st</sup> Street, Floor 3, Phoenix, AZ 85004 and SHOULDER INNOVATIONS, INC., a Delaware corporation ("**Borrower**"), with offices at 1535 Steele Ave SW, Suite B Grand Rapids, MI 49507.

Administrative Agent, Lenders and Borrower have entered into that certain Loan and Security Agreement, dated as of August 7, 2023 (the "**Existing Loan Agreement**", and as amended, modified, restated, replaced or supplemented from time to time, including pursuant to this Amendment, the "**Loan Agreement**"). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.

1.&nbsp;&nbsp;&nbsp;&nbsp;<u>MODIFICATION TO EXISTING LOAN AGREEMENT</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;Upon satisfaction of the conditions set forth in Section 3 hereof, the Existing Loan Agreement is hereby amended as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;**Section 3.1** (**Grant of Security Interests**). Clause (c) Section 3.1 of the Loan Agreement hereby is amended and restated in its entirety and replaced with the following:

"(c) All contract rights and general intangibles (including Intellectual Property), now owned or hereafter acquired, including goodwill, license agreements, franchise agreements, blueprints, drawings, purchase orders, customer lists, route lists, infringements, claims, software, computer programs, computer disks, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payment intangibles, commercial tort claims (including without limitation, that certain commercial tort claim, a civil action for infringement of Borrower's United States Patent No. 11,771,561 under the patent laws of the United States, 35 U.S.C. §§ 100, *et seq.* filed in the United States District Court for the District of Delaware on February 28, 2024, C.A. No. 24-266-JLH), payments of insurance and rights to payment of any kind;"

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;&nbsp;&nbsp;&nbsp;**References Within Existing Loan Agreement**. Each reference in the Existing Loan Agreement to "this Agreement" and the words "hereof," "herein," "hereunder," or words of like import, shall mean and be a reference to the Existing Loan Agreement as amended by this Amendment. This Amendment shall be a Loan Document.

2.&nbsp;&nbsp;&nbsp;&nbsp;<u>CONDITIONS TO EFFECTIVENESS</u>. This Amendment shall become effective (such date, the "**Amendment Closing Date**") upon satisfaction by Administrative Agent of each of the conditions specified below, Administrative Agent shall have received one or more counterparts of this Amendment, duly executed, completed and delivered by, Administrative Agent, Lenders and Borrower.

3.&nbsp;&nbsp;&nbsp;&nbsp;<u>REPRESENTATIONS AND WARRANTIES</u>. To induce Administrative Agent and Lenders to enter into this Amendment, Borrower hereby confirms, as of the date hereof, (a) that the representations and warranties made by it in Section 4.1 of the Loan Agreement and in the other Loan Documents are true and correct in all material <u>respects</u>; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof, provided, further, that to the extent such representations and warranties by their terms expressly relate only to a prior date such representations and warranties shall be true and correct as of such prior date; (b) that there has not been and there does not exist a Material Adverse Change; (c) Administrative Agent (for the ratable benefit of the Lenders) has and shall continue to have valid, enforceable and perfected first-priority liens, subject only to Permitted Liens, on and security interests in the Collateral and all other collateral heretofore granted by Borrower to Administrative Agent (for the ratable benefit of the Lenders) pursuant to the Loan Documents or otherwise granted to or held by Administrative Agent; (d) the

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agreements and obligations of Borrower contained in the Loan Documents and in this Amendment constitute the legal, valid and binding obligations of Borrower, enforceable against Borrower in accordance with their respective terms, except as the enforceability thereof may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by the application of general principles of equity; and (e) the execution, delivery and performance of this Amendment by Borrower will not (i) conflict with Borrower's organizational documents, including its Operating Documents, (ii) contravene, conflict with, constitute a default under or violate any material requirement of law applicable thereto, (iii) contravene, conflict or violate any applicable material order, writ, judgment, injunction, decree, determination or award of any Governmental Authority by which Borrower or any of its property or assets may be bound or affected, and (iv) constitute an event of default under any material agreement by which Borrower or any of its properties is bound, the termination or noncompliance with which could reasonably be expected to have a Material Adverse Change. For the purposes of this Section, each reference in Section 4.1 of the Loan Agreement to "this Agreement," and the words "hereof," "herein," "hereunder," or words of like import in such Section, shall mean and be a reference to the Loan Agreement as amended by this Amendment.

4.&nbsp;&nbsp;&nbsp;&nbsp;<u>RATIFICATION OF LOAN DOCUMENTS</u>. Borrower hereby expressly (1) grants, reaffirms, ratifies and confirms its Obligations under the Loan Agreement and the other Loan Documents, (2) grants, reaffirms, ratifies and confirms the grant of security under Article 3 of the Loan Agreement, (3) grants and reaffirms that such grant of security in the Collateral (as such term is amended by this Amendment) secures all Obligations under the Loan Agreement, and with effect from (and including) the date hereof, such grant of security in the Collateral: (x) remains in full force and effect; and (y) secures all Obligations under the Loan Agreement, as amended by this Amendment, and the other Loan Documents, (4) agrees that this Amendment shall be a "Loan Document" under the Loan Agreement, and (5) agrees that the Loan Agreement and each other Loan Document shall remain in full force and effect following any action contemplated in connection herewith.

5.&nbsp;&nbsp;&nbsp;&nbsp;<u>CONTINUING VALIDITY</u>. Borrower understands and agrees that in modifying the existing Obligations, Administrative Agent and the Lenders are relying upon Borrower's representations, warranties, and agreements, as set forth in the Loan Agreement. Except as expressly modified pursuant to this Amendment, the terms of the Loan Agreement remain unchanged and in full force and effect. Administrative Agent's and Lenders' agreement to modifications to the existing Obligations pursuant to this Amendment in no way shall obligate Administrative Agent or any Lender to make any future modifications to the Obligations. Nothing in this Amendment shall constitute a satisfaction of the Obligations. It is the intention of Administrative Agent, the Lenders and Borrower to retain as liable parties all makers of Loan Agreement, unless the party is expressly released by Administrative Agent in writing. No maker will be released by virtue of this Amendment.

6.&nbsp;&nbsp;&nbsp;&nbsp;<u>GOVERNING LAW</u>. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES THAT WOULD RESULT IN THE APPLICATION OF ANY LAWS OTHER THAN THE LAWS OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE COLLATERAL.

7.&nbsp;&nbsp;&nbsp;&nbsp;<u>COUNTERSIGNATURE</u>. This Amendment shall become effective only when it shall have been executed by Borrower, Administrative Agent and Lenders.

8.&nbsp;&nbsp;&nbsp;&nbsp;<u>ELECTRONIC EXECUTION OF DOCUMENTS</u>. The words "execution," "signed," "signature" and words of like import in any Loan Document shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity and enforceability as a manually executed signature or the use of a paper-based recordkeeping systems, as the case may be, to the extent and as provided for in any applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act.

*[The remainder of this page is intentionally left blank]*

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**IN WITNESS WHEREOF**, the parties hereto have caused this Amendment to be duly executed as of the day and year first above written.

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| |
|:---|
| SHOULDER INNOVATIONS, INC., |
| a Delaware corporation |
| By:/s/ Jeff Points |
| Name: Jeff Points |
| Its: Chief Financial Officer |

---

Address for Notices:

1535 Steele Ave SW, Suite B

Grand Rapids, MI 49507

Attention: Matt Ahearn

Telephone: [\*\*\*]

Email Address: [\*\*\*]

*[Signature Page to First Amendment to Loan and Security Agreement]*

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| |
|:---|
| **ADMINISTRATIVE AGENT** |
| TRINITY CAPITAL INC. |
| By: /s/ Sarah Stanton |
| Name: Sarah Stanton |
| Title: General Counsel and Chief Compliance Officer |

---

Address for Notices:

Trinity Capital Inc. 1 N. 1st Street, Floor 3

Phoenix, AZ 85004

Attention: Legal Department

Telephone: [\*\*\*]

Email: [\*\*\*]

*[Signature Page to First Amendment to Loan and Security Agreement]*

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---

| |
|:---|
| **LENDER:** |
| TRINITY CAPITAL INC. |
| By: /s/ Sarah Stanton |
| Name: Sarah Stanton |
| Title: General Counsel and Chief Compliance Office |

---

## Exhibit 10.6

**Exhibit 10.6**

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<u>ACT</u>"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.5 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

**WARRANT TO PURCHASE STOCK**

---

| | |
|:---|:---|
| *Company:* | Shoulder Innovations, Inc., a Delaware corporation (the "<u>Company</u>") |
| *Number of Shares:* | Up to 2,494,457 |
| *Type/Series of Stock:* | Series D Convertible Preferred Stock of the Company |
| *Warrant Price:* | $0.5412 per share |
| *Issue Date:* | August 7, 2023 |
| *Expiration Date:* | August 7, 2033 (See also Section 5.1(a)) |
| *Credit Facility:* | This Warrant to Purchase Stock ("<u>Warrant</u>") is issued in connection with that certain Loan and Security Agreement, dated as of the date hereof by and among (i) Trinity Capital Inc., a Maryland corporation with an office located at 1 N 1<sup>st</sup> Street, Floor 3, Phoenix AZ 85004, as lender ("<u>Trinity</u>"), (ii) Trinity, in its capacity as administrative agent and collateral agent for the lenders, (iii) the other lenders party thereto, and (iv) the Company (as amended, restated, or otherwise modified from time to time, the "<u>Loan Agreement</u>"). |

---

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, Trinity (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, the "<u>Holder</u>") is entitled to purchase the number of fully paid and non-assessable shares (the "<u>Shares</u>") of the above-stated Type/Series of Stock (the "<u>Class</u>") of the Company at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to SECTION 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant.

SECTION 1&nbsp;&nbsp;&nbsp;&nbsp;<u>EXERCISE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Vesting of the Warrants</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;This Warrant shall vest and become exercisable for 831,486 Shares upon the advance of the Tranche A Loan (as defined in the Loan Agreement);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;This Warrant shall vest and become exercisable for an additional 831,486 Shares upon the advance of the Tranche B Loan (as defined in the Loan Agreement); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;This Warrant shall vest and become exercisable for an additional 831,486 Shares upon the advance of the Tranche C Loan (as defined in the Loan Agreement).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;If, upon the closing of a Subsequent Equity Financing, the Subsequent Equity Financing Price shall be less than the Warrant Price in effect as of immediately prior thereto, then the "Warrant Price" shall be the Subsequent Equity Financing Price from and after such closing, subject to adjustment thereafter from time to time in accordance with the provisions of this Warrant. As used herein (i) "Subsequent Equity Financing" means any sale of issuance by the Company on or after the Issue Date of this Warrant set forth above, in a single transaction or a series of related transactions, including multiple rounds of equity financing, of shares of its preferred stock or other equity securities to one or more investors for cash for financing purposes where the Company

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receives aggregate gross proceeds in excess of $5 million; (ii) "Subsequent Equity Financing Securities" means the type, class and series of preferred stock or other equity security sold or issued by the Company in the applicable Subsequent Equity Financing; and (iii) "Subsequent Equity Financing Price" means the lowest price per share for which Subsequent Equity Financing Securities are sold or issued by the Company in any Subsequent Equity Financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Method of Exercise/Exchange</u>. The Holder may at any time and from time to time exercise this Warrant, in whole or in part, by delivering to the Company a fully executed copy of this Warrant together with a duly executed Notice of Exercise/Exchange in substantially the form attached hereto as Appendix 1 and, unless Holder is exchanging this Warrant pursuant to a cashless exchange set forth in Section 1.3 a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Cashless Exchange</u>. In lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.2 above, but otherwise in accordance with the requirements of Section 1.2, Holder shall have the right to exchange this Warrant or any portion hereof for a number of Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exchanged. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

X = Y(A-B)/A

where:

X =&nbsp;&nbsp;&nbsp;&nbsp;the number of Shares to be issued to the Holder;

Y =&nbsp;&nbsp;&nbsp;&nbsp;the number of Shares with respect to which this Warrant is being exchanged (inclusive of the Shares surrendered to the Company in satisfaction of the aggregate Warrant Price);

A =&nbsp;&nbsp;&nbsp;&nbsp;the Fair Market Value (as determined pursuant to Section 1.4 below) of one Share; and

B =&nbsp;&nbsp;&nbsp;&nbsp;the Warrant Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Fair Market Value</u>. If the Company's common stock is then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a "<u>Trading Market</u>") and the Class is common stock, the fair market value of a Share shall be the closing price or last sale price of a share of common stock reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise/Exchange to the Company (the "<u>Fair Market Value</u>"). If the Company's common stock is then traded in a Trading Market and the Class is a series of the Company's convertible preferred stock, the fair market value of a Share shall be the closing price or last sale price of a share of the Company's common stock reported for the Business Day immediately before the date on which the Holder delivers this Warrant together with its Notice of Exercise/Exchange to the Company multiplied by the number of shares of the Company's common stock into which a Share is then convertible. If the Company's common stock is not traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Certificate and New Warrant</u>. Promptly after Holder exercises or exchanges this Warrant in the manner set forth in Section 1.2 or 1.3 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised or exchanged and has not expired, a new warrant of like tenor representing the Shares not so acquired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Replacement of Warrant</u>. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Treatment of Warrant Upon Acquisition of Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Acquisition.</u> For the purpose of this Warrant, "<u>Acquisition</u>" means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license or other disposition of all or substantially all of the assets of the Company; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company's domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company's (or the surviving or successor entity's) outstanding voting power immediately after such merger, consolidation or reorganization; (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company's then-total outstanding combined voting power.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Treatment of Warrant in Cash/Public Acquisition</u>. In the event of an Acquisition in which the consideration to be received by the Company's stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a "<u>Cash/Public</u> <u>Acquisition</u>"), and the fair market value of one Share as determined in accordance with Section 1.4 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.2 above as to all Shares, then this Warrant shall automatically be deemed to be exchanged pursuant to Section 1.3 above as to all such Shares for which it shall not have been previously exercised effective immediately prior to and contingent upon the consummation of a Cash/Public Acquisition. In connection with such exchange, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise or exchange. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.4 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;<u>Sale Right in a Cash Acquisition</u>. Notwithstanding the foregoing, in connection with an Acquisition in which the consideration to be received by the Company's stockholders is primarily cash, Holder shall have the right in lieu of the foregoing to exchange this Warrant or any portion hereof for a lump-sum cash payment equal to the value of this Warrant, or portion hereof as to which this Warrant is being exchanged, of the same proportion of cash, securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant. Any payments made by the Company to the Holder pursuant to this Warrant shall be made without any deduction or withholding for or on account of taxes or otherwise. Thereupon, the Company shall pay to the Holder such lump-sum cash payment equal to the product of "X" multiplied by "A," each as determined in accordance with Section 1.3 above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;<u>Treatment of Warrant in Other Acquisitions</u>. Upon the closing of any Acquisition other than a Cash/Public Acquisition defined above, the Company shall cause the acquiring, surviving or successor entity to assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant; <u>provided</u>, <u>however</u>, that if the fair market value of one Share as determined in accordance with Section 1.4 above in such Acquisition is greater than three times the Warrant Price then in effect then the acquiring, surviving or successor entity may elect not to assume the obligations of this Warrant and this Warrant shall terminate upon the consummation of such Acquisition, <u>provided</u> <u>further</u>, <u>however</u>, that the acquiring, surviving or successor entity and the Company shall give the Holder notice in accordance with Section 3.4(d) of this Warrant and reasonable opportunity to exercise or exchange this Warrant prior to the consummation of such Acquisition, and in any event the provisions of Section Section 5.1(b) shall be applicable upon such expiration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;As used in this Warrant, "<u>Marketable Securities</u>" means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "<u>Exchange Act</u>"), and is then current in its filing of all required reports and other information under the Securities Act of 1933, as amended (the "<u>Act</u>") and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in

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connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in Trading Market; and (iii) Holder would be able to publicly re-sell, within six months following the closing of such Acquisition, all of the issuer's shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Joinder to Certain Preferred Stock Financing Agreements</u>. Upon and as a condition to any exercise of this Warrant and solely with respect to the Shares issued thereupon, Holder shall become an "Investor" party, by execution and delivery to the Company of a counterpart signature page, joinder agreement, instrument of accession or similar instrument, to that certain (a) Third Amended and Restated Investors' Rights Agreement dated February 10, 2023 by and among the Company and the other parties named therein, as amended or restated and in effect from time to time, (b) Third Amended and Restated Voting Agreement dated February 10, 2023 by and among the Company and the other parties named therein, as amended or restated and in effect from time to time, and (c) Third Amended and Restated Right of First Refusal and Co-Sale Agreement dated February 10, 2023 by and among the Company and the other parties named therein, as amended or restated and in effect from time to time, in each case to the extent such agreement is then by its terms in force and effect (the agreements referred to in clauses (a), (b) and (c), collectively, the "<u>Preferred Stock Financing Agreements</u>").

SECTION 2&nbsp;&nbsp;&nbsp;&nbsp;<u>ADJUSTMENTS TO THE SHARES</u> <u>AND WARRANT PRICE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Stock Dividends, Splits, Etc</u>. If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in common stock or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased, provided the aggregate purchase price shall remain the same. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased, provided the aggregate purchase price shall remain the same.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Reclassification, Exchange, Combinations or Substitution</u>. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, provided the aggregate purchase price shall remain the same and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Conversion of Preferred Stock</u>. If the Class is a class and series of the Company's convertible preferred stock, in the event that all outstanding shares of the Class are converted, automatically or by action of the holders thereof, into common stock pursuant to the provisions of the Company's Third Amended and Restated Certificate of Incorporation, dated February 10, 2023, as amended from time to time (the "<u>Charter</u>"), including, without limitation, in connection with the Company's initial, underwritten public offering and sale of its common stock pursuant to an effective registration statement under the Act (the "<u>IPO</u>"), then from and after the date on which all outstanding shares of the Class have been so converted, this Warrant shall be exercisable for such number of shares of common stock into which the Shares would have been converted had the Shares been outstanding on the date of such conversion, and the Warrant Price shall equal the Warrant Price in effect as of immediately prior to such conversion divided by the number of shares of common stock into which one Share would have been converted, all subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Adjustments for Diluting Issuances</u>. The Type/Series of Stock issuable upon exercise of this Warrant shall have the same original issue price and conversion price as all other shares of the same Type/Series of Stock of the Company. For the avoidance of doubt, this means that if there is an adjustment to the conversion price of the Type/Series of Stock prior to the exercise of this Warrant then the shares of the Type/Series of Stock (or Common Stock issuable upon conversion of such shares) shall have the same conversion price as

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other outstanding shares of the same Type/Series of Stock notwithstanding that an adjustment to the conversion price occurred prior to the exercise of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.5&nbsp;&nbsp;&nbsp;&nbsp;<u>No Fractional Share</u>. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (a) the fair market value (as determined in accordance with Section 1.4 above) of a full Share, less (b) the then-effective Warrant Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice/Certificate as to Adjustments</u>. Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company's expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Executive Officer or Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

SECTION 3&nbsp;&nbsp;&nbsp;&nbsp;<u>REPRESENTATIONS AND COVENANTS OF THE COMPANY</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Warranties</u>. The Company represents and warrants to, and agrees with, the Holder as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The initial Warrant Price referenced on the first page of this Warrant is not greater than the price per share at which shares of the Class were last sold and issued prior to the Issue Date hereof in an arms-length transaction in which at least $500,000 of such shares were sold.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;This Warrant is, and all Shares which may be issued upon the exercise of this Warrant, all securities, if any, issuable upon conversion of the Shares and any warrants issued in substitution for or replacement of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any taxes, liens, charges and encumbrances except for restrictions on transfer provided for herein, under the Charter or bylaws of the Company or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class, common stock and other securities as will be sufficient to permit the exercise in full of this Warrant and the conversion of the Shares into common stock or such other securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;The Company's capitalization table attached hereto as Schedule 1 is true and complete, in all material respects, as of the Issue Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The Company (i) has been duly incorporated and is validly existing as a corporation in good standing under the laws of Delaware, with full corporate power and authority to own or lease, as the case may be, and to operate its properties and conduct its business as presently conducted, and (ii) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification, except in the case of clause (ii) above, to the extent that the failure to be so qualified or be in good standing would not reasonably be expected to result in (i) a material adverse effect on the validity or enforceability of this Warrant, (ii) a material adverse effect on the financial condition, earnings, business or properties of the Company, or (iii) a material adverse effect on the Company's ability to perform in any material respect its obligations under this Warrant (any of (i), (ii) or (iii)) (a "<u>Material Adverse Effect</u>").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;The Company has all requisite corporate power and authority, and has taken all requisite corporate action, to execute and deliver this Warrant, sell and issue the Shares and carry out and perform all of its obligations under this Warrant, and without limiting the foregoing, the Company hereby agrees that the Company shall all times have authorized and reserved the number of Shares needed to provide for the exercise of the rights then represented by this Warrant. If at any time the Company does not have a sufficient number of Shares authorized and available, then the Company shall call and hold a special meeting of its stockholders within 60 days of that time for the sole purpose of increasing the number of authorized Shares to a sufficient number. This Warrant constitutes the legal, valid and binding obligation of the Company, enforceable in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or affecting

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the enforcement of creditors' rights generally and (ii) as limited by equitable principles generally, including any specific performance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f)&nbsp;&nbsp;&nbsp;&nbsp;No consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state, or local governmental authority on the part of the Company is required in connection with the consummation of the transactions contemplated by this Warrant except for the filing of a Form D with the Securities and Exchange Commission under the Securities Act and compliance with the securities and blue sky laws in the states and other jurisdictions in which shares of common stock of the Company are offered and/or sold, which compliance will be effected in accordance with such laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g)&nbsp;&nbsp;&nbsp;&nbsp;Neither the execution, delivery or performance of this Warrant by the Company nor the consummation of any of the transactions contemplated thereby (including, without limitation, the issuance and sale by the Company of the Shares) will conflict with, result in a breach or violation of, or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to, (i) the charter or by-laws of the Company, (ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note agreement, loan agreement or other agreement, obligation, condition, covenant or instrument to which the Company is a party or bound or to which its or their property is subject, or (iii) any statute, law, rule, regulation, judgment, order or decree applicable to the Company of any court, regulatory body, administrative agency, governmental body, arbitrator or other authority having jurisdiction over the Company or any of its properties, except in the case of clauses (ii) and (iii) above, for any conflict, breach or violation of, or imposition that would not, individually or in the aggregate, have a Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h)&nbsp;&nbsp;&nbsp;&nbsp;Neither the Company nor any person acting on its behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D promulgated under the Securities Act) in connection with the offer or sale of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Neither of the Company or any person acting on its behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any Company security, under circumstances that would adversely affect reliance by the Company on Section 4(a)(2) of the Securities Act or require registration of this Warrant under the Securities Act or cause this Warrant to be integrated with prior offerings by the Company for purposes of the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Registration Rights/Investor Rights Agreement</u>. The Company shall take such actions as are necessary to provide that the Holder, upon exercise of this Warrant, is a party to the Company's Third Amended and Restated Investors' Rights Agreement, dated as of February 10, 2023 and entitled to "piggyback" and S-3 registration rights.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Reporting</u>. So long as this Warrant has not been terminated or fully exercised, and after the financial obligations under the Loan Agreement have been fully repaid in cash, the Company shall deliver to Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;(x) as soon as available but no later than thirty (30) days after the Company's biannual investor meeting, which shall occur at least two (2) times per twelve (12) month period and (y) upon Holder's reasonable request, a copy of the Company's detailed capitalization table, as of the last day of the fiscal quarter then ended;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;within thirty (30) days of its completion, or upon request of Holder, a copy of the Company's most recent 409A valuation report; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;within (x) two hundred seventy-five (275) days following the end of the fiscal year ending December 31, 2022 and (y) within two hundred twenty-five (225) days following the end of each fiscal year thereafter, a copy of the Company's annual, audited financial statements consisting of a consolidated and consolidating balance sheet, income statement and cash flow statement prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year and presenting fairly Company's financial condition as at the end of that fiscal year and the results of its operations for the twelve (12) month period then ended and certified as true and correct by Company's chief financial officer; provided that

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if the Company's board of directors determines in its reasonable discretion not to require an audit or review with respect to any fiscal year, then the Company shall instead deliver, and Holder shall accept, company-prepared annual consolidated financial statements no later than sixty (60) days after the last day of such fiscal year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice of Certain Events</u>. If the Company proposes at any time to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;declare any dividend or distribution upon the outstanding shares of the Class or common stock, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company's stock (other than pursuant to contractual pre-emptive rights);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;effect an Acquisition or to liquidate, dissolve or wind up; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e)&nbsp;&nbsp;&nbsp;&nbsp;effect an IPO;

then, in connection with each such event, the Company shall give Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;at least seven Business Days prior written notice of the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any, in respect of the matters referred to in (a) and (b) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;in the case of the matters referred to in (c) and (d) above at least seven Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3)&nbsp;&nbsp;&nbsp;&nbsp;with respect to the IPO, at least seven Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

Company will also provide information requested by Holder that is reasonably necessary to enable Holder to comply with Holder's accounting or reporting requirements.

SECTION 4&nbsp;&nbsp;&nbsp;&nbsp;<u>REPRESENTATIONS AND WARRANTIES OF THE HOLDER.</u>

The Holder represents and warrants to the Company as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Purchase for Own Account.</u> This Warrant and the securities to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder's account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Disclosure of Information.</u> Holder is aware of the Company's business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Investment Experience.</u> Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder's investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Accredited Investor Status.</u> Holder is an "accredited investor" within the meaning of Regulation D promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;<u>The Act.</u> Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder's investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;<u>No Voting Rights</u>. Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

SECTION 5&nbsp;&nbsp;&nbsp;&nbsp;<u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Term and Automatic Conversion Upon Expiration</u>. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 P.M. Pacific time, on the Expiration Date and shall be void thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Automatic Cashless Exchange upon Expiration</u>. In the event that, upon the Expiration Date, the fair market value of one Share (or other security issuable upon the exercise hereof) as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall automatically be deemed on and as of such date to be exchanged pursuant to Section 1.2 above as to all Shares (or such other securities) for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares (or such other securities) issued upon such exchange to Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Legends</u>. The Shares (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) shall be imprinted with a legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "<u>ACT</u>"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO TRINITY CAPITAL INC. DATED AUGUST 7, 2023, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance with Securities Laws on Transfer</u>. This Warrant and the Shares issuable upon exercise of this Warrant (and the securities issuable, directly or indirectly, upon conversion of the Shares, if any) may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to any affiliate of Holder, <u>provided</u> that any such transferee is an "accredited investor" as defined in Regulation D promulgated

------

under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;<u>No Pay to Play; Further Assurances</u>. Holder shall not be required to purchase any shares in any Mandatory Offering (as defined below) and shall not suffer a Disproportionate Adverse Change in Rights (as defined below) as a result of not purchasing any shares in any Mandatory Offering, and the Company will not take any action to subject Holder to a Mandatory Offering or cause Holder to suffer a Disproportionate Adverse Change in Rights for not participating in a Mandatory Offering. A "<u>Disproportionate Adverse Change in Rights</u>" means an adverse change in the existing rights of the Holder under this Warrant (including the conversion of some or all of the Class into Common Stock or another series of Preferred Stock) in a manner different than the Participating Investors (as defined below). For example, if there is a "pull-through" transaction where all shares of the Class are converted to Common Stock, and as a result of the transaction Participating Investors receive additional shares of Common Stock or another series of Preferred Stock, then at the Holder's election the Holder and this Warrant shall be treated in the same manner as a Participating Investor, such that the Warrant would be exercisable for the same class or series of shares as a Participating Investor receives in the pull-through transaction. A "<u>Mandatory Offering</u>" means any financing of the Company pursuant to which a holder of Preferred Stock must acquire, or cause an affiliate of such holder to acquire, part of the investment amount in the financing in order to avoid a Disproportionate Adverse Change in Rights (such an investor, a "<u>Participating Investor</u>"). The Company (i) will not increase the par value of any Shares above the Warrant Price then in effect, and (ii) will take all such actions as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable Shares upon the exercise of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Transfer Procedure</u>. Subject to the provisions of <u>Section 5.3</u> and upon providing the Company with written notice, Holder may transfer all or part of this Warrant or the Shares issuable upon exercise of this Warrant to any transferee; <u>provided</u>, <u>however</u>, that no written notice is required in connection with a transfer to any affiliate of Holder. Notwithstanding the foregoing, so long as no Event of Default under the Loan Agreement exists or if the Loan Agreement is no longer in effect, Holder may not assign its interest in this Warrant to any person or entity who is known to Holder as a direct competitor of the Company, whether as an operating company or direct or indirect parent with voting control over such operating company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Binding on Successors</u>. This Warrant will be binding upon any entity succeeding to the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Taxes</u>. The Company will pay all taxes (other than taxes based upon income) and other governmental charges that may be imposed with respect to the issuance or delivery of the Shares, other than any tax or other charge imposed in connection with any transfer involved in the issue and delivery of the Shares in a name other than that of the Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.8 All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

Trinity Capital Inc.

Attn: Sarah Stanton

1 N 1<sup>st</sup> Street

Floor 3

Phoenix, AZ 85004

Telephone: [\*\*\*]

Facsimile: [\*\*\*]

Email address: [\*\*\*]

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

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Shoulder Innovations, Inc.

Attn: Matthew Ahearn

1535 Steele Ave SW

Suite B

Grand Rapids, MI 49507

Telephone: [\*\*\*]

Facsimile: [\*\*\*]

Email address: [\*\*\*]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Attorneys' Fees</u>. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts; Facsimile/Electronic Signatures</u>. This Warrant may be executed in counterparts, all of which together shall constitute one and the same agreement. Any signature page delivered electronically or by facsimile shall be binding to the same extent as an original signature page with regards to any agreement subject to the terms hereof or any amendment thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Entirety; Amendments.</u> This Warrant and the appendices, schedules and attachments referred to herein constitute the entire agreement between Holder and Company as to the subject matter contemplated herein, and supersedes all prior agreements and understandings relating thereto. Each of the parties hereto acknowledges that no party hereto nor any agent of any other party whomsoever has made any promise, representation or warranty whatsoever, express or implied, not contained herein, concerning the subject matter hereof, to induce it to execute this Warrant. No other agreements will be effective to change, modify, waive or terminate this Warrant in whole or in part unless such agreement is in writing and duly executed by each of the parties and Holder has provided prior written consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflict of law principles that would result in the application of any other than the laws of the State of New York.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.14&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver of Jury Trial</u>. **AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.15&nbsp;&nbsp;&nbsp;&nbsp;<u>Headings</u>. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.16&nbsp;&nbsp;&nbsp;&nbsp;<u>Business Days</u>. "<u>Business Day</u>" is any day that is not a Saturday, Sunday or a day on which banks in New York or California are closed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.17&nbsp;&nbsp;&nbsp;&nbsp;<u>Confidentiality</u>. Section 8.18 of the Loan Agreement is hereby incorporated by reference, and Holder agrees to treat and hold all information provided by the Company pursuant to this Warrant in confidence in accordance with the provisions of Section 8.18 of the Loan Agreement (regardless of whether the Loan Agreement shall then be in effect).

[*Signature page follows*]

------

IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

---

| | | |
|:---|:---|:---|
| "COMPANY" | "COMPANY" | "COMPANY" |
| **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** |
| a Delaware corporation | a Delaware corporation | a Delaware corporation |
| By: | /s/ Matthew Ahearn | /s/ Matthew Ahearn |
| Name: | Name: | Matthew Ahearn |
| Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Operating Officer | Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Operating Officer | Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Chief Operating Officer |
| "HOLDER" | "HOLDER" | "HOLDER" |
| **TRINITY CAPITAL INC.**, | **TRINITY CAPITAL INC.**, | **TRINITY CAPITAL INC.**, |
| a Maryland corporation | a Maryland corporation | a Maryland corporation |
| By: | /s/ Sarah Stanton | /s/ Sarah Stanton |
| Name: | Name: | Sarah Stanton |
| Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Counsel and Chief Compliance Officer | Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Counsel and Chief Compliance Officer | Its:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; General Counsel and Chief Compliance Officer |

---

[Signature Page to Warrant to Purchase Stock]

------

**APPENDIX 1**

<u>NOTICE OF EXERCISE/EXCHANGE</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Holder hereby exercises its right purchase/exchange [circle one] ___________ shares of the Common/Series ____________ Preferred [circle one] Stock of __________________ (the "<u>Company</u>") in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

[ ]&nbsp;&nbsp;&nbsp;&nbsp;check in the amount of $________ payable to order of the Company enclosed herewith

[ ]&nbsp;&nbsp;&nbsp;&nbsp;Wire transfer of immediately available funds to the Company's account

[ ]&nbsp;&nbsp;&nbsp;&nbsp;Cashless Exchange pursuant to Section 1.3 of the Warrant

[ ]&nbsp;&nbsp;&nbsp;&nbsp;Other [Describe] __________________________________________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;Please issue a certificate or certificates representing the Shares in the name specified below:

___________________________________________

Holder's Name

___________________________________________

___________________________________________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Address)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

HOLDER:

_________________________

By:_________________________

Name:________________________

Title:_________________________

(Date):_______________________

Appendix 1

## Exhibit 10.7

**Exhibit 10.7**

**Shoulder Innovations Supplier Agreement**

**Terms and Conditions**

**GENERAL:** As used herein "SI" means SI. The term "Supplies" means the goods and/or services including without limitation, raw materials, gauges, parts, assemblies, technical data, equipment, tooling, dies, molds, drawings, services or any other item, to be provided hereunder to SI by the seller, hereinafter, "Seller." All specifications, drawings, and data submitted by/or to Seller relating to this order are hereby incorporated herein. Any agreement arising from this order and its acceptance shall be construed under the laws of the State of Indiana. All supplies shall be produced in accordance with materials specifications and drawings received with this purchase order. Materials specifications and drawings from previous purchase orders shall have no application to this purchase order.

**ACCEPTANCE:** SI is not bound by any purchase order until SI receives a valid written acceptance thereof from Seller or SI receives and accepts all or part of the Supplies ordered hereby. Acceptance by Seller in either manner shall bind Seller to all terms and conditions of an order. SI reserves the right to rescind an order at any time prior to acceptance by Seller. No contract shall exist hereunder except as provided herein. Seller shall not assign all, or any part of, a contract arising from any purchase order to a third party without SI's written consent.

**MODIFICATION – CANCELLATION:** No modification, variation, or amendment of a contract arising from Seller's acceptance of this purchase order shall be valid or binding on SI unless agreed to in writing by SI. SI reserves the right to terminate and cancel this purchase order by written notice at any time as to all or any part of undelivered Supplies hereunder, and SI's liability therefore shall be limited to Seller's cost for materials and labor incurred on the Supplies cancelled prior to receipt of the cancellation notice.

**INSPECTION:** Supplies ordered hereunder are subject to inspection and acceptance by SI at SI's destination. SI may reject any supplies not in complete accordance with any agreement arising out of Seller's acceptance of this order and/or Seller's warranties, express or implied.

**QUALITY:** Seller specifically warrants that the Supplies furnished to SI hereunder will be:

(a)of merchantable quality and fit for the purpose as specified in any order, drawings, other specifications or specified by SI in writing,

(b)free from defects in material and workmanship as specified in any order, drawings, other specifications or specified by SI in writing,

(c)in full conformity with any agreement arising from this order and any plans, designs, drawings, samples, standards, or other specifications furnished or specified by SI in writing;

(d)free from defects in design if design is Supplier's responsibility, and

(e)fully satisfactory to SI in terms of quality as specified in any order, drawings, other specifications or specified by SI in writing.

Supplies not accepted by SI may be returned to Seller at Seller's expense. Payment by SI for any Supplies hereunder shall not constitute acceptance thereof.

------

**PROPERTY AND DESIGNS FURNISHED SELLER:** Unless otherwise agreed in writing, all dies, molds, patterns, design specifications, drawings, gauges and any other property (collectively "Property") furnished to Seller by SI or specifically paid for by SI are and remain the property of SI. Such Property shall not be disclosed to any third party and will be used solely for SI and shall be subject to removal at SI's instruction. Seller shall maintain and repair such Property at Seller's expense and shall keep the same fully insured in an amount equal to the replacement cost thereof with a loss payable clause in favor of SI. Supplies made according to a design furnished by SI (not previously a standard commercial design of Seller) shall not be furnished to any other buyer without SI's prior written consent.

**PATENTS:** Seller warrants the Supplies specified herein and their subsequent sale and/or use by SI will not infringe any U.S. or foreign patents, and Seller agrees to indemnify SI and hold it harmless from all judgments, decrees, costs and expenses resulting from any alleged or actual infringements and Seller specifically agrees, at its cost and expense, to defend any action which may be brought against SI alleging any such infringement.

**PRICE:** Seller shall not invoice SI at prices higher than those set out in an accepted order without SI's prior written authorization. Any change to the price for a Product covered by an accepted order will only be as agreed by the Seller and SI in writing.

**COMPLIANCE WITH LAW:** Seller represents and agrees that Seller has and shall comply with all state and federal laws, regulations, and orders in the manufacturing, import, export and sale of items hereby ordered, specifically including and certifying compliance with the Fair Labor Standards Act of 1938, as amended, the Occupational Safety and Health Act of 1970 and the Foreign Corrupt Practices Act. Supplies ordered herein may be used by SI in fulfilling a U.S Government prime or subcontract and may be subject to applicable Government Procurement Regulations, and Seller agrees to be bound thereby and comply therewith.

**DELIVERY:** Any Supplies shipped to SI facilities under this purchase order should be addressed to Seller c/o SI. All Supplies sent to SI facilities must be shipped on a prepaid freight basis and shall be delivered free and clear of any and all liens, claims or other encumbrances.

**NON-DISCRIMINATION:** In the performance of its work hereunder, Seller shall comply with EQUAL OPPORTUNITY and/or non-discrimination provisions of EXECUTIVE ORDER numbered 11246 and 11375 and any rules of regulation issued thereunder and agrees not to discriminate against any employee or applicant for employment because of race, creed, color, national origin, or sex and shall include in all sub contracts a provision similar to the foregoing.

**FORCE MAJEURE:** Strikes, riots, wars, insurrection, embargoes, acts of terrorism, fires, floods or any other casualties, government actions, acts of God, or other events beyond SI's reasonable control which shall effect SI's ability to receive and/or use the Supplies ordered hereunder shall constitute valid grounds for suspension by SI of shipment of Supplies covered hereby without penalty or liability, upon written notification to Seller, except that, upon cancellation of such causes, SI agrees to pay Seller its direct expenditure incurred for labor and

------

materials prior to receipt of such notice of cancellation made upon the authority of this purchase order.

**NO WAIVER:** The failure of SI to enforce at any time any of the provisions hereof shall in no way affect the validity of this purchase order or any part hereof or the right of SI thereafter to enforce each and every such provision. No waiver of any breach of this purchase order shall be held to be a waiver of any other subsequent breach.

**LIMITATION OF LIABILITY; STATUTE OF LIMITATIONS:** [\*\*\*]

**PAYMENT TERMS:** Unless otherwise specified on the purchase order, SI shall pay all invoices within [\*\*\*] following receipt of invoice**.** 

**PROCESSING CHANGES**: The Seller is responsible and agrees to inform SI of any changes to the raw material, router, bill of materials, service, or method of manufacture and validations that affect the design characteristics (design outputs) and/or the quality assurance specifications of the device. These changes will not be acceptable to or binding on SI unless agreed to in writing by SI. Seller agrees to immediately inform SI of nonconforming product for the purpose of disposition by SI as to the acceptability of the product.

**ACCESS FOR NOTIFIED BODY AND/OR COMPETENT AUTHORITIES:** The Seller agrees that any and all information related to any purchase order by SI is accessible to a Notified Body and/or a Competent Authority.

Seller further agrees that Sellers facility is accessible to Notified Body and/or Competent Authority without prior notice.

**DEVICE HISTORY RECORDS:** The supplier is responsible for archiving of the Device History Records for all product manufactured for SI.

---

| | |
|:---|:---|
| For SI | For Seller (Supplier) |
| /s/ Alyson Harris | /s/ Ben Thompson |
| Alyson Harris | Ben Thompson |
| 2/24/2024 | 2/24/2024 |
| Date | Date |
| Title: Director of QA/RA | Title: Chief Commercial Officer |

---

------

---

| | | | |
|:---|:---|:---|:---|
| **Rev.** | **Description** | **DCO Number** | **Effective Date** |
| A | Initial Release | 150001 | 08/14/15 |
| B | Change from Form 6.2.1 to 6.3.1 | 160007 | 02/19/16 |
| C | Update documents to ISO 13485 compliance | 160028 | 08/16/16 |
| D | Change from GIG to SI | 210071 | 01/03/22 |

---

## Exhibit 10.8

**Exhibit 10.8**

THIS WARRANT AND THE SHARES ISSUABLE HEREUNDER HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "**<u>ACT</u>**"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN SECTIONS 5.3 AND 5.4 BELOW, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

**WARRANT TO PURCHASE STOCK**

**Company:** Shoulder Innovations, Inc., a Delaware corporation

**Number of Shares:** As set forth in Paragraph A below

**Type/Series of Stock:** Common Stock, $0.001 par value per share

**Warrant Price:** $0.11 per Share, subject to adjustment

**Issue Date:** April 1, 2021

**Expiration Date:** April 1, 2031&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**See also Section 5.1(b).**

**Credit Facility:** This Warrant to Purchase Stock ("**<u>Warrant</u>**") is issued in connection with that &nbsp;&nbsp;&nbsp;&nbsp; certain Loan and Security Agreement of even date herewith between Silicon Valley Bank and the Company (as amended and/or modified and in effect from time to time, the "**<u>Loan Agreement</u>**").

THIS WARRANT CERTIFIES THAT, for good and valuable consideration, SILICON VALLEY BANK (together with any successor or permitted assignee or transferee of this Warrant or of any shares issued upon exercise hereof, "**<u>Holder</u>**") is entitled to purchase up to the number of fully paid and non-assessable shares of the above-stated Type/Series of Stock (the "**<u>Class</u>**") of the above-named company (the "**<u>Company</u>**") determined pursuant to Paragraph A below, at the above-stated Warrant Price, all as set forth above and as adjusted pursuant to Section 2 of this Warrant, subject to the provisions and upon the terms and conditions set forth in this Warrant. Reference is made to Section 5.4 of this Warrant whereby Silicon Valley Bank shall transfer this Warrant to its parent company, SVB Financial Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;&nbsp;&nbsp;&nbsp;<u>Number of Shares</u>. This Warrant shall be exercisable for the Initial Shares, plus the Additional Shares, if any (collectively, and as may be adjusted from time to time in accordance with the provisions of this Warrant, the "**<u>Shares</u>**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1)&nbsp;&nbsp;&nbsp;&nbsp;<u>Initial Shares</u>. As used herein, "**<u>Initial Shares</u>**" means 226,760 shares of the Class, subject to adjustment from time to time in accordance with the provisions of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2)&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Shares</u>.&nbsp;&nbsp;&nbsp;&nbsp; Upon the making, if any, of the Term B Loan Advance (as defined in the Loan Agreement) to the Company, this Warrant automatically shall become exercisable for an additional 113,380 shares of the Class, as such number may be adjusted from time to time in accordance with the provisions of this Warrant (the "**<u>Additional</u> <u>Shares</u>**"), including, without limitation, adjustments in respect of events occurring prior to the

------

date, if any, on which this Warrant becomes exercisable for such shares as if they constituted "Shares" hereunder for such purpose at all times from the Issue Date.

SECTION 1. <u>EXERCISE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Method of Exercise</u>. Holder may at any time and from time to time on or before the Expiration Date exercise this Warrant, in whole or in part, by delivering to the Company the original of this Warrant together with a duly executed Notice of Exercise in substantially the form attached hereto as <u>Appendix 1</u> and, unless Holder is exercising this Warrant pursuant to a cashless exercise set forth in Section 1.2, a check, wire transfer of same-day funds (to an account designated by the Company), or other form of payment acceptable to the Company for the aggregate Warrant Price for the Shares being purchased. Notwithstanding any contrary provision herein, if this Warrant was originally executed and/or delivered electronically, in no event shall Holder be required to surrender or deliver an ink-signed paper copy of this Warrant in connection with its exercise hereof or of any rights hereunder, nor shall Holder be required to surrender or deliver a paper or other physical copy of this Warrant in connection with any exercise hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Cashless Exercise</u>. On any exercise of this Warrant, in lieu of payment of the aggregate Warrant Price in the manner as specified in Section 1.1 above, but otherwise in accordance with the requirements of Section 1.1, Holder may elect to receive Shares equal to the value of this Warrant, or portion hereof as to which this Warrant is being exercised. Thereupon, the Company shall issue to the Holder such number of fully paid and non-assessable Shares as are computed using the following formula:

X = Y(A-B)/A

where:

X =&nbsp;&nbsp;&nbsp;&nbsp;the number of Shares to be issued to the Holder;

Y =&nbsp;&nbsp;&nbsp;&nbsp;the number of Shares with respect to which this Warrant is being exercised (inclusive of the Shares surrendered to the Company in payment of the aggregate Warrant Price);

A =&nbsp;&nbsp;&nbsp;&nbsp;the Fair Market Value (as determined pursuant to Section 1.3 below) of one Share; and

B = &nbsp;&nbsp;&nbsp;&nbsp;the Warrant Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Fair Market Value</u>. If shares of the Class are then traded or quoted on a nationally recognized securities exchange, inter-dealer quotation system or over-the-counter market (a "**<u>Trading Market</u>**"), the fair market value of a Share shall be the closing price or last sale price of a share of the Class reported for the Business Day immediately before the date on which Holder delivers this Warrant together with its Notice of Exercise to the Company. If

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shares of the Class are not then traded in a Trading Market, the Board of Directors of the Company shall determine the fair market value of a Share in its reasonable good faith judgment.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Delivery of Certificate and New Warrant</u>. Within a reasonable time after Holder exercises this Warrant in the manner set forth in Section 1.1 or 1.2 above, the Company shall deliver to Holder a certificate representing the Shares issued to Holder upon such exercise and, if this Warrant has not been fully exercised and has not expired, a new warrant of like tenor representing the Shares not so acquired.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Replacement of Warrant</u>. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form, substance and amount to the Company or, in the case of mutilation, on surrender of this Warrant to the Company for cancellation, the Company shall, within a reasonable time, execute and deliver to Holder, in lieu of this Warrant, a new warrant of like tenor and amount.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Treatment of Warrant Upon Acquisition of Company</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Acquisition</u>. For the purpose of this Warrant, "**<u>Acquisition</u>**" means any transaction or series of related transactions involving: (i) the sale, lease, exclusive license, or other disposition of all or substantially all of the assets of the Company; (ii) any merger or consolidation of the Company into or with another person or entity (other than a merger or consolidation effected exclusively to change the Company's domicile), or any other corporate reorganization, in which the stockholders of the Company in their capacity as such immediately prior to such merger, consolidation or reorganization, own less than a majority of the Company's (or the surviving or successor entity's) outstanding voting power immediately after such merger, consolidation or reorganization (or, if such Company stockholders beneficially own a majority of the outstanding voting power of the surviving or successor entity as of immediately after such merger, consolidation or reorganization, such surviving or successor entity is not the Company); or (iii) any sale or other transfer by the stockholders of the Company of shares representing at least a majority of the Company's then-total outstanding combined voting power. For the avoidance of doubt, "Acquisition" shall not include any sale and issuance by the Company of shares of its capital stock or of securities or instruments exercisable for or convertible into, or otherwise representing the right to acquire, shares of its capital stock to one or more investors for cash in a transaction or series of related transactions the primary purpose of which is a bona fide equity financing of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Treatment of Warrant at Acquisition</u>. In the event of an Acquisition in which the consideration to be received by the Company's stockholders consists solely of cash, solely of Marketable Securities or a combination of cash and Marketable Securities (a "**<u>Cash/Public Acquisition</u>**"), and the fair market value of one Share as determined in accordance with Section 1.3 above would be greater than the Warrant Price in effect on such date immediately prior to such Cash/Public Acquisition, and Holder has not exercised this Warrant pursuant to Section 1.1 above as to all Shares, then this Warrant shall automatically be deemed to be Cashless Exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised effective immediately prior to and contingent upon the

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consummation of a Cash/Public Acquisition. In connection with such Cashless Exercise, Holder shall be deemed to have restated each of the representations and warranties in Section 4 of the Warrant as of the date thereof and the Company shall promptly notify the Holder of the number of Shares (or such other securities) issued upon exercise. In the event of a Cash/Public Acquisition where the fair market value of one Share as determined in accordance with Section 1.3 above would be less than the Warrant Price in effect immediately prior to such Cash/Public Acquisition, then this Warrant will expire immediately prior to the consummation of such Cash/Public Acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Upon the closing of any Acquisition other than a Cash/Public Acquisition, the acquiring, surviving or successor entity shall assume the obligations of this Warrant, and this Warrant shall thereafter be exercisable for the same securities and/or other property as would have been paid for the Shares issuable upon exercise of the unexercised portion of this Warrant as if such Shares were outstanding on and as of the closing of such Acquisition, subject to further adjustment from time to time in accordance with the provisions of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;As used in this Warrant, "**<u>Marketable Securities</u>**" means securities meeting all of the following requirements: (i) the issuer thereof is then subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "**<u>Exchange Act</u>**"), and is then current in its filing of all required reports and other information under the Act and the Exchange Act; (ii) the class and series of shares or other security of the issuer that would be received by Holder in connection with the Acquisition were Holder to exercise this Warrant on or prior to the closing thereof is then traded in a Trading Market, and (iii) following the closing of such Acquisition, Holder would not be restricted from publicly re-selling all of the issuer's shares and/or other securities that would be received by Holder in such Acquisition were Holder to exercise this Warrant in full on or prior to the closing of such Acquisition, except to the extent that any such restriction (x) arises solely under federal or state securities laws, rules or regulations, and (y) does not extend beyond six (6) months from the closing of such Acquisition.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Certain Agreements</u>. Following any exercise of this Warrant and solely with respect to the Shares issued thereupon, Holder shall, if the Company so requests in writing, become a "Key Holder" party, by execution and delivery to the Company of a counterpart signature page, joinder agreement, instrument of accession or similar instrument, to (a) that certain Second Amended and Restated Right of First Refusal and Co-Sale Agreement dated October 22, 2020 by and among the Company and the other parties named therein, as amended or restated and in effect from time to time (the "**<u>ROFR</u>**"), and (b) that certain Second Amended and Restated Voting Agreement dated October 22, 2020 by and among the Company and the other parties named therein, as amended or restated and in effect from time to time (the "**<u>Voting</u> <u>Agreement</u>**"), in each case only if only if such agreement is then by its terms in force and effect. Provided that the foregoing condition is met as to the ROFR and/or Voting Agreement at the time of any exercise of this Warrant, Holder shall, effective upon such exercise, automatically become bound by, and the Shares issued upon such exercise automatically become subject to, such ROFR and/or Voting Agreement.

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SECTION 2. <u>ADJUSTMENTS TO THE SHARES AND WARRANT PRICE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Stock Dividends, Splits, Etc</u>. If the Company declares or pays a dividend or distribution on the outstanding shares of the Class payable in additional shares of the Class or other securities or property (other than cash), then upon exercise of this Warrant, for each Share acquired, Holder shall receive, without additional cost to Holder, the total number and kind of securities and property which Holder would have received had Holder owned the Shares of record as of the date the dividend or distribution occurred. If the Company subdivides the outstanding shares of the Class by reclassification or otherwise into a greater number of shares, the number of Shares purchasable hereunder shall be proportionately increased and the Warrant Price shall be proportionately decreased. If the outstanding shares of the Class are combined or consolidated, by reclassification or otherwise, into a lesser number of shares, the Warrant Price shall be proportionately increased and the number of Shares shall be proportionately decreased.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Reclassification, Exchange, Combinations or Substitution</u>. Upon any event whereby all of the outstanding shares of the Class are reclassified, exchanged, combined, substituted, or replaced for, into, with or by Company securities of a different class and/or series, then from and after the consummation of such event, this Warrant will be exercisable for the number, class and series of Company securities that Holder would have received had the Shares been outstanding on and as of the consummation of such event, and subject to further adjustment thereafter from time to time in accordance with the provisions of this Warrant. The provisions of this Section 2.2 shall similarly apply to successive reclassifications, exchanges, combinations, substitutions, replacements or other similar events.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>No Fractional Share</u>. No fractional Share shall be issuable upon exercise of this Warrant and the number of Shares to be issued shall be rounded down to the nearest whole Share. If a fractional Share interest arises upon any exercise of the Warrant, the Company shall eliminate such fractional Share interest by paying Holder in cash the amount computed by multiplying the fractional interest by (i) the fair market value (as determined in accordance with Section 1.3 above) of a full Share, less (ii) the then-effective Warrant Price.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice/Certificate as to Adjustments</u>. Upon each adjustment of the Warrant Price, Class and/or number of Shares, the Company, at the Company's expense, shall notify Holder in writing within a reasonable time setting forth the adjustments to the Warrant Price, Class and/or number of Shares and facts upon which such adjustment is based. The Company shall, upon written request from Holder, furnish Holder with a certificate of its Chief Financial Officer, including computations of such adjustment and the Warrant Price, Class and number of Shares in effect upon the date of such adjustment.

SECTION 3. <u>REPRESENTATIONS AND COVENANTS OF THE COMPANY</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Representations and Warranties</u>. The Company represents and warrants to, and agrees with, the Holder as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The initial Warrant Price referenced on the first page of this Warrant is not greater than the fair market value of a share of the Class as determined by the

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most recently completed valuation, approved or accepted by the Company's Board of Directors, of a share of the Class for purposes of the Company's compliance with Section 409A of the Internal Revenue Code of 1986, as amended (or the corresponding section of any successor statute) (a "**<u>409A Valuation</u>**").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The number of Initial Shares first set forth above together with the number of Additional Shares first set forth above collectively represent not less than 0.300% of the Company's total issued and outstanding shares of capital stock, calculated on and as of the Issue Date hereof on a fully-diluted, common stock-equivalent basis (but without excluding shares of capital stock that are not convertible into shares of common stock) assuming (i) the conversion into common stock of all outstanding securities and instruments (including, without limitation, securities deemed to be outstanding pursuant to clause (ii) of this Section 3.1(b)) convertible by their terms into shares of common stock (regardless of whether such securities or instruments are by their terms now so convertible), (ii) the exercise in full of all outstanding options, warrants (including, without limitation, this Warrant) and other rights to purchase or acquire shares of common stock or securities exercisable for or convertible into shares of common stock (regardless of whether such options, warrants or other rights to purchase or acquire are by their terms now exercisable); and (iii) the inclusion of all shares of common stock reserved for issuance under all of the Company's incentive stock and stock option plans and not now subject to outstanding grants or options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;All Shares which may be issued upon the exercise of this Warrant shall, upon issuance, be duly authorized, validly issued, fully paid and non-assessable, and free of any liens and encumbrances except for restrictions on transfer provided for herein or under applicable federal and state securities laws. The Company covenants that it shall at all times cause to be reserved and kept available out of its authorized and unissued capital stock such number of shares of the Class and other securities as will be sufficient to permit the exercise in full of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;The Company's capitalization table attached hereto as <u>Schedule 1</u> is true and complete, in all material respects, as of the Issue Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Notice of Certain Events</u>. If the Company proposes at any time to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) declare any dividend or distribution upon the outstanding shares of the Class, whether in cash, property, stock, or other securities and whether or not a regular cash dividend;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) offer for subscription or sale pro rata to the holders of the outstanding shares of the Class any additional shares of any class or series of the Company's stock (other than pursuant to contractual pre-emptive rights);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) effect any reclassification, exchange, combination, substitution, reorganization or recapitalization of the outstanding shares of the Class;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) effect an Acquisition or to liquidate, dissolve or wind up; or

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) effect its initial, underwritten offering and sale of its securities to the public pursuant to an effective registration statement under the Act (the "**<u>IPO</u>**");

then, in connection with each such event, the Company shall give Holder:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) in the case of the matters referred to in (a) and (b) above, at least seven (7) Business Days prior written notice of the earlier to occur of the effective date thereof or the date on which a record will be taken for such dividend, distribution, or subscription rights (and specifying the date on which the holders of outstanding shares of the Class will be entitled thereto) or for determining rights to vote, if any;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) in the case of the matters referred to in (c) and (d) above at least seven (7) Business Days prior written notice of the date when the same will take place (and specifying the date on which the holders of outstanding shares of the Class will be entitled to exchange their shares for the securities or other property deliverable upon the occurrence of such event and such reasonable information as Holder may reasonably require regarding the treatment of this Warrant in connection with such event giving rise to the notice); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(3) with respect to the IPO, at least seven (7) Business Days prior written notice of the date on which the Company proposes to file its registration statement in connection therewith.

The Company will also provide information requested by Holder from time to time, within a reasonable time following each such request, that is reasonably necessary to enable Holder to comply with Holder's accounting or reporting requirements. Prior to the IPO, such information may include, but shall not be limited to, the Company's then-current summary capitalization table, the price per share for which the Company most recently prior thereto sold or issued shares of its convertible preferred stock to investors for cash in a bona fide equity financing of the Company, and the Company's most recent 409A Valuation. Holder agrees to treat and hold all information provided by the Company pursuant to this Warrant in confidence in accordance with the provisions of Section 12.9 of the Loan Agreement (regardless of whether the Loan Agreement shall then be in effect).

SECTION 4. <u>REPRESENTATIONS, WARRANTIES OF THE HOLDER.</u>

The Holder represents and warrants to the Company as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Purchase for Own Account</u>. This Warrant and the Shares to be acquired upon exercise of this Warrant by Holder are being acquired for investment for Holder's account, not as a nominee or agent, and not with a view to the public resale or distribution within the meaning of the Act. Holder also represents that it has not been formed for the specific purpose of acquiring this Warrant or the Shares.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Disclosure of Information</u>. Holder is aware of the Company's business affairs and financial condition and has received or has had full access to all the information it considers necessary or appropriate to make an informed investment decision with respect to the acquisition of this Warrant and its underlying securities. Holder further has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the offering of this Warrant and its underlying securities and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) necessary to verify any information furnished to Holder or to which Holder has access.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Investment Experience</u>. Holder understands that the purchase of this Warrant and its underlying securities involves substantial risk. Holder has experience as an investor in securities of companies in the development stage and acknowledges that Holder can bear the economic risk of such Holder's investment in this Warrant and its underlying securities and has such knowledge and experience in financial or business matters that Holder is capable of evaluating the merits and risks of its investment in this Warrant and its underlying securities and/or has a preexisting personal or business relationship with the Company and certain of its officers, directors or controlling persons of a nature and duration that enables Holder to be aware of the character, business acumen and financial circumstances of such persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Accredited Investor Status</u>. Holder is an "accredited investor" within the meaning of Regulation D promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;<u>The Act</u>. Holder understands that this Warrant and the Shares issuable upon exercise hereof have not been registered under the Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of the Holder's investment intent as expressed herein. Holder understands that this Warrant and the Shares issued upon any exercise hereof must be held indefinitely unless subsequently registered under the Act and qualified under applicable state securities laws, or unless exemption from such registration and qualification are otherwise available. Holder is aware of the provisions of Rule 144 promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;<u>No Voting Rights</u>. Holder, as a Holder of this Warrant, will not have any voting rights until the exercise of this Warrant.

SECTION 5. <u>MISCELLANEOUS</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Term; Automatic Cashless Exercise Upon Expiration</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;<u>Term</u>. Subject to the provisions of Section 1.6 above, this Warrant is exercisable in whole or in part at any time and from time to time on or before 6:00 PM, Pacific Time, on the Expiration Date and shall be void thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;<u>Automatic Cashless Exercise upon Expiration</u>. In the event that, upon the Expiration Date, the fair market value of one Share as determined in accordance with Section 1.3 above is greater than the Warrant Price in effect on such date, then this Warrant shall

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automatically be deemed on and as of such date to be exercised pursuant to Section 1.2 above as to all Shares for which it shall not previously have been exercised, and the Company shall, within a reasonable time, deliver a certificate representing the Shares issued upon such exercise to Holder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Legends</u>. Each certificate evidencing Shares shall be imprinted with a legend in substantially the following form:

THE SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "**<u>ACT</u>**"), OR THE SECURITIES LAWS OF ANY STATE AND, EXCEPT AS SET FORTH IN THAT CERTAIN WARRANT TO PURCHASE STOCK ISSUED BY THE ISSUER TO SILICON VALLEY BANK DATED APRIL 1, 2021, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS AND UNTIL REGISTERED UNDER SAID ACT AND LAWS OR, IN THE OPINION OF LEGAL COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Compliance with Securities Laws on Transfer</u>. This Warrant and the Shares issued upon exercise of this Warrant may not be transferred or assigned in whole or in part except in compliance with applicable federal and state securities laws by the transferor and the transferee (including, without limitation, the delivery of investment representation letters and legal opinions reasonably satisfactory to the Company, as reasonably requested by the Company). The Company shall not require Holder to provide an opinion of counsel if the transfer is to SVB Financial Group (Silicon Valley Bank's parent company) or any other affiliate of Holder, provided that any such transferee is an "accredited investor" as defined in Regulation D promulgated under the Act. Additionally, the Company shall also not require an opinion of counsel if there is no material question as to the availability of Rule 144 promulgated under the Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Transfer Procedure</u>. After receipt by Silicon Valley Bank of the executed Warrant, Silicon Valley Bank will transfer all of this Warrant to its parent company, SVB Financial Group. By its acceptance of this Warrant, SVB Financial Group hereby makes to the Company each of the representations and warranties set forth in Section 4 hereof and agrees to be bound by all of the terms and conditions of this Warrant as if the original Holder hereof. Subject to the provisions of Section 5.3 and upon providing the Company with written notice, SVB Financial Group and any subsequent Holder may transfer all or part of this Warrant or the Shares issued upon exercise of this Warrant to any transferee, provided, however, in connection with any such transfer, SVB Financial Group or any subsequent Holder will give the Company notice of the portion of the Warrant and/or Shares being transferred with the name, address and taxpayer identification number of the transferee and Holder will surrender this Warrant to the Company for reissuance to the transferee(s) (and Holder if applicable); and provided further, that

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any subsequent transferee other than SVB Financial Group shall agree in writing with the Company to be bound by all of the terms and conditions of this Warrant; and provided further, that the transfer of any Shares issued on exercise hereof shall be subject to the provisions of the ROFR and Voting Agreement if Holder is then a party thereto or otherwise subject thereto in accordance with Section 1.7 above. Notwithstanding any contrary provision herein, at all times prior to the IPO, Holder may not, without the Company's prior written consent, transfer this Warrant or any portion hereof, or any Shares issued upon any exercise hereof, to any person or entity who directly competes with the Company, except in connection with an Acquisition of the Company by such a direct competitor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. All notices and other communications hereunder from the Company to the Holder, or vice versa, shall be deemed delivered and effective (i) when given personally, (ii) on the third (3<sup>rd</sup>) Business Day after being mailed by first-class registered or certified mail, postage prepaid, (iii) upon actual receipt if given by facsimile or electronic mail and such receipt is confirmed in writing by the recipient, or (iv) on the first Business Day following delivery to a reliable overnight courier service, courier fee prepaid, in any case at such address as may have been furnished to the Company or Holder, as the case may be, in writing by the Company or such Holder from time to time in accordance with the provisions of this Section 5.5. All notices to Holder shall be addressed as follows until the Company receives notice of a change of address in connection with a transfer or otherwise:

SVB Financial Group

Attn: Treasury Department

3003 Tasman Drive, HC 215

Santa Clara, CA 95054

Telephone: [\*\*\*]

Facsimile: [\*\*\*]

Email address: [\*\*\*]

Notice to the Company shall be addressed as follows until Holder receives notice of a change in address:

Shoulder Innovations, Inc.

Attn: Chief Financial Officer

13827 Port Sheldon St.

Holland, MI 49424

Telephone:

Facsimile:

Email:

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

Honigman LLP

Attn: Justin M. Crawford

650 Trade Centre Way, Suite 200

Kalamazoo, MI 49002

Telephone: [\*\*\*]

Email: [\*\*\*]

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Waiver</u>. This Warrant and any term hereof may be changed, waived, discharged or terminated (either generally or in a particular instance and either retroactively or prospectively) only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Attorneys' Fees</u>. In the event of any dispute between the parties concerning the terms and provisions of this Warrant, the party prevailing in such dispute shall be entitled to collect from the other party all costs incurred in such dispute, including reasonable attorneys' fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts; Facsimile/Electronic Signatures</u>. This Warrant may be executed by one or more of the parties hereto in any number of separate counterparts, all of which together shall constitute one and the same instrument. The Company, Holder and any other party hereto may execute this Warrant by electronic means and each party hereto recognizes and accepts the use of electronic signatures and the keeping of records in electronic form by any other party hereto in connection with the execution and storage hereof. To the extent that this Warrant or any agreement subject to the terms hereof or any amendment hereto is executed, recorded or delivered electronically, it shall be binding to the same extent as though it had been executed on paper with an original ink signature, as provided under applicable law, including, without limitation, any state law based on the Uniform Electronic Transactions Act. The fact that this Warrant is executed, signed, stored or delivered electronically shall not prevent the transfer by any Holder of this Warrant pursuant to Section 5.4 or the enforcement of the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Headings</u>. The headings in this Warrant are for purposes of reference only and shall not limit or otherwise affect the meaning of any provision of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Business Days</u>. "**<u>Business Day</u>**" is any day that is not a Saturday, Sunday or a day on which Silicon Valley Bank is closed.

SECTION 6.&nbsp;&nbsp;&nbsp;&nbsp;<u>GOVERNING LAW, VENUE, JURY TRIAL WAIVER, AND JUDICIAL</u> 

<u>REFERENCE</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. This Warrant shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Jurisdiction and Venue</u>. The Company and Holder each submit to the exclusive jurisdiction of the State and Federal courts in New York, NY provided, however, that nothing in this Warrant shall be deemed to operate to preclude Holder from bringing suit or taking other legal action in any other jurisdiction to enforce a judgment or other court order in favor of Holder. The Company expressly submits and consents in advance to such jurisdiction in any action or suit commenced in any such court, and the Company hereby waives any objection that it may have based upon lack of personal jurisdiction, improper venue, or forum non conveniens and hereby consents to the granting of such legal or equitable relief as is deemed appropriate by such court. The Company hereby waives personal service of the summons, complaints, and other process issued in such action or suit and agrees that service of such summons, complaints, and other process may be made in accordance with Section 5.5 of this Warrant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Jury Trial Waiver</u>. **TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY AND HOLDER EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS WARRANT, THE LOAN AGREEMENT OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR THE PARTIES' AGREEMENT TO THIS WARRANT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Survival</u>. This Section 6 shall survive the termination of this Warrant.

[Remainder of page left blank intentionally]

[Signature page follows]

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IN WITNESS WHEREOF, the parties have caused this Warrant to Purchase Stock to be executed by their duly authorized representatives effective as of the Issue Date written above.

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| | |
|:---|:---|
| "COMPANY" | "COMPANY" |
| SHOULDER INNOVATIONS, INC. | SHOULDER INNOVATIONS, INC. |
| By: | /s/ Matthew Ahearn |
| Name: Matthew Ahearn | Name: Matthew Ahearn |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Print) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Print) |
| Title: Chief Operating Officer | Title: Chief Operating Officer |
| "HOLDER" | "HOLDER" |
| SILICON VALLEY BANK | SILICON VALLEY BANK |
| By: | /s/ Brian Powers |
| Name: Brian Powers | Name: Brian Powers |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Print) | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Print) |
| Title: Vice President | Title: Vice President |

---

------

APPENDIX 1

<u>NOTICE OF EXERCISE</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;The undersigned Holder hereby exercises its right to purchase ____________ shares of the Common/Series _______ Preferred [circle one] Stock of ___________________ (the "**<u>Company</u>**") in accordance with the attached Warrant To Purchase Stock, and tenders payment of the aggregate Warrant Price for such shares as follows:

[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;check in the amount of $________ payable to order of the Company enclosed herewith

[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;Wire transfer of immediately available funds to the Company's account

[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;Cashless Exercise pursuant to Section 1.2 of the Warrant

[&nbsp;&nbsp;&nbsp;&nbsp;]&nbsp;&nbsp;&nbsp;&nbsp;Other [Describe] ___________________________________________

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;Please issue a certificate or certificates representing the Shares in the name specified below:

---

| |
|:---|
| ______________________________________________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holder's Name |
| ______________________________________________ |
| ______________________________________________ |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Address) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;By its execution below and for the benefit of the Company, Holder hereby restates each of the representations and warranties in Section 4 of the Warrant to Purchase Stock as of the date hereof.

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| |
|:---|
| HOLDER: |
| ____________________________ |
| By:____________________________ |
| Name:___________________________ |
| Title:____________________________ |
| (Date):__________________________ |

---

Appendix 1

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AMENDMENT NO. 1 TO WARRANT TO PURCHASE STOCK

THIS AMENDMENT NO. 1 TO WARRANT TO PURCHASE STOCK (this "<u>Amendment No. 1</u>") is made this 30th day of September, 2022, by and between SVB Financial Group ("<u>Holder</u>") and Shoulder Innovations, Inc., a Delaware corporation (the "<u>Company</u>").

WHEREAS, Holder is the holder, by assignment from Silicon Valley Bank ("<u>Bank</u>"), of that certain Warrant to Purchase Stock dated April 1, 2021 issued by the Company to Bank (the "<u>Warrant</u>"); and

WHEREAS, in connection with certain credit transactions of even date herewith between Bank and the Company, the parties desire to amend the Warrant in the manner set forth below;

NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Amendment of Warrant</u>.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The Warrant is hereby amended by deleting Paragraph A thereof in its entirety and substituting therefor the following new Paragraph A:

"A.&nbsp;&nbsp;&nbsp;&nbsp; <u>Number of Shares</u>.&nbsp;&nbsp;&nbsp;&nbsp; This Warrant shall be exercisable for 340,140 shares of the Class (as may be adjusted from time to time in accordance with the provisions of this Warrant, the "**<u>Shares</u>**")."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;<u>No Adjustment Events</u>. The Company represents and warrants that, since the original Issue Date of the Warrant, there has occurred no event of a type described in Section 2 thereof that resulted in an adjustment to the number of Shares, the Class or the Warrant Price (as such terms are defined in the Warrant).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;<u>No Other Amendments</u>.&nbsp;&nbsp;&nbsp;&nbsp;Except as amended hereby, the Warrant shall remain in full force and effect as originally written.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.&nbsp;&nbsp;&nbsp;&nbsp;<u>Governing Law</u>. This Amendment No. 1 shall be governed by and construed in accordance with the laws of the State of Delaware, without giving effect to its principles regarding conflicts of law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5.&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. This Amendment No. 1 may be executed by one or more of the parties hereto in any number of separate counterparts, all of which together shall constitute one and the same instrument

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;&nbsp;&nbsp;&nbsp;<u>Electronic Signatures</u>. Each party hereto may execute this Amendment No. 1 by electronic means and recognizes and accepts the use of electronic signatures and records by any other party hereto in connection with the execution and storage hereof.

------

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to Warrant to Purchase Stock as of the date first above written.

---

| | |
|:---|:---|
| SHOULDER INNOVATIONS, INC. | SHOULDER INNOVATIONS, INC. |
| By: | /s/ Robert Ball |
| Name: Robert Ball | Name: Robert Ball |
| Title: Chief Executive Officer | Title: Chief Executive Officer |
| SVB FINANCIAL GROUP | SVB FINANCIAL GROUP |
| By: | /s/ John Doran |
| Name: John Doran | Name: John Doran |
| Title: Senior Portfolio Manager | Title: Senior Portfolio Manager |

---

## Exhibit 10.9

**Exhibit 10.9**

**SHOULDER INNOVATIONS, INC.**

**<u>AMENDED AND RESTATED STOCK OPTION PLAN</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;PURPOSES OF THIS PLAN.** The purposes of this Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide an additional incentive to Employees and other personnel and to promote the success of the Company's business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS.** As used herein, the following definitions shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**"***Administrator***" means, in accordance with Section 4, the Board, unless the Board delegates this authority to a Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**"***Applicable Laws***" means any applicable law, including without limitation: (a) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (b) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, whether U.S. or non-U.S. federal, state or local; and (c) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**"***Board***" means the Board of Directors of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**"***Change in Control***" means and includes each of the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission or a transaction or series of transactions that meets the requirements of clauses (1) and (2) of subsection (iii) below) whereby any "person" or related "group" of "persons" (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a "person" that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company's securities outstanding immediately after such acquisition; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsections (i) or (iii)) whose election by the Board or nomination for election by the Company's stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company's assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)&nbsp;&nbsp;&nbsp;&nbsp;**which results in the Company's voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by

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being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company's assets or otherwise succeeds to the business of the Company (the Company or such person, the "***Successor Entity***")) directly or indirectly, at least a majority of the combined voting power of the Successor Entity's outstanding voting securities immediately after the transaction, and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)&nbsp;&nbsp;&nbsp;&nbsp;**after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; <u>provided</u>, <u>however</u>, that no person or group shall be treated for purposes of this clause (ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction.

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Option (or portion of any Option) that provides for the deferral of compensation that is subject to Section 409A, to the extent required to avoid the imposition of additional taxes under Section 409A, the transaction or event described in subsection (i), (ii) or (iii) with respect to such Option (or portion thereof) shall only constitute a Change in Control for purposes of the payment timing of such Option (or portion thereof) if such transaction also constitutes a "change in control event," as defined in Treasury Regulation Section 1.409A-3(i)(5).

The Administrator shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control has occurred pursuant to the above definition, the date of the occurrence of such Change in Control and any incidental matters relating thereto; provided that any exercise of authority in conjunction with a determination of whether a Change in Control is a "change in control event" as defined in Treasury Regulation Section 1.409A-3(i)(5) shall be consistent with such regulation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**"***Code***" means the Internal Revenue Code of 1986, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**"***Committee***" means a committee of Directors or other individuals appointed by the Board in accordance with Applicable Laws and Section 4.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;**"***Common Stock***" means the Common Stock of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;**"***Company***" means Shoulder Innovations, Inc., a Delaware corporation, including any and all related entities as such is determined under Code Section 414.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**"***Director***" means a Board member.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(j)&nbsp;&nbsp;&nbsp;&nbsp;**"***Disability***" occurs when an Employee or other individual is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(k)&nbsp;&nbsp;&nbsp;&nbsp;**"***Employee***" means any person, including officers, employed by the Company. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(l)&nbsp;&nbsp;&nbsp;&nbsp;**"***Exchange Act***" means the Securities Exchange Act of 1934, as amended.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(m)&nbsp;&nbsp;&nbsp;&nbsp;**"***Fair Market Value***" means, as of any date, the value of Common Stock determined as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**If the Common Stock is listed on any established stock exchange or a national market system its Fair Market Value shall be the closing sales price for such stock as quoted on such exchange or system on the day of determination or, if no sale occurred on such date, the last day preceding such date during which a sale occurred, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value shall be the mean between the high bid and low asked prices for the Common Stock on the day of determination; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**In the absence of an established market for the Common Stock, the Fair Market Value thereof shall be determined in good faith by the Administrator, in accordance with Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(n)&nbsp;&nbsp;&nbsp;&nbsp;**"***Incentive Stock Option***" means an Option intended to qualify as an incentive stock option within the meaning of Code Section 422.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(o)&nbsp;&nbsp;&nbsp;&nbsp;**"***Nonstatutory Stock Option***" means an Option not intended to qualify as an Incentive Stock Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(p)&nbsp;&nbsp;&nbsp;&nbsp;**"***Option***" means a stock option granted pursuant to this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(q)&nbsp;&nbsp;&nbsp;&nbsp;**"***Option Award Agreement***" means a written agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. Each Option Award Agreement is subject to the terms and conditions of this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(r)&nbsp;&nbsp;&nbsp;&nbsp;**"***Optioned Stock***" means the Common Stock subject to an Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(s)&nbsp;&nbsp;&nbsp;&nbsp;**"***Optionee***" means the holder of an outstanding Option granted under this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(t)&nbsp;&nbsp;&nbsp;&nbsp;**"***Plan***" means this Shoulder Innovations, Inc. Amended and Restated Stock Option Plan, as the same may be amended, restated or amended and restated from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(u)&nbsp;&nbsp;&nbsp;&nbsp;**"***Securities Act***" means the Securities Act of 1933, as amended.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**"***Share***" means a share of Common Stock, as adjusted in accordance with Section 12.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;STOCK SUBJECT TO THIS PLAN.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Subject to Section 12 of this Plan, the maximum aggregate number of Shares that may be subject to Option under this Plan is [__________] Shares, of which the maximum number of Shares that may be issued pursuant to Incentive Stock Options shall be [__________] Shares. The Shares may be authorized, but unissued, or reacquired Common Stock.<sup>1</sup>

<sup>1</sup> NTD: Share reserve and ISO reserve to be updated to reflect stock split, once determined.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**If an Option expires or becomes unexercisable without having been exercised in full, the unexercised Shares that were subject thereto shall become available for future grants under this Plan (unless this Plan has terminated). However, Shares that have actually been issued under this Plan, upon exercise of an Option, shall not be returned to this Plan and shall not become available for future distribution under this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;ADMINISTRATION OF THIS PLAN.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Administrator**. The Administrator shall be the Board and/or a Committee, if the Board delegates some or all of its responsibilities to a Committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Powers of the Administrator**. The Administrator shall have the authority in its discretion:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**to determine the Fair Market Value of Common Stock;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**to select the Employees and other individuals to whom Options may from time to time be granted hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**to determine the number of Shares to be covered by each such award granted hereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**to approve forms of agreement for use under this Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(v)&nbsp;&nbsp;&nbsp;&nbsp;**to determine the terms and conditions of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine. Notwithstanding the foregoing or anything in the Plan to the contrary, the Board may, without the approval of the stockholders of the Company, reduce the exercise price per share of outstanding Options or cancel outstanding Options in exchange for cash, other awards or Options with an exercise price per share that is less than the exercise price per share of the original Options;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(vi)&nbsp;&nbsp;&nbsp;&nbsp;**to prescribe, amend and rescind rules and regulations relating to this Plan, including rules and regulations relating to sub-plans established for the purpose of satisfying applicable foreign laws;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(vii)&nbsp;&nbsp;&nbsp;&nbsp;**to allow Optionees, to the extent permitted by Applicable Laws, to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Option that number of Shares having a Fair Market Value equal to the minimum amount required to be withheld. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Optionees to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(viii)&nbsp;&nbsp;&nbsp;&nbsp;**to amend the terms of any one (1) or more Options without the affected Employee's consent if necessary to maintain the status of such Option as an Incentive Stock Option or, if necessary, to bring an Option into compliance with Code Section 409A and the related guidance thereunder; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ix)&nbsp;&nbsp;&nbsp;&nbsp;**to construe and interpret the terms of this Plan and any Options granted thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Effect of Administrator's Decision**. All decisions, determinations and interpretations of the Administrator shall be final and binding on all parties, including Optionees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;ELIGIBILITY.** Incentive Stock Options may be granted only to Employees. Nonstatutory Stock Options may be granted to Employees and other individuals selected by the Administrator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;LIMITATIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Incentive Stock Option Limit**. Each Option shall be designated in the Option Award Agreement as either an Incentive Stock Option or Nonstatutory Stock Option. However, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;At-Will Relationship**. Neither this Plan nor any Option shall confer upon any Optionee any right with respect to continuing the Optionee's relationship with the Company (as an Employee, agent, service provider or otherwise), nor shall it interfere in any way with his or her right or the Company's right to terminate such relationship at any time, with or without cause, and with or without notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;TERM OF PLAN.** This Plan (as amended and restated) shall become effective upon its adoption by the Board and shall terminate automatically upon the effectiveness of the Company's 2025 Incentive Award Plan (the "***2025 Plan***"). No Options may be granted under the Plan after the termination of the Plan. However, any Options that, by their terms, remain outstanding as of the termination of the Plan shall remain outstanding and in full force and effect, and the terms and conditions of the Plan shall survive its termination and continue to apply to any such Options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;TERM OF OPTION.** The term of each Option shall be stated in the Option Award Agreement; provided, however, that the term of each Option shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option granted to an Optionee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company, the term of the Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Award Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;OPTION EXERCISE PRICE AND CONSIDERATION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Exercise Price**. The per share exercise price for the Shares to be issued upon exercise of an Option shall be such price as determined by the Administrator and stated in the Option Award Agreement, but shall be subject to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**In the case of an Incentive Stock Option:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(1)&nbsp;&nbsp;&nbsp;&nbsp;**If granted to an Employee who, at the time of grant of such Option, owns stock representing more than ten percent (10%) of the voting power of all classes of

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stock of the Company, the exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(2)&nbsp;&nbsp;&nbsp;&nbsp;**If granted to an Employee not referenced in subsection (1) above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**In the case of a Nonstatutory Stock Option, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Forms of Consideration**. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator at the time of grant. Such consideration may, in the Administrator's discretion, consist of, without limitation, (1) cash, (2) check, (3) bank draft or money order payable to the Company, (4) any other method acceptable to the Administrator, or (5) any combination of the foregoing methods of payment. In making its determination as to the acceptable types of consideration, the Administrator shall ensure that the consideration is consistent with Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;EXERCISE OF OPTION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Procedure for Exercise; Rights as a Stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Any Option granted hereunder shall be exercisable according to the terms hereof at such times and under such conditions as determined by the Administrator and set forth in an Option Award Agreement. An Option may not be exercised for a fraction of a Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**An Option shall be deemed exercised when the Company receives (i) written notice of exercise (in accordance with the Option Award Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Award Agreement and this Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares as soon as administratively practicable after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**Exercise of an Option shall result in a decrease in the number of Shares thereafter available under this Plan by the number of Shares as to which the Option is exercised.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Termination of Relationship**. If an Optionee ceases to be an Employee or ceases to have a service provider relationship with the Company (as determined by the Company), such Optionee may exercise his or her Option within one (1) month of such termination, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of the Option as set forth in the Option Award Agreement). If, on the date of the termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to this Plan; provided, however, that if the date of termination occurs after this Plan terminates then such Shares shall revert to the 2025 Plan. If, after termination, the Optionee does not exercise his or her Option

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within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to this Plan; provided, however, that if the Option terminates after this Plan terminates then such Shares shall revert to the 2025 Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Disability of Optionee**. If an Optionee ceases to be an Employee or ceases to have a service provider relationship with the Company (as determined by the Company) as a result of the Optionee's Disability, the Optionee may exercise his or her Option within one (1) month of such termination, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Award Agreement). If, on the date of termination, the Optionee is not vested as to his or her or its entire Option, the Shares covered by the unvested portion of the Option shall revert to this Plan; provided, however, that if the date of termination occurs after this Plan terminates then such Shares shall revert to the 2025 Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to this Plan; provided, however, that if the Option terminates after this Plan terminates then such Shares shall revert to the 2025 Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Death of Optionee**. If an Optionee dies while an Employee or while providing services to the Company (as determined by the Company), the Option may be exercised within one (1) month following Optionee's death, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Option Award Agreement) by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to this Plan; provided, however, that if the date of termination occurs after this Plan terminates then such Shares shall revert to the 2025 Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to this Plan; provided, however, that if the Option terminates after this Plan terminates then such Shares shall revert to the 2025 Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;LIMITED TRANSFERABILITY.** Unless determined otherwise in writing by the Administrator, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.&nbsp;&nbsp;&nbsp;&nbsp;ADJUSTMENTS; DISSOLUTION OR LIQUIDATION; MERGER OR CHANGE IN CONTROL.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Adjustments**. In the event that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, or other change in the corporate structure of the Company affecting the Shares occurs, the Administrator, in order to prevent diminution or enlargement of the benefits or potential benefits intended to be made available under this Plan, may (in its sole discretion) adjust the number and class of Shares that may be delivered under this Plan and/or the number, class, and price of Shares covered by each outstanding Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Dissolution or Liquidation**. To the extent permitted by Applicable Law, in the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each

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Optionee as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Merger or Change in Control**. In the event of a merger of the Company with or into another entity, or a Change in Control, it is intended that each outstanding Option shall be assumed or an equivalent option substituted by the successor entity (or, a parent or subsidiary of the successor entity). In the event that the successor entity in a merger or Change in Control refuses to assume or substitute for the Option, then the Optionee shall fully vest in and have the right to exercise the Option as to all of the Optioned Stock, including Shares as to which it would not otherwise be vested or exercisable. If an Option becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or Change in Control, the Administrator shall notify the Optionee in writing that this Option shall be fully exercisable for a period of fifteen (15) days from the date of such notice, and the Option shall terminate upon expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or Change in Control, the option confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or Change in Control, the consideration (whether stock, cash, or other securities or property) received in the merger or Change in Control by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or Change in Control is not solely common stock (or its equivalent in an entity that is not a corporation) of the successor entity (or, a parent or subsidiary of the successor entity), the Administrator may, with the consent of the successor entity, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock (or its equivalent in an entity that is not a corporation) of the successor entity (or, a parent or subsidiary of the successor entity) equal in fair market value to the per share consideration received by holders of common stock (or its equivalent in an entity that is not a corporation) in the merger or Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13.&nbsp;&nbsp;&nbsp;&nbsp;TIME OF GRANTING OPTIONS.** The date of grant of an Option shall, for all purposes, be the date on which the Administrator makes the determination granting such Option or such later date as is determined by the Administrator. Notice of the determination shall be given to each Employee or other individual to whom an Option is so granted within a reasonable time after the date of such grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14.&nbsp;&nbsp;&nbsp;&nbsp;AMENDMENT AND TERMINATION OF THIS PLAN.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Amendment and Termination**. The Board may at any time amend, alter, suspend or terminate this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Stockholder Approval**. The Board shall obtain stockholder approval of any Plan amendment or termination to the extent necessary and desirable to comply with Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Effect of Amendment or Termination**. No amendment, alteration, suspension or termination of this Plan shall impair the rights of any Optionee as to Options already granted, unless mutually agreed otherwise between the Optionee and the Board which agreement must be in writing and signed by the Optionee and an authorized delegate of the Board. Notwithstanding the immediately preceding sentence, this Plan may be unilaterally amended, altered, suspended or terminated by the Board to the extent necessary to comply with Applicable Laws. Termination of this Plan shall not affect the

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Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under this Plan prior to the date of such termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Code Section 409A**. To the extent that the Board determines that any Option granted under this Plan is subject to Code Section 409A, the corresponding Option Award Agreement evidencing such Option shall incorporate the terms and conditions necessary to avoid the tax, interest and penalty consequences described in Code Section 409A. To the extent applicable, this Plan and all Option Award Agreements shall be interpreted in accordance with Code Section 409A and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued or amended after the effective date of this Plan. Notwithstanding any provision of this Plan to the contrary, in the event that following the effective date of this Plan, the Board determines that any Option may be subject to Code Section 409A and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the effective date of this Plan), the Board may unilaterally adopt such amendments to this Plan and the applicable Option Award Agreements or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Board determines are necessary or appropriate to (1) exempt such Options from Code Section 409A and/or preserve the intended tax treatment of the benefits provided with respect to each such Option, or (2) comply with the requirements of Code Section 409A and related Department of Treasury guidance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15.&nbsp;&nbsp;&nbsp;&nbsp;CONDITIONS UPON ISSUANCE OF SHARES.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Legal Compliance**. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares complies with Applicable Laws, subject to the approval of counsel for the Company with respect to such compliance.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Investment Representations**. As a condition to the exercise of an Option, the Administrator may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16.&nbsp;&nbsp;&nbsp;&nbsp;INABILITY TO OBTAIN AUTHORITY.** The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17.&nbsp;&nbsp;&nbsp;&nbsp;RESERVATION OF SHARES.** The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18.&nbsp;&nbsp;&nbsp;&nbsp;[RESERVED]**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19.&nbsp;&nbsp;&nbsp;&nbsp;RIGHT OF FIRST REFUSAL**. The Company's Right of First Refusal (as defined in the applicable Option Award Agreement) shall terminate in connection with the termination of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**20.&nbsp;&nbsp;&nbsp;&nbsp;LIMITATIONS ON LIABILITY**. Notwithstanding any other provisions of the Plan, and to the fullest extent permitted by Applicable Laws and the Company's certificate of incorporation and bylaws, (a) no individual acting as a director, officer, other employee or agent of the Company or a

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subsidiary will be liable to any Optionee, former Optionee, spouse, beneficiary, or any other person for any claim, loss, liability, or expense incurred in connection with the Plan or any award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company or any subsidiary and (b) the Company will indemnify and hold harmless each director, officer, other employee and agent of the Company or any subsidiary that has been or will be granted or delegated any duty or power relating to the Plan's administration or interpretation, against any cost or expense (including attorneys' fees) or liability (including any sum paid in settlement of a claim with the Administrator's approval) arising from any act or omission concerning this Plan unless arising from such person's own fraud or bad faith.

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---

| | |
|:---|:---|
| **COMPANY:** | **COMPANY:** |
| Shoulder Innovations, Inc. | Shoulder Innovations, Inc. |
| By: | [___________________] |
| Name: | [___________________] |
| Title: | [___________________] |
| Date: | [___________________] |

---

## Exhibit 10.9

**Exhibit 10.9 (a)**

**SHOULDER INNOVATIONS, INC.**

**STOCK OPTION PLAN**

**OPTION AWARD AGREEMENT**

Unless otherwise defined herein, the terms defined in the Shoulder Innovations, Inc. Stock Option Plan shall have the same defined meanings for purposes of this Option Award Agreement (this "***Option Award Agreement***").

**I.&nbsp;&nbsp;&nbsp;&nbsp;NOTICE OF STOCK OPTION GRANT**

The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Award Agreement, as follows:

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| |
|:---|
| Optionee: |
| Date of Grant: |
| Vesting Commencement Date: |
| Number of Shares Subject to Option: |
| Exercise Price (Per Share): |
| Total Exercise Price: |
| Expiration Date: |

---

---

| | |
|:---|:---|
| **Type of Grant:** | □ Incentive Stock Option [ Shares]<br>□ Nonstatutory Stock Option [ Shares] |
| **Exercise Schedule:** | Same as Vesting Schedule |

---

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| | |
|:---|:---|
| **Vesting Schedule:** | Incentive Stock Options:<br>1.&nbsp;&nbsp;&nbsp;&nbsp; [ ] Option Shares shall be vested as of the earlier of the one-year anniversary of the Grant Date and the one-year anniversary of Participant's employment commencement date with the Company as an Employee; and<br>2.&nbsp;&nbsp;&nbsp;&nbsp;[ ] additional Option Shares shall be vested as of each monthly anniversary of the date Option Shares are vested pursuant to (a) above for a period of thirty-six months.<br>Nonstatutory Stock Options:<br>[ ] Option Shares shall be vested as of the earlier of the one-year anniversary of the Grant Date and the one-year anniversary of Participant's employment commencement date with the Company as an Employee (or, the date the service provider commenced his or her service provider relationship with the Company); and<br>1.&nbsp;&nbsp;&nbsp;&nbsp;[ ] additional Option Shares shall be vested as of each monthly anniversary of the date Option Shares are vested pursuant to (x) above for a period of thirty-six months. |
| **Payment:** | By one or a combination of the following methods of payment (described in Section 5 of this Option Award Agreement):<br>• Cash or check;<br>• Bank draft or money order payable to the Company; or<br>• Cashless exercise. |
| **Termination Period:** | This Option shall be exercisable in accordance with Section 10 of the Plan. |

---

**II.&nbsp;&nbsp;&nbsp;&nbsp;AGREEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**A.&nbsp;&nbsp;&nbsp;&nbsp;GRANT OF OPTION.**

The Administrator hereby grants to the Optionee, an option (this "***Option***") to purchase the number of Shares, at the exercise price per Share, set forth in this Option Award Agreement, subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of a conflict between the terms and conditions of the Plan and this Option Award Agreement, the terms and conditions of the Plan shall prevail.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**B.&nbsp;&nbsp;&nbsp;&nbsp;EXERCISE OF OPTION.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;Right to Exercise**. This Option shall be exercisable during its term in accordance with the Vesting Schedule and the applicable provisions of the Plan and this Option Award Agreement.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;Method of Exercise.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;This Option shall be exercisable by delivery of an Exercise Notice (see <u>Exhibit A</u>), which shall state the election to exercise this Option, the number of Shares with respect to which this Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;No Shares shall be issued pursuant to the exercise of this Option unless such issuance and such exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes, the Shares shall be considered transferred to Optionee on the date on which this Option is exercised with respect to such Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**C.OPTIONEE'S REPRESENTATIONS.** In the event the Shares have not been registered under the Securities Act at the time this Option is exercised, Optionee shall, if required by the Company, concurrently with the exercise of all or any portion of this Option, deliver to the Company an investment representation statement (see <u>Exhibit B</u>) in the manner required by the Administrator.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**D.&nbsp;&nbsp;&nbsp;&nbsp;LOCK-UP PERIOD.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;**Optionee hereby agrees that Optionee shall not 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 Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Optionee (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;**Optionee agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriter which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Optionee shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company's securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section shall not apply to a registration relating solely to employee benefit plans on Form S-l or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred eighty (180) day period. Optionee agrees that any transferee of this Option or shares acquired pursuant to this Option shall be bound by this Section.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**E.METHOD OF PAYMENT.** Payment of the aggregate Exercise Price shall consist of any of the following, or a combination thereof:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.**cash or check; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.**bank draft or money order payable to the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.**consideration received by the Company under a formal cashless exercise program acceptable to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**F.RESTRICTIONS ON EXERCISE.** This Option may not be exercised (a) until such time as the Plan has been approved by the stockholders of the Company, or (b) if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**G.NON-TRANSFERABILITY OF OPTION.** Except as provided in the Plan, Options may not be transferred in any manner other than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Award Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**H.TERM OF OPTION.** This Option may be exercised only within the term set out in this Option Award Agreement, and may be exercised during such term only in accordance with the Plan and this Option Award Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**I.&nbsp;&nbsp;&nbsp;&nbsp;TAX OBLIGATIONS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;Withholding Taxes**. Optionee agrees to make appropriate arrangements with the Company for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Optionee acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;Notice of Disqualifying Disposition of ISO Shares**. If Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the Incentive Stock Option provisions of this Option Award Agreement on or before the later of (1) the date two (2) years after the Date of Grant, or (2) the date one (1) year after the date of exercise, Optionee shall immediately notify the Company in writing of such disposition. Optionee agrees that Optionee may be subject to income tax withholding by the Company on the compensation income recognized by Optionee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**J.ENTIRE AGREEMENT; GOVERNING LAW.** The Plan is incorporated herein by reference. The Plan and this Option Award Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof. This Option is governed by the internal substantive laws but not the choice of law rules of Michigan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**K.NO GUARANTEE OF CONTINUED SERVICE.** OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS AN EMPLOYEE

------

(OR SERVICE PROVIDER) AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS OPTION, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS AN EMPLOYEE (OR SERVICE PROVIDER) FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS AN EMPLOYEE (OR SERVICE PROVIDER) AT ANY TIME, WITH OR WITHOUT CAUSE.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**L.**Acknowledgements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;**Optionee acknowledges receipt of a copy of the Plan and represents that he, she or it is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option Award Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option Award Agreement and fully understands all provisions of this Option Award Agreement. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option Award Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding the Board's good faith determination of the Fair Market Value of the Common Stock of the Company, the taxing authorities may assert that the Fair Market Value of the Shares on the date of award was greater than the exercise price per Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;**Optionee acknowledges that under Code Section 409A, if the exercise price per Share of this Option is less than the Fair Market Value of the Common Stock of the Company on the date of this Option, this Option may be treated as a form of deferred compensation and Optionee may be subject to an additional 20% tax, plus interest and possible penalties. Optionee is encouraged to consult a tax advisor regarding the potential impact of Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;**Optionee acknowledges that the Administrator, in the exercise of its sole discretion and without Optionee's consent, may amend or modify this Option Award Agreement in any manner and delay the payment of any amounts payable pursuant to this Option Award Agreement to the minimum extent necessary to meet the requirements of Code Section 409A as amplified by any Internal Revenue Service or U.S. Treasury Department regulations or guidance as the Company deems appropriate or advisable.

---

| | |
|:---|:---|
| **OPTIONEE:** | **COMPANY:** |
|  | Shoulder Innovations, Inc. |
|  | By: |
|  | Name:  |
| Date: Title:  |  |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date: |

---

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**<u>EXHIBIT A</u>**

**SHOULDER INNOVATIONS, INC. STOCK OPTION PLAN**

**EXERCISE NOTICE**

Shoulder Innovations, Inc.

Attention: President

13827 Port Sheldon Street

Holland, MI 49424

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;EXERCISE OF OPTION**. Effective as of today,_________, the undersigned *(*"***Optionee***") hereby elects to exercise Optionee's option to purchase _________shares of the Common Stock (the "***Shares***") of SHOULDER INNOVATIONS, INC., a Delaware corporation (the "***Company***") under and pursuant to the Shoulder Innovations, Inc. Stock Option Plan (the "***Plan***") and the Option Award Agreement dated _________ (the "***Option Award Agreement***")*.*

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;DELIVERY OF PAYMENT**. Optionee herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Award Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;REPRESENTATIONS OF OPTIONEE**. Optionee acknowledges that Optionee has received, read and understood the Plan and the Option Award Agreement and agrees to abide by and be bound by their terms and conditions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;RIGHTS AS STOCKHOLDER**. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Shares shall be issued to the Optionee as soon as practicable after the Option is exercised in accordance with the Option Award Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 13 of the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;COMPANY'S RIGHT OF FIRST REFUSAL**. Before any Shares held by Optionee or any transferee (being sometimes referred to herein as the "***Holder***") may be sold or otherwise transferred (including transfer by gift or operation of law), the Company or its assignee(s) shall have a right of first refusal to purchase the Shares on the terms and conditions set forth in this Section (the "***Right of First Refusal***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Proposed Transfer**. The Holder of the Shares shall deliver to the Company a written notice (the "***Notice***") stating: (i) the Holder's bona fide intention to sell or otherwise transfer such Shares; (ii) the name of each proposed purchaser or other transferee *(*"***Proposed Transferee***"); (iii) the number of Shares to be transferred to each Proposed Transferee; and (iv) the bona fide cash price or other consideration for which the Holder proposes to transfer the Shares (the "***Offered Price***")***,*** and the Holder shall offer the Shares at the Offered Price to the Company or its assignee(s).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Exercise of Right of First Refusal**. At any time within thirty (30) days after receipt of the Notice, the Company and/or its assignee(s) may, by giving written notice to the Holder, elect to purchase all, but not less than all, of the Shares proposed to be transferred to any one or more of the Proposed Transferees, at the purchase price determined in accordance with subsection (c) below.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Purchase Price**. The purchase price (the "***Purchase Price***") for the Shares purchased by the Company or its assignee(s) under this Section shall be the Offered Price. If the Offered Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Board of Directors of the Company in good faith.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Payment**. Payment of the Purchase Price shall be made, at the option of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of the Notice or in the manner and at the times set forth in the Notice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Holder's Right to Transfer**. If all of the Shares proposed in the Notice to be transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s) as provided in this Section, then the Holder may sell or otherwise transfer such Shares to that Proposed Transferee at the Offered Price or at a higher price, provided that (i) such sale or other transfer is consummated within 120 days after the date of the Notice, (ii) any such sale or other transfer is effected in accordance with any applicable securities laws, (iii) the Proposed Transferee agrees in writing that the provisions of this Section shall continue to apply to the Shares in the hands of such Proposed Transferee, and (iv) the Proposed Transferee agrees in writing to be bound by all of the terms and provisions of the Voting Agreement (as defined below) so that such Voting Agreement continues to apply to the Shares in the hands of such Proposed Transferee. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, a new Notice shall be given to the Company, and the Company and/or its assignees shall again be offered the Right of First Refusal before any Shares held by the Holder may be sold or otherwise transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Exception for Certain Family Transfers**. Anything to the contrary contained in this Section notwithstanding, the transfer of any or all of the Shares during Optionee's lifetime or on Optionee's death by will or intestacy to Optionee's immediate family or a trust for the benefit of Optionee's immediate family shall be exempt from the provisions of this Section. "***Immediate Family***" as used herein shall mean spouse, lineal descendant or antecedent, father, mother, brother or sister. In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of this Section, and there shall be no further transfer of such Shares except in accordance with the terms of this Section, and such transfer shall be conditioned upon the transferee or other recipient agreeing in writing to be bound by all of the terms and provisions of the Voting Agreement so that such Voting Agreement continues to apply to the Shares in the hands of such transferee or other recipient.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Termination of Right of First Refusal**. The Right of First Refusal shall terminate as to any Shares upon the earlier of (i) the first sale of Common Stock of the Company to the general public, or (ii) a Change in Control in which the successor corporation has equity securities that are publicly traded.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;TAX CONSULTATION**. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee has consulted with any tax consultants Optionee deems advisable in connection with the purchase or disposition of the Shares and that Optionee is not relying on the Company for any tax advice.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;RESTRICTIVE LEGENDS AND STOP-TRANSFER ORDERS.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Legends**. Optionee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "***ACT***") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COMPANY COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND A RIGHT OF FIRST REFUSAL HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER FOR A PERIOD NOT TO EXCEED 180 DAYS FOLLOWING THE EFFECTIVE DATE OF THE UNDERWRITTEN PUBLIC OFFERING OF THE COMPANY'S SECURITIES AND MAY NOT BE SOLD OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT THE CONSENT OF THE COMPANY OR THE MANAGING UNDERWRITER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Stop-Transfer Notices**. Optionee agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate "stop transfer" instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Refusal to Transfer**. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Exercise Notice or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;VOTING AGREEMENT**. The Company and its stockholders are parties to a Voting Agreement dated February 14, 2017 (as amended and with regard to any successor agreement, as determined by the Company, the "***Voting Agreement***")*.* Optionee represents, warrants and covenants to the Company that Optionee has received a copy of the Voting Agreement from the Company prior to Optionee's execution of this Exercise Notice and that Optionee read and understood the provisions of the Voting Agreement. Optionee hereby adheres to the Voting Agreement and agrees to be bound by all of the terms and provisions of the Voting Agreement as a "Stockholder" of the Voting Agreement. Optionee consents and agrees that this Exercise Notice containing Optionee's signature below shall serve as

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Optionee's signature on the Voting Agreement. Optionee acknowledges and agrees that the Shares are subject to the terms and conditions of the Voting Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;SUCCESSORS AND ASSIGNS**. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon Optionee and his or her heirs, executors, administrators, successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;INTERPRETATION**. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Optionee or by the Company forthwith to the Administrator which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;GOVERNING LAW; SEVERABILITY**. This Exercise Notice is governed by the internal substantive laws but not the choice of law rules, of Michigan. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice will continue in full force and effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12.&nbsp;&nbsp;&nbsp;&nbsp;ENTIRE AGREEMENT**. The Plan and Option Award Agreement are incorporated herein by reference. This Exercise Notice, the Plan, the Option Award Agreement and the Investment Representation Statement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee.

---

| | |
|:---|:---|
| *Submitted By:* | *Accepted By:* |
| **OPTIONEE:** | **THE COMPANY:** |
|  | Shoulder Innovations, Inc. |
|  | By: |
|  | Name: |
| Date: | Title: |
| Resident Address: | Date: |

---

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**<u>EXHIBIT B</u>**

**INVESTMENT REPRESENTATION STATEMENT**

OPTIONEE:&nbsp;&nbsp;&nbsp;&nbsp;«NAME»

COMPANY:&nbsp;&nbsp;&nbsp;&nbsp;Shoulder Innovations, Inc.

SECURITY:&nbsp;&nbsp;&nbsp;&nbsp;COMMON STOCK

AMOUNT:

DATE:

In connection with the purchase of the above-listed Securities, the undersigned Optionee represents to the Company the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**Optionee is aware of the Company's business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee's own account only and not with a view to, or for resale in connection with, any "distribution" thereof within the meaning of the Securities Act of 1933, as amended (the "***Securities Act***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**Optionee acknowledges and understands that the Securities constitute "restricted securities" under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Optionee's investment intent as expressed herein. In this connection, Optionee understands that, in the view of the Securities and Exchange Commission, the statutory basis for such exemption may be unavailable if Optionee's representation was predicated solely upon a present intention to hold these Securities for the minimum capital gains period specified under tax statutes, for a deferred sale, for or until an increase or decrease in the market price of the Securities, or for a period of one year or any other fixed period in the future. Optionee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Optionee further acknowledges and understands that the Company is under no obligation to register the Securities. Optionee understands that the certificate evidencing the Securities will be imprinted with any legend required under applicable state securities laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of "restricted securities" acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Optionee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited "broker's transaction" or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being sold

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during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**Optionee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Optionee understands that no assurances can be given that any such other registration exemption will be available in such event.

---

| |
|:---|
| ***Signature of Optionee*** |
| **OPTIONEE:** |
| Date: |

---

## Exhibit 10.10

**Exhibit 10.10**

**CHANGE IN CONTROL** 

**OPTION VESTING ACCELERATION POLICY**

**Shoulder Innovations, Inc.**

**Administrative Policy No. 1**

**Subject:** Vesting of Options upon a Change in Control

**Effective Date:** April 3, 2024

**Purpose** 

The purpose of Administrative Policy No. 1 (this ***"Policy"***) is to provide guidance on the treatment of Options (as defined in the Plan) granted under the Stock Option Plan, as amended from time to time (the ***"Plan"***), of Shoulder Innovations, Inc. (the ***"Company"***).

**Covered Individuals**

This Policy covers all employees of the Company who have Options under the Plan (the ***"Covered Persons"***).

**Board Authority**

The Plan gives the Board the ability to impose conditions or restrictions with respect to the vesting and exercisability of Options granted under the Plan. The Plan also gives the Board the authority to accelerate the time at which an Option may first be exercised or the time at which an Option will vest.

**Accelerated Vesting of Options** 

Notwithstanding the Plan or the terms of any Option Award Agreement entered into in connection with the Plan, if within 12 months following or three months prior to the effective date of a Change in Control: (i) any Covered Person effects a termination for Good Reason (as defined below) or (ii) the Company terminates a Covered Person's employment other than due to such Covered Person's death, a termination due to a Disability (as defined in the Plan) or a termination for Cause (as defined below), all outstanding Options granted to such Covered Person (whether granted prior to, or after, the effective date of this Policy) that have not been forfeited will become 100% vested and exercisable on the date of termination.

"<u>Good Reason</u>" has the meaning ascribed to such term in any written agreement between the Covered Person and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Covered Person, the occurrence of any of the following events: (i) a reduction of Covered Person's cash compensation rate or (ii) a material reduction in Covered Person's duties and responsibilities.

"<u>Cause</u>" has the meaning ascribed to such term in any written agreement between the Covered Person and the Company defining such term and, in the absence of such agreement, such term means, with respect to a Covered Person, the occurrence of any of the following events: (i) acts of dishonesty undertaken by the Covered Person and intended to result in personal enrichment to him or her at the expense of the Company; (ii) gross misconduct on the part of the Covered Person that is injurious to the Company; (iii) the Covered Person's commission of, or entry into a no contest plea to, any felony; (iv) a persistent and deliberate failure by Covered Person to perform the duties and responsibilities of his or her employment which remains uncured for 30 days after the Company provides the Covered Person with written notice of his or her intentional action or conduct; or (v) material breach of any terms and

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conditions of his or her employment agreement which remains uncured for 10 days after the Company provides the Covered Person with written notice.

**Effect on Plan and Option Award Agreements**

This Policy shall not limit or otherwise affect the provisions of any of the Plan or of any agreement between the Company and a Covered Person, and the terms of any such agreement shall remain unaffected by the adoption of this Policy.

## Exhibit 10.11

**Exhibit 10.11(b)**

---

| |
|:---|
| **SHOULDER INNOVATIONS, INC.** |
| **2025 INCENTIVE AWARD PLAN** |

---

**STOCK OPTION GRANT NOTICE**

Shoulder Innovations, Inc., a Delaware corporation (the "***Company***") has granted to the participant listed below ("***Participant***") the stock option (the "***Option***") described in this Stock Option Grant Notice (the "***Grant Notice***"), subject to the terms and conditions of the Shoulder Innovations, Inc. 2025 Incentive Award Plan (as amended from time to time, the "***Plan***") and the Stock Option Agreement attached hereto as **Exhibit A** (the "***Agreement***"), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

---

| | |
|:---|:---|
| **Participant:** | [To be specified] |
| **Grant Date:** | [To be specified] |
| **Exercise Price per Share:** | [To be specified] |
| **Shares Subject to the Option:** | [To be specified] |
| **Final Expiration Date:** | [To be specified] |
| **Vesting Commencement Date:** | [To be specified] |
| **Vesting Schedule:** | [To be specified] |
| **Type of Option** | [Incentive Stock Option]/[Non-Qualified Stock Option] |

---

By accepting (whether in writing, electronically or otherwise) the Option, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

---

| | |
|:---|:---|
| **SHOULDER INNOVATIONS, INC.** | **PARTICIPANT** |
| By: |  |
| Name: | [Participant Name] |
| Title: |  |

---

------

**STOCK OPTION AGREEMENT**

Capitalized terms not specifically defined in this Agreement have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

**ARTICLE I.**

**GENERAL**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Grant of Option</u>. The Company has granted to Participant the Option effective as of the grant date set forth in the Grant Notice (the "***Grant Date***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Incorporation of Terms of Plan</u>. The Option is subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

**ARTICLE II.**

**PERIOD OF EXERCISABILITY**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Commencement of Exercisability</u>. The Option will vest and become exercisable according to the vesting schedule in the Grant Notice (the "***Vesting Schedule***") except that any fraction of a Share as to which the Option would be vested or exercisable will be accumulated and will vest and become exercisable only when a whole Share has accumulated. Notwithstanding anything in the Grant Notice, the Plan or this Agreement to the contrary, unless the Administrator otherwise determines, the Option will immediately expire and be forfeited as to any portion that is not vested and exercisable as of Participant's Termination of Service for any reason (after taking into consideration any accelerated vesting and exercisability which may occur in connection with such Termination of Service).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Duration of Exercisability</u>. The Vesting Schedule is cumulative. Any portion of the Option which vests and becomes exercisable will remain vested and exercisable until the Option expires. The Option will be forfeited immediately upon its expiration.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Expiration of Option</u>. The Option may not be exercised to any extent by anyone after, and will expire on, the first of the following to occur:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The final expiration date in the Grant Notice; provided, however, such final expiration date may be extended pursuant to Section 5.3 of the Plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Except as the Administrator may otherwise approve, the expiration of three months from the date of Participant's Termination of Service, unless Participant's Termination of Service is for Cause or by reason of Participant's death or Disability;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Except as the Administrator may otherwise approve, the expiration of one year from the date of Participant's Termination of Service by reason of Participant's death or Disability; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Except as the Administrator may otherwise approve, Participant's Termination of Service for Cause.

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**ARTICLE III.**

**EXERCISE OF OPTION**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Person Eligible to Exercise</u>. During Participant's lifetime, only Participant may exercise the Option. After Participant's death, any exercisable portion of the Option may, prior to the time the Option expires, be exercised by Participant's Designated Beneficiary as provided in the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Partial Exercise</u>. Any exercisable portion of the Option or the entire Option, if then wholly exercisable, may be exercised, in whole or in part, according to the procedures in the Plan at any time prior to the time the Option or portion thereof expires, except that the Option may only be exercised for whole Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Withholding; Exercise Price</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 3.3(b) and 3.3(c), payment of the exercise price and withholding tax obligations with respect to the Option may be by any of the following, or a combination thereof, as determined by the Company (or, if the Participant is subject to Section 16 of the Exchange Act, the Administrator):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Cash or check;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;In whole or in part by delivery of Shares, including Shares delivered by attestation and Shares retained from the Option creating the tax obligation, valued at their Fair Market Value on the date of delivery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 9.10 of the Plan, delivery (including electronically or telephonically to the extent permitted by the Company) by Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company that Participant has placed a market sell order with such broker with respect to Shares then-issuable upon exercise of the Option, and that the broker has been directed to deliver promptly to the Company funds sufficient to satisfy the applicable exercise price and/or tax withholding obligations; provided, that payment of such proceeds is then made to the Company at such time as may be required by the Administrator; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;In whole or in part by the Company withholding of Shares otherwise issuable upon exercise of this Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Unless the Company (or, if the Participant is subject to Section 16 of the Exchange Act, the Administrator) otherwise determines, the Company shall withhold, or cause to be withheld, Shares otherwise issuable under this Option in satisfaction of any exercise price and/or applicable withholding tax obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 9.5 of the Plan, the applicable tax withholding obligation will be determined based on Participant's Applicable Withholding Rate. Participant's "***Applicable Withholding Rate***" shall mean (i) if Participant is subject to Section 16 of the Exchange Act, the greater of (A) the minimum applicable statutory tax withholding rate or (B) with Participant's consent, the maximum individual tax withholding rate permitted under the rules of the applicable taxing authority for tax withholding attributable to the underlying transaction, or (ii) if Participant is not subject to Section 16 of the Exchange Act, the minimum applicable statutory tax withholding rate or such other higher rate approved by the Company; provided, however, that (i) in no event shall Participant's Applicable Withholding Rate exceed the maximum individual statutory tax rate in the applicable jurisdiction at the

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time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America); and (ii) the number of Shares tendered or withheld, if applicable, shall be rounded up to the nearest whole Share sufficient to cover the applicable tax withholding obligation, to the extent rounding up to the nearest whole Share does not result in the liability classification of the Option under generally accepted accounting principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Participant acknowledges that Participant is ultimately liable and responsible for the exercise price and all taxes owed in connection with the Option (and, with respect to taxes, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the Option). Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or exercise of the Option or the subsequent sale of Shares. The Company and the Subsidiaries do not commit and are under no obligation to structure the Option to reduce or eliminate Participant's tax liability.

**ARTICLE IV.**

**OTHER PROVISIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Adjustments</u>. Participant acknowledges that the Option is subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Clawback</u>. The Option and the Shares issuable hereunder shall be subject to any clawback or recoupment policy in effect on the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company's Chief Financial Officer at the Company's principal office or the Chief Financial Officer's then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant's last known mailing address, email address or facsimile number in the Company's personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Titles</u>. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Conformity to Securities Laws</u>. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Successors and Assigns</u>. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the

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Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Limitations Applicable to Section 16 Persons</u>. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the Option will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement; Amendment</u>. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the Option without the prior written consent of Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Agreement Severable</u>. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Limitation on Participant's Rights</u>. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Option, and rights no greater than the right to receive the Shares as a general unsecured creditor with respect to the Option, as and when exercised pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Not a Contract of Employment</u>. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without Cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.13&nbsp;&nbsp;&nbsp;&nbsp;<u>Incentive Stock Options</u>. If the Option is designated as an Incentive Stock Option:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Participant acknowledges that to the extent the aggregate fair market value of shares (determined as of the time the option with respect to the shares is granted) with respect to which stock options intended to qualify as "incentive stock options" under Section 422 of the Code, including the Option, are exercisable for the first time by Participant during any calendar year exceeds $100,000 or

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if for any other reason such stock options do not qualify or cease to qualify for treatment as "incentive stock options" under Section 422 of the Code, such stock options (including the Option) will be treated as non-qualified stock options. Participant further acknowledges that the rule set forth in the preceding sentence will be applied by taking the Option and other stock options into account in the order in which they were granted, as determined under Section 422(d) of the Code. Participant also acknowledges that if the Option is exercised more than three months after Participant's Termination of Service, other than by reason of death or Disability, the Option will be taxed as a Non-Qualified Stock Option.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Participant will give prompt written notice to the Company of any disposition or other transfer of any Shares acquired under this Agreement if such disposition or other transfer is made (i) within two years from the Grant Date or (ii) within one year after the transfer of such Shares to Participant. Such notice will specify the date of such disposition or other transfer and the amount realized, in cash, other property, assumption of indebtedness or other consideration, by Participant in such disposition or other transfer.

**\* \* \* \* \***

## Exhibit 10.11

**Exhibit 10.11 (c)**

**SHOULDER INNOVATIONS, INC.**<br>**2025 INCENTIVE AWARD PLAN**<br>

**RESTRICTED STOCK UNIT GRANT NOTICE**

Shoulder Innovations, Inc., a Delaware corporation (the "***Company***"), has granted to the participant listed below ("***Participant***") the Restricted Stock Units (the "***RSUs***") described in this Restricted Stock Unit Grant Notice (this "***Grant Notice***"), subject to the terms and conditions of the Shoulder Innovations, Inc. 2025 Incentive Award Plan (as amended from time to time, the "***Plan***") and the Restricted Stock Unit Agreement attached hereto as **Exhibit A** (the "***Agreement***"), both of which are incorporated into this Grant Notice by reference. Capitalized terms not specifically defined in this Grant Notice or the Agreement have the meanings given to them in the Plan.

---

| | |
|:---|:---|
| **Participant:** | [To be specified] |
| **Grant Date:** | [To be specified] |
| **Number of RSUs:** | [To be specified] |
| **Vesting Commencement Date:** | [To be specified] |
| **Vesting Schedule:** | [To be specified] |

---

By accepting (whether in writing, electronically or otherwise) the RSUs, Participant agrees to be bound by the terms of this Grant Notice, the Plan and the Agreement. Participant has reviewed the Plan, this Grant Notice and the Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and fully understands all provisions of the Plan, this Grant Notice and the Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan, this Grant Notice or the Agreement.

---

| | |
|:---|:---|
| **SHOULDER INNOVATIONS, INC.** | **PARTICIPANT** |
| By: |  |
| Name: | [Participant Name] |
| Title: |  |

---

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**RESTRICTED STOCK UNIT AGREEMENT**

Capitalized terms not specifically defined in this Restricted Stock Unit Agreement (this "***Agreement***") have the meanings specified in the Grant Notice or, if not defined in the Grant Notice, in the Plan.

**ARTICLE I.**

**GENERAL**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Award of RSUs and Dividend Equivalents</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The Company has granted the RSUs to Participant effective as of the Grant Date set forth in the Grant Notice (the "***Grant Date***"). Each RSU represents the right to receive one Share as set forth in this Agreement. Participant will have no right to the distribution of any Shares until the time (if ever) the RSUs have vested.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;The Company hereby grants to Participant, with respect to each RSU granted hereunder, a Dividend Equivalent for ordinary cash dividends paid to substantially all holders of outstanding Shares with a record date after the Grant Date and prior to the date the applicable RSU is settled, forfeited or otherwise expires. Each Dividend Equivalent entitles Participant to receive the equivalent value of any such ordinary cash dividends paid on a single Share. The Company will establish a separate Dividend Equivalent bookkeeping account (a "***Dividend Equivalent Account***") for each Dividend Equivalent and credit the Dividend Equivalent Account (without interest) on the applicable dividend payment date with the amount of any such cash paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Incorporation of Terms of Plan</u>. The RSUs and Dividend Equivalents are subject to the terms and conditions set forth in this Agreement and the Plan, which is incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan will control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Unsecured Promise</u>. The RSUs and Dividend Equivalents will at all times prior to settlement represent an unsecured Company obligation payable only from the Company's general assets.

**ARTICLE II.**

**VESTING; FORFEITURE AND SETTLEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Vesting; Forfeiture</u>. The RSUs will vest according to the vesting schedule in the Grant Notice except that any fraction of an RSU that would otherwise be vested will be accumulated and will vest only when a whole RSU has accumulated. Dividend Equivalents (including any Dividend Equivalent Account balance) will vest upon the vesting of the RSUs with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates. In the event of Participant's Termination of Service for any reason, (a) all unvested RSUs will immediately and automatically be cancelled and forfeited, except as otherwise determined by the Administrator or provided in a binding written agreement between Participant and the Company (after taking into consideration any accelerated vesting which may occur in connection with such Termination of Service) and (b) Dividend Equivalents (including any Dividend Equivalent Account balance) will be forfeited upon the forfeiture of the RSUs with respect to which the Dividend Equivalent (including the Dividend Equivalent Account) relates.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Settlement</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;The RSUs will, to the extent vested, be paid in Shares, and Dividend Equivalents (including any Dividend Equivalent Account balance) will be paid in cash or, if approved by the Administrator, Shares, as soon as administratively practicable after the vesting of the applicable RSU, but in no event later than March 15 of the year following the year in which the RSU's vesting date occurs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Notwithstanding the foregoing, the Company may delay any payment under this Agreement that the Company reasonably determines would violate Applicable Law until the earliest date the Company reasonably determines the making of the payment will not cause such a violation (in accordance with Treasury Regulation Section 1.409A-2(b)(7)(ii)); provided the Company reasonably believes the delay will not result in the imposition of excise taxes under Section 409A. Any Dividend Equivalents granted in connection with the RSUs issued hereunder, and any amounts that may become distributable in respect thereof, shall be treated separately from such RSUs and the rights arising in connection therewith for purposes of the designation of time and form of payments required by Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;If a Dividend Equivalent is paid in Shares, the number of Shares paid with respect to the Dividend Equivalent will equal the quotient, rounded down to the nearest whole Share, of the Dividend Equivalent Account balance divided by the Fair Market Value of a Share on the day immediately preceding the payment date.

**ARTICLE III.**

**TAXATION AND TAX WITHHOLDING**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Representation</u>. Participant represents to the Company that Participant has reviewed with Participant's own tax advisors the tax consequences of this award of RSUs and Dividend Equivalents (the "***Award***") and the transactions contemplated by the Grant Notice and this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Tax Withholding</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 3.2(b), payment of the withholding tax obligations with respect to the Award may be by any of the following, or a combination thereof, as determined by the Company (or, if the Participant is subject to Section 16 of the Exchange Act, the Administrator):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;Cash or check;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;In whole or in part by delivery of Shares, including Shares delivered by attestation and Shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 9.10 of the Plan, delivery (including electronically or telephonically to the extent permitted by the Company) by Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company that Participant has placed a market sell order with such broker with respect to Shares then-issuable upon settlement of the Award, and that the broker has been directed to deliver promptly to the Company funds sufficient to satisfy the applicable tax withholding obligations; provided, that

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payment of such proceeds is then made to the Company at such time as may be required by the Administrator; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;In whole or in part by the Company withholding of Shares otherwise vesting or issuable under this Award in satisfaction of any applicable withholding tax obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)&nbsp;&nbsp;&nbsp;&nbsp;Unless the Company (or, if the Participant is subject to Section 16 of the Exchange Act, the Administrator) otherwise determines, the Company shall withhold, or cause to be withheld, Shares otherwise vesting or issuable under this Award in satisfaction of any applicable withholding tax obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c)&nbsp;&nbsp;&nbsp;&nbsp;Subject to Section 9.5 of the Plan, the applicable tax withholding obligation will be determined based on Participant's Applicable Withholding Rate. Participant's "***Applicable Withholding Rate***" shall mean (i) if Participant is subject to Section 16 of the Exchange Act, the greater of (A) the minimum applicable statutory tax withholding rate or (B) with Participant's consent, the maximum individual tax withholding rate permitted under the rules of the applicable taxing authority for tax withholding attributable to the underlying transaction, or (ii) if Participant is not subject to Section 16 of the Exchange Act, the minimum applicable statutory tax withholding rate or such other higher rate approved by the Company; provided, however, that (i) in no event shall Participant's Applicable Withholding Rate exceed the maximum individual statutory tax rate in the applicable jurisdiction at the time of such withholding (or such other rate as may be required to avoid the liability classification of the applicable award under generally accepted accounting principles in the United States of America); and (ii) the number of Shares tendered or withheld, if applicable, shall be rounded up to the nearest whole Share sufficient to cover the applicable tax withholding obligation, to the extent rounding up to the nearest whole Share does not result in the liability classification of the RSUs under generally accepted accounting principles.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d)&nbsp;&nbsp;&nbsp;&nbsp;Participant acknowledges that Participant is ultimately liable and responsible for all taxes owed in connection with the RSUs and Dividend Equivalents, regardless of any action the Company or any Subsidiary takes with respect to any tax withholding obligations that arise in connection with the RSUs or Dividend Equivalents. Neither the Company nor any Subsidiary makes any representation or undertaking regarding the treatment of any tax withholding in connection with the awarding, vesting or payment of the RSUs or the Dividend Equivalents or the subsequent sale of Shares. The Company and its Subsidiaries do not commit and are under no obligation to structure the RSUs or Dividend Equivalents to reduce or eliminate Participant's tax liability.

**ARTICLE IV.**

**OTHER PROVISIONS**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1&nbsp;&nbsp;&nbsp;&nbsp;<u>Adjustments</u>. Participant acknowledges that the RSUs and the Shares subject to the RSUs and the Dividend Equivalents are subject to adjustment, modification and termination in certain events as provided in this Agreement and the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.2&nbsp;&nbsp;&nbsp;&nbsp;<u>Clawback</u>. The Award and the Shares issuable hereunder shall be subject to any clawback or recoupment policy in effect on the Grant Date or as may be adopted or maintained by the Company following the Grant Date, including the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.3&nbsp;&nbsp;&nbsp;&nbsp;<u>Notices</u>. Any notice to be given under the terms of this Agreement to the Company must be in writing and addressed to the Company in care of the Company's Chief Financial Officer at the Company's principal office or the Chief Financial Officer's then-current email address or facsimile number. Any notice to be given under the terms of this Agreement to Participant must be in writing and addressed to Participant (or, if Participant is then deceased, to the Designated Beneficiary) at Participant's last known mailing address, email address or facsimile number in the Company's personnel files. By a notice given pursuant to this Section, either party may designate a different address for notices to be given to that party. Any notice will be deemed duly given when actually received, when sent by email, when sent by certified mail (return receipt requested) and deposited with postage prepaid in a post office or branch post office regularly maintained by the United States Postal Service, when delivered by a nationally recognized express shipping company or upon receipt of a facsimile transmission confirmation.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.4&nbsp;&nbsp;&nbsp;&nbsp;<u>Titles</u>. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.5&nbsp;&nbsp;&nbsp;&nbsp;<u>Conformity to Securities Laws</u>. Participant acknowledges that the Plan, the Grant Notice and this Agreement are intended to conform to the extent necessary with all Applicable Laws and, to the extent Applicable Laws permit, will be deemed amended as necessary to conform to Applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.6&nbsp;&nbsp;&nbsp;&nbsp;<u>Successors and Assigns</u>. The Company may assign any of its rights under this Agreement to a single or multiple assignees, and this Agreement will inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth in this Agreement or the Plan, this Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.7&nbsp;&nbsp;&nbsp;&nbsp;<u>Limitations Applicable to Section 16 Persons</u>. Notwithstanding any other provision of the Plan or this Agreement, if Participant is subject to Section 16 of the Exchange Act, the Plan, the Grant Notice, this Agreement and the RSUs and Dividend Equivalents will be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3) that are requirements for the application of such exemptive rule. To the extent Applicable Laws permit, this Agreement will be deemed amended as necessary to conform to such applicable exemptive rule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.8&nbsp;&nbsp;&nbsp;&nbsp;<u>Entire Agreement; Amendment</u>. The Plan, the Grant Notice and this Agreement (including any exhibit hereto) constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or the Board; provided, however, that except as may otherwise be provided by the Plan, no amendment, modification, suspension or termination of this Agreement shall materially and adversely affect the RSUs or Dividend Equivalents without the prior written consent of Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.9&nbsp;&nbsp;&nbsp;&nbsp;<u>Agreement Severable</u>. In the event that any provision of the Grant Notice or this Agreement is held illegal or invalid, the provision will be severable from, and the illegality or invalidity of the provision will not be construed to have any effect on, the remaining provisions of the Grant Notice or this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.10&nbsp;&nbsp;&nbsp;&nbsp;<u>Limitation on Participant's Rights</u>. Participation in the Plan confers no rights or interests other than as herein provided. This Agreement creates only a contractual obligation on the part of the

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Company as to amounts payable and may not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. Participant will have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the RSUs and Dividend Equivalents, and rights no greater than the right to receive cash or the Shares as a general unsecured creditor with respect to the RSUs and Dividend Equivalents, as and when settled pursuant to the terms of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.11&nbsp;&nbsp;&nbsp;&nbsp;<u>Not a Contract of Employment</u>. Nothing in the Plan, the Grant Notice or this Agreement confers upon Participant any right to continue in the employ or service of the Company or any Subsidiary or interferes with or restricts in any way the rights of the Company and its Subsidiaries, which rights are hereby expressly reserved, to discharge or terminate the services of Participant at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Company or a Subsidiary and Participant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.12&nbsp;&nbsp;&nbsp;&nbsp;<u>Counterparts</u>. The Grant Notice may be executed in one or more counterparts, including by way of any electronic signature, subject to Applicable Law, each of which will be deemed an original and all of which together will constitute one instrument.

**\* \* \* \* \***

## Exhibit 10.13

**Exhibit 10.13**

**SHOULDER INNOVATIONS, INC.**

**NON-EMPLOYEE DIRECTOR COMPENSATION PROGRAM**

Eligible Directors (as defined below) on the board of directors (the "***Board***") of Shoulder Innovations, Inc. (the "***Company***") shall be eligible to receive cash and equity compensation as set forth in this Non-Employee Director Compensation Program (this "***Program***"). The cash and equity compensation described in this Program shall be paid or be made, as applicable, automatically as set forth herein and without further action of the Board, to each member of the Board who is not an employee of the Company or any of its parents or subsidiaries (each, an "***Eligible Director***") unless such member is determined by the Board to not be an Eligible Director or unless such Eligible Director declines the receipt of such cash or equity compensation by written notice to the Company.

This Program shall become effective upon the closing of the initial public offering of the Company's common stock (the "***Effective Date***") and shall remain in effect until it is revised or rescinded by further action of the Board. This Program may be amended, modified or terminated by the Board at any time in its sole discretion. No Eligible Director shall have any rights hereunder, except with respect to equity awards granted pursuant to Section 2 of this Program.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.&nbsp;&nbsp;&nbsp;&nbsp;<u>Cash Compensation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;<u>Annual Retainers</u>. Each Eligible Director shall be eligible to receive an annual cash retainer of $45,000 for service on the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;<u>Additional Annual Retainers</u>. An Eligible Director shall be eligible to receive the following additional annual retainers, as applicable:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;&nbsp;&nbsp;&nbsp;<u>Lead Independent Director</u>. An Eligible Director serving as Lead Independent Director of the Board shall be eligible to receive an additional annual retainer of $35,000 for such service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Non-Executive Chair</u>. An Eligible Director serving as Non-Executive Chair of the Board shall be eligible to receive an additional annual retainer of $40,000 for such service.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii)&nbsp;&nbsp;&nbsp;&nbsp;<u>Committee Chair</u>. An Eligible Director serving as Chair of the Audit Committee, the Compensation Committee or the Nominating and Governance Committee shall be eligible to receive an additional annual retainer of $20,000, $15,000 or $10,000, respectively, for such service on such committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv)&nbsp;&nbsp;&nbsp;&nbsp;<u>Non-Chair Committee Member</u>. An Eligible Director serving as a non-Chair member of the Audit Committee, Compensation Committee or the Nominating and Governance Committee shall be eligible to receive an additional annual retainer of $10,000, $7,500 or $5,000, respectively, for such service on such committee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;<u>Payment of Retainers</u>. The annual cash retainers described in Sections 1(a) and 1(b) shall be earned on a quarterly basis based on a calendar quarter and shall be paid by the Company in arrears not later than 30 days following the end of each calendar quarter. In the event an Eligible Director does not serve as a director, or in the applicable positions described in Section 1(b), for an entire calendar

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quarter, the retainer paid to such Eligible Director shall be prorated for the portion of such calendar quarter actually served as a director, or in such position, as applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.&nbsp;&nbsp;&nbsp;&nbsp;<u>Equity Compensation</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a.&nbsp;&nbsp;&nbsp;&nbsp;<u>General</u>. Eligible Directors shall be granted the equity awards described below without further action from the Board. The awards described below shall be granted under and shall be subject to the terms and provisions of the Company's 2025 Incentive Award Plan or any other applicable Company equity incentive plan then-maintained by the Company (such plan, as may be amended from time to time, the "***Equity Plan***") and may be granted subject to the execution and delivery of award agreements, including attached exhibits, in substantially the forms approved by the Board prior to or in connection with such grants. All applicable terms of the Equity Plan apply to this Program as if fully set forth herein, and all grants of equity awards hereby are subject in all respects to the terms of the Equity Plan. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Equity Plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b.&nbsp;&nbsp;&nbsp;&nbsp;<u>2025 Award</u>. An Eligible Director who is serving on the Board as of the Effective Date shall be granted a Restricted Stock Unit award with a value of $115,000 (the "***2025 Award***"). The 2025 Award shall be granted on the later of (i) the date on which the Form S-8 Registration Statement with respect to the Company's common stock issuance under the Equity Plan becomes effective and (ii) the Effective Date. The number of Restricted Stock Units subject to a 2025 Award will be determined by dividing $115,000 by the price per share to the public of the Company's common stock as determined on the pricing date of the Company's initial public offering. Each 2025 Award shall vest in full on the earlier to occur of (x) the one-year anniversary of the Effective Date and (y) the date of the Annual Meeting (as defined below) for calendar year 2026, subject to continued service through the applicable vesting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c.&nbsp;&nbsp;&nbsp;&nbsp;<u>Annual Awards</u>. An Eligible Director who is serving on the Board as of the date of the annual meeting of the Company's stockholders (the "***Annual Meeting***") each calendar year beginning with calendar year 2026 shall be granted a Restricted Stock Unit award with a value of $115,000 (an "***Annual Award***", and together with the 2025 Award, the "***Equity Awards***"). The number of Restricted Stock Units subject to an Annual Award will be determined by dividing $115,000 by the closing price for the Company's common stock on the applicable grant date. Each Annual Award shall be granted on the applicable Annual Meeting date, and shall vest in full on the earlier to occur of (x) the one-year anniversary of the applicable grant date and (y) the date of the next Annual Meeting following the grant date, subject to continued service through the applicable vesting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d.&nbsp;&nbsp;&nbsp;&nbsp;<u>Accelerated Vesting Events</u>. Notwithstanding the foregoing, an Eligible Director's Equity Award(s) shall vest in full immediately prior to the occurrence of a Change in Control, to the extent outstanding at such time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.&nbsp;&nbsp;&nbsp;&nbsp;<u>Compensation Limits</u>. Notwithstanding anything to the contrary in this Program, all compensation payable under this Program will be subject to any limits on the maximum amount of non-employee Director compensation set forth in the Equity Plan, as in effect from time to time.

## Exhibit 10.15

**Exhibit 10.15**

**<u>EMPLOYMENT AGREEMENT</u>**

THIS EMPLOYMENT AGREEMENT (this "***Agreement***") is entered into as of November 1, 2020 (the "***Effective Date***") by and between SHOULDER INNOVATIONS, INC., a Delaware corporation (the "***Company***"), and ROBERT BALL (the "***Executive***").

**RECITALS**

**WHEREAS**, the Board of Directors of the Company (the "***Board***") has determined that it is in the best interests of the Company and its stockholders to retain the Executive as an employee of the Company;

**WHEREAS**, the Executive will be employed as the Company's Chief Executive Officer (the "***CEO***"); and

**WHEREAS**, the Company and the Executive desire to enter into this Agreement to embody the terms of the relationship.

**NOW**, **THEREFORE**, in consideration of the foregoing and the terms and conditions set forth herein, the parties agree as follows:

**AGREEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DUTIES; REPORTING RELATIONSHIP**. Beginning on the Effective Date and continuing throughout the term of this Agreement, Executive shall be employed by the Company to serve as the CEO, reporting to the Board, and shall have such duties and responsibilities as are assigned to the Executive by the Board consistent with the Executive's position as the CEO of the Company. Upon termination of the Executive's employment for any reason, the Executive will be deemed to have automatically resigned, effective as of the termination date, from any and all positions that the Executive holds as an officer, director, manager and/or member of any governing body (or a committee thereof), in any case, of the Company or any of its Affiliates. As used in this Agreement, "***Affiliate***," means, with respect to any specific entity, any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified entity, and, with respect to the Company, it also means all of its direct or indirect subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;OFFICE LOCATION**. The Executive will work from the Company's Michigan headquarters office and such other locations as needed or reasonably requested from time to time by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;COMPENSATION AND BENEFITS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Base Salary**. The Executive's initial annual base salary shall be $400,000 per annum, subject to all payroll deductions and all required withholdings as determined by the Company. The Executive's salary will be paid bi-weekly in accordance with the regular payroll practices of the Company. During the Executive's employment with the Company, the Executive's base salary will be reviewed at least annually. For the avoidance of doubt, the

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Executive's base salary during the calendar year of 2020 shall be prorated by the number of days (or other measurement of time) during which the Executive was employed by the Company in the calendar year of 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Performance Bonus**. The Executive will be eligible to participate in any bonus program established by the Company and for which the Executive would be eligible. The Executive will be eligible to earn an annual performance bonus, paid quarterly in accordance with such bonus program, up to 50% of the Executive's effective salary for the applicable bonus quarter based upon the Executive's performance and the Company's performance, subject to payroll deductions and all required withholdings (the "***Performance Bonus***"). The Executive must be an employee in good standing on the Performance Bonus payment date to earn and be eligible to receive a Performance Bonus. The Board (or the Compensation Committee of the Board) will determine whether the Executive has earned the Performance Bonus and the amount of any Performance Bonus. For the avoidance of doubt, any Performance Bonus earned by the Executive during the calendar year of 2020 shall be prorated by the number of days (or other measurement of time) during which the Executive was employed by the Company in the calendar year of 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Equity Award**. Subject to the approval of the Board and terms of the Company's Stock Option Plan, as amended, or other newly adopted equity incentive plan of the Company (the "***Plan***"), and the form of stock option agreement issued thereunder, the Company will issue the Executive a stock option to purchase (the "***Initial Option Award***") 3,500,000 shares of the Company's common stock (the "***Initial Shares***"). The Initial Option Award shall include the following additional terms: (i) the exercise price per share for the Initial Shares shall be equal to the per share fair market value of the Company's common stock as reflected in the 409A valuation report obtained by the Company following the initial closing by the Company of the sale and issuance of shares of the Company's Series C Preferred Stock that results in gross proceeds to the Company of at least $18,000,000; (ii) subject to the Executive's continued employment and the terms and conditions of the Plan, twenty five percent (25%) of the Initial Shares shall vest and become exercisable on the one (1) year anniversary of the Effective Date and the balance of the Initial Shares subject to the Initial Option Award shall vest and become exercisable in equal monthly installments on the last day of each month over the thirty-six (36) month period following the one (1) year anniversary of the Effective Date; and (iii) subject to the Release Requirements, upon the occurrence of a Change in Control (as defined below) and if upon or within thirty (30) days prior to or after such Change in Control the Company (or any successor entity) terminates the Executive's employment without Cause or the Executive resigns the Executive's employment for Good Reason, then the Initial Shares shall fully vest and become exercisable immediately prior to the effectiveness of such Change in Control, subject to the terms and conditions of this Agreement, the Initial Option Award and the Plan (the "***Option Acceleration***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Benefit Plans**. During the Executive's employment with the Company, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under benefit plans, practices, policies and programs provided by the Company and made available to other senior executive officers of the Company.

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Notwithstanding the foregoing, the Company may amend or discontinue any such benefit plans, practices, policies and programs at any time in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Expenses**. During the Executive's employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the plans, practices, policies and programs of the Company as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Paid Time Off**. During the Executive's employment with the Company, the Executive shall be entitled to utilize paid time off in accordance with the Company's handbook and other policies and practices for employees, as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY AND PROPRIETARY INFORMATION OBLIGATIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Company Policies**. As a condition of the Executive's employment, the Executive agrees to continue to abide by all Company policies, rules and regulations, including, but not limited to, the policies contained in the employee handbook adopted by the Company (as amended from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Third Party Information**. In the Executive's work for the Company, the Executive is expected not to use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom the Executive has an obligation of confidentiality. The Executive is expected to use only that information which is generally known and used by persons with training and experience comparable to the Executive's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. The Executive hereby agrees that the Executive will not bring onto premises of the Company or use in the Executive's work for the Company any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that the Executive is not authorized to use or disclose. By entering into this Agreement, the Executive represents that the Executive is able to perform the Executive's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Exclusive Property**. The Executive agrees that all business procured by the Executive that relates to the Company and the Company's business and all Company related business opportunities and plans made known to the Executive while the Executive is employed by the Company shall remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Adverse or Outside Business Activities**. Throughout the Executive's employment with the Company, the Executive may serve on for-profit boards of directors and engage in activities related thereto, and engage in civic, academic teaching and lectures, and not-for-profit activities, so long as such activities do not materially interfere with the performance of the Executive's duties hereunder or present a conflict of interest with the Company. The Executive may not engage in other employment unless the Executive obtains the prior written consent of the Board. The Board may rescind consent to the Executive's service as a director of all other corporations or participation in other business or public activities if the Board, in its

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reasonable discretion, determines that such activities materially compromise or threaten to compromise the Company's business interests or conflict with the Executive's duties to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;NO CONFLICTS**. By signing this Agreement the Executive hereby represents to the Company that, except as previously disclosed to the Company: (a) the Executive's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (b) the Executive does not know of any conflicts that would restrict the Executive's employment with the Company. The Executive hereby represents that the Executive has disclosed to the Company any contract the Executive has signed that may restrict the Executive's activities on behalf of the Company, and that the Executive is presently in compliance with such contracts, if any. The Executive will not disclose to or use on behalf of the Company and its Affiliates any proprietary information of a third party without such party's consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;AT WILL EMPLOYMENT**. The Executive's employment with the Company is an "at-will" arrangement and this Agreement does not constitute a guarantee of employment for any specific period of time. This means that either the Executive or the Company may terminate the Executive's employment at any time, with or without Cause (as defined below), and with or without advance notice. This "at-will" employment relationship cannot be changed except in a written agreement approved by the Board and signed by the Executive and a representative of the Company authorized to sign on behalf of the Company by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;SEVERANCE BENEFITS**. If, at any time following the Effective Date, the Company (or any successor entity) terminates the Executive's employment without Cause, or if the Executive resigns the Executive's employment for Good Reason, the Executive will be eligible to receive, as the Executive's sole severance benefits (the "***Severance Benefits***"): (a) severance pay in the form of continuation of the Executive's base salary in effect as of the employment termination date for twelve (12) months following the termination date of the Executive's employment with the Company; and (b) if the Executive validly elects to receive continuation coverage under the Company's group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("***COBRA***"), an amount equal to the applicable premium otherwise payable for such COBRA continuation coverage for the twelve (12) month period following the Executive's termination date (the "***COBRA Payment Period***"). The Severance Benefits shall be subject to all required payroll deductions and withholdings as determined by the Company. Notwithstanding the foregoing, in order to be eligible for the Severance Benefits, the Executive must meet the Release Requirements (as defined below) as set forth in <u>Section 9</u> within sixty (60) days after the date of the Executive's employment termination, and the Executive shall receive no severance if the Executive fails to meet the Release Requirements. Provided that the Executive meets the Release Requirements set forth in <u>Section 9</u>, the Severance Benefits set forth in subsection (a) of the first sentence of this <u>Section 7</u> will be paid in equal monthly installments in accordance with the Company's regular payroll practices, provided, however, that the first payment of such amounts will not be made to the Executive until the first regular monthly payroll date that is more than sixty (60) days after the termination date, with the first payment due on such first payroll date that is more than sixty (60)

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days after the termination date to include all payments that would have been due during the period beginning on the first regular monthly payroll date following the termination date and such first regular monthly payroll date after the sixtieth (60th) day following the termination date. Notwithstanding anything to the contrary in this Agreement, (i) the Executive's entitlement to any benefits or payments related to reimbursement for COBRA premiums shall cease on such date that the Executive becomes eligible to receive health insurance coverage from another employer group health plan due to the Executive's employment with a future employer, and (ii) if at any time the Company determines that its payment of COBRA premiums on the Executive's behalf would result in a violation of applicable law (including, but not limited to, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums pursuant to this <u>Section 7</u>, the Company shall pay the Executive on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, for the remainder of the COBRA Payment Period. For purposes of mitigation and reduction of the Company's financial obligations to the Executive under this <u>Section 7</u>, the Executive shall promptly and fully disclose to the Company in writing the fact that the Executive has become eligible for comparable group health, dental or life insurance coverage from any other employer, and the Executive shall be liable to repay any amounts to the Company that should have been so mitigated or reduced but for the Executive's failure or unwillingness to make such disclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;CERTAIN DEFINITIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Cause**. "***Cause***" for the Company (or any acquirer or successor in interest thereto) to terminate the Executive's employment shall exist if any of the following occurs: (i) the Executive's repeated failure, in the reasonable judgment of the Board, to substantially perform the Executive's assigned duties or responsibilities under this Agreement (for reasons other than death or disability) after written notice thereof from the Board to the Executive describing in reasonable detail the Executive's failure to perform such duties or responsibilities and the Executive having had the opportunity to address the Board, with counsel, regarding such alleged failures and the Executive's failure to remedy same within thirty (30) days of receiving written notice; (ii) the Executive's engaging in knowing and intentional illegal conduct that was or is injurious to the Company or its affiliates; (iii) the Executive's violation of a federal or state law or regulation applicable to the business of the Company or its affiliates, which violation was or is reasonably likely to be injurious to the Company or its affiliates; (iv) the Executive's breach of the terms of any confidentiality agreement or invention assignment agreement between the Executive and the Company (or any affiliate of the Company), including, without limitation the Invention Assignment Agreement; or (v) the Executive being convicted of, or entering a plea of nolo contendere to, a felony comprising any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, the Company or its affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Change in Control**. "***Change in Control***" shall mean a Deemed Liquidation Event, as defined in the Company's Second Amended and Restated Certificate of Incorporation, as may be further amended or restated from time to time.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Good Reason**. A resignation for "***Good Reason***" shall mean a resignation of the Executive's employment with the Company within sixty (60) days after the occurrence of any of the following events which is not corrected within thirty (30) days after the Company (or any successor thereto) receives written notice from the Executive that any of the following events have occurred and that the Executive asserts that grounds for a resignation for Good Reason exists as a result of: (i) the material reduction of the Executive's authority, duties or responsibilities; provided, however, neither (y) a mere change in title or reporting relationship nor (z) eliminating the Executive's title of CEO will constitute "***Good Reason***" for the Executive's resignation; or (ii) a material and permanent reduction of the Executive's base salary unless such reduction is made pursuant to an across the board reduction applicable to all senior executives of the Company. Notwithstanding the foregoing, a termination shall not be treated as a termination for Good Reason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of termination for Good Reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;RELEASE REQUIREMENTS**. To be eligible to receive the Option Acceleration and/or the Severance Benefits, the Executive must meet the following requirements (the "***Release Requirements***"): (a) the Executive must first timely execute, make effective, and deliver to the Company within sixty (60) days after the date of the Executive's employment termination a general release of all known and unknown claims, in a form acceptable to the Company (which may, at the Company's election, be incorporated into a separation agreement); (b) the statutory period under which the Executive may revoke the release provided to the Company pursuant to this <u>Section 9</u> shall have expired without the Executive revoking such release; and (c) the Executive must not be in material breach of any other agreement or contract between the Executive and the Company at the time of the receipt of such benefits. In the event that, during such time as the Executive continues to receive any Severance Benefits, the Executive materially breaches any other agreement or contract between the Executive and the Company, the Company's obligation to continue to provide the Severance Benefits will immediately cease in full, and the Executive will not be entitled to receive any additional Severance Benefits as of the date of the Executive's breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement**. The Executive is required, as a condition to the Executive's employment with the Company, to sign the Company's standard Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement in the form attached hereto as <u>EXHIBIT A</u> (the "***Invention Assignment Agreement***"). To the extent that there are any conflicts between the terms and conditions of the Invention Assignment Agreement and this Agreement, the terms and conditions of this Agreement shall control. All non-conflicting terms of the Invention Assignment Agreement are hereby expressly preserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement**. This Agreement, the Invention Assignment Agreement, the award agreement for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof,

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supersede all prior understandings, agreements or negotiations between such parties, whether written or oral, which the Company and Executive acknowledge and agree shall be deemed terminated on the Effective Date and is superseded in its entirety by this Agreement and may be amended, supplemented or changed only by an agreement in writing which makes specific reference to this Agreement or the agreement or document delivered pursuant hereto, as the case may be, and which is signed by the party against whom enforcement of any such amendment, supplement or modification is sought. If any of the terms and conditions of this Agreement conflict with the terms and conditions of the Initial Option Award, the terms and conditions of this Agreement shall control. All non-conflicting terms of the award agreement for the Initial Option Award are hereby expressly preserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Parachute Payments**. Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "***Parachute Payments***"), would be subject to the excise tax imposed by Section 4999 of the Code, then (i) the amounts payable to the Executive under this Agreement shall be reduced (but not below zero (0)) to the extent necessary so that the maximum Parachute Payments shall not exceed the Threshold Amount (the "***Reduction Amount***"), and (ii) the Company shall use commercially reasonable efforts to satisfy the shareholder approval requirements set forth in Q/A 7 of Treasury Regulations Section 1.280G-1 with respect to such Reduction Amount, and if such requirements are satisfied then such Reduction Amount shall become payable hereunder as if subsection (a) above had not applied thereto. For purposes of this <u>Section 10(c)</u>, "***Threshold Amount***" shall mean three (3) times Executive's "base amount" within the meaning of Section 280G(b)(3) of the Code and the Treasury Regulations thereunder, less One Dollar ($1.00).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Binding Effect; Severability**. This Agreement will bind the heirs, personal representatives, successors and assigns of both the Executive and the Company, and inure to the benefit of both the Executive and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Jury Trial Waiver**. The terms of this Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. By signing this Agreement, the Executive irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. BY SIGNING THIS AGREEMENT THE EXECUTIVE ALSO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Mutual Drafting**. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and.pdf signatures shall be equivalent to original signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Notices**. Any notices, requests, demands and other communications required or permitted required or permitted under this Agreement will be given to the Company at the location of its headquarters at the time notice is given, labeled "Attention Board of Directors," and to the Executive at the Executive's address as listed on the Company's payroll records, or at such other address as the Company or the Executive may designate by written notice to the other. Each such notice, request, demand or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient's next business day. In the event of any conflict between the Company's books and records and this Agreement or any notice delivered hereunder, the Company's books and records will control absent fraud or error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;CODE SECTION 409A COMPLIANCE**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The intent of the parties is that payments and benefits under this Agreement either are exempt from or comply with Code Section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement (and payments and benefits hereunder) shall be interpreted to be exempt from or in compliance therewith. However, in no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or for damages for failing to be exempt from or in compliance with Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other payment schedule provided herein to the contrary, if the Executive is deemed on the date of termination to be a "specified employee"

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within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**With regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a "separation from service," such payment shall be made on the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such "separation from service" of the Executive, and (B) the date of the Executive's death (the "***Delay Period***") to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**To the extent that any benefits to be provided during the Delay Period is considered deferred compensation under Code Section 409A provided on account of a "separation from service," the Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse the Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to the Executive, the Company's share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**Subject to the applicable terms and conditions contained in <u>Section 3(e)</u>, all reimbursements of expenses under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive. Any right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. No such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**For purposes of Code Section 409A, the Executive's right to receive any installment payment pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes "deferred compensation" for purposes of Code Section 409A be subject to offset, counterclaim or recoupment by any other amount payable to the Executive unless and to the extent otherwise permitted by Code Section 409A. Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is to be paid for a specified continuing period of time beyond the date of the Executive's termination of employment in accordance with the Company's payroll practices (or other similar

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term), the payments of such base salary or other compensation shall be made upon such schedule as in effect upon the date of termination, but no less frequently than monthly.

**SIGNATURES ON THE FOLLOWING PAGE**

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**IN WITNESS WHEREOF**, the Company and the Executive have executed this Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **THE EXECUTIVE:** | **THE COMPANY:** | **THE COMPANY:** |
| | SHOULDER INNOVATIONS, INC. | SHOULDER INNOVATIONS, INC. |
| /s/ Robert Ball | By: | /s/ Matthew Ahearn |
| ROBERT BALL | Name: Matthew Ahearn | Name: Matthew Ahearn |
|  | Title: Chief Operating Officer | Title: Chief Operating Officer |

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SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

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**<u>EXHIBIT A</u>**

**<u>EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS</u>**

**<u>ASSIGNMENT AND NON-COMPETITION AGREEMENT</u>**

THIS EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS ASSIGNMENT AND NON-COMPETITION AGREEMENT (this "***Agreement***") is made as of the date set forth below between SHOULDER INNOVATIONS, INC., a Delaware corporation (the "***Company***"), and the undersigned employee of the Company ("***Employee***").

This Agreement confirms certain terms of Employee's employment with the Company, which Employee acknowledges are a material part of the consideration for Employee's employment and/or continued employment by the Company, and the compensation that the Company provides to Employee from time-to-time. This Agreement in entered into by and between the Company and Employee in connection with the Company and Employee entering into an Employment Agreement of even date herewith (the "***Employment Agreement***"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS**. The following capitalized terms used in this Agreement shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**"***Company Documents and Materials***" means documents or other media, whether in tangible or intangible form, that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents or media have been prepared by Employee or by others. Company Documents and Materials include, without limitation, blueprints, drawings, photographs, charts, graphs, notebooks, tests, test results, experiments, customer lists, computer disks, tapes or printouts, sound recordings and other printed, electronic, typewritten or handwritten documents or information, sample products, prototypes and models.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**"***Inventions***" means, without limitation, all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable or copyrightable that either: (i) relate to any current or prospective business, work, research or investigations of the Company; (ii) were developed, in whole or in part, on the Company's time or with the use of any of the Company's personnel, equipment, supplies, resources, facilities or Proprietary Information; (iii) result from or are suggested by any work that Employee may do or will have done for the Company; or (iv) were created or improved by Employee, or upon which Employee works in any fashion, during Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**"***Proprietary Information***" means information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known to, or was or is conveyed to the Company, which has commercial value in the Company's business, whether or not patentable or copyrightable, including, without limitation, information about software programs and subroutines, source and object code, algorithms, trade

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secrets, designs, technology, know-how, processes, data, ideas, techniques, inventions, works of authorship, formulas, business and product development plans, customer lists, terms of compensation and performance levels of the Company's employees and consultants, the Company's customers and other information concerning the Company's actual or anticipated business, research or development, or which is received in confidence by or for the Company from any other person or entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY OF THE COMPANY'S PROPRIETARY INFORMATION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of Proprietary Information**. Employee understands that the Company has expended significant resources developing and obtaining the Proprietary Information and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of the Company's Proprietary Information. Employee further understands and agrees that the Company's ability to protect its investment in its Proprietary Information and to keep that Proprietary Information for its sole and exclusive use is of great competitive importance and commercial value to the Company and the use of the Company's Proprietary Information by another business that competes with the Company would be highly detrimental to the Company and would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Confidentiality**. At all times, both during Employee's employment with the Company and after Employee's employment with the Company ends, regardless of the reason that employment ends, Employee shall keep in confidence and trust and shall not use or disclose any Proprietary Information or anything relating to it without the prior written consent of the Chairman of the Board of Directors (the "***Chairman***") or other duly designated officer of the Company, except as may be necessary in the ordinary course of performing Employee's duties for the Company; provided, however, that Employee shall have no such obligation with respect to Proprietary Information that: (i) was already known to Employee at the time of its disclosure to Employee by or on behalf of the Company, as evidenced by written records; (ii) at the time of disclosure to Employee was generally available to the public or otherwise in the public domain; or (iii) subsequent to such disclosure becomes generally available to the public without fault on Employee's part.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Compelled Disclosure**. In the event that Employee is requested in any proceeding to disclose any Proprietary Information, Employee shall give the Company prompt notice of such request so that the Company may seek an appropriate protective order. If, in the absence of a protective order, Employee is nonetheless compelled by any court or tribunal of competent jurisdiction to disclose Proprietary Information, Employee may disclose such information without liability hereunder; provided, however, that Employee gives the Company notice of the Proprietary Information to be disclosed as far in advance of its disclosure as is practicable and uses Employee's commercially reasonable efforts to obtain assurances that confidential treatment will be accorded to such Proprietary Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Immunity Under Defend Trade Secrets Act of 2016**. Employee understands that Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret where such disclosure is made:

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(i) in confidence to a federal, state, or local governmental official or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or in a complaint or other document filed under seal in a lawsuit or other proceeding; or (ii) in a lawsuit for retaliation by an employer for reporting a suspected violation of law, if the disclosure is made to Employee's attorney for use in such court proceeding and if any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to a court order. Nothing in this <u>Section 2</u> is intended to conflict with 18 U.S.C. § 1833(b) or to limit or expand the rights, if any, that Employee may have thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;INVENTIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Disclosure**. Employee shall promptly disclose in writing to Employee's immediate supervisor or to such other person designated by the Company all Inventions made during the term of Employee's employment. Employee shall also disclose to Employee's immediate supervisor or such designee all Inventions made, discovered, conceived, reduced to practice or developed by Employee either alone or jointly with others, within six (6) months after the termination of Employee's employment with the Company which resulted, in whole or in part, from Employee's prior employment by the Company. Such disclosures shall be received by the Company in confidence, to the extent such Inventions are not assigned to the Company pursuant to <u>Section 3(b)</u> below, and do not extend the assignments made in such subsection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Assignment of Inventions to the Company**. Except as provided in <u>Sections 3(c)</u> and <u>3(d)</u>, Employee agrees that all Inventions which Employee makes, discovers, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during Employee's employment, including, but not limited to, conceptions or ideas derived prior to employment and developed for the first time (in whole or in part, either alone or jointly with others) during employment, shall be the sole property of the Company to the maximum extent permitted by law and Employee agrees to assign and hereby does assign to the Company any right, title and interest Employee has to the Inventions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Works Made for Hire**. Employee agrees that the Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Inventions. Employee further acknowledges and agrees that such Inventions, including, without limitation, any computer programs, programming documentation and other works of authorship, are "works made for hire" for purposes of the Company's rights under copyright laws. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in such Inventions. If in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or machine a prior Invention or improvement owned by Employee or in which Employee has an interest, and listed in <u>Exhibit 1</u>, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute such prior Invention as part of or in connection with such product, process or machine. Pursuant to <u>Section 3(d)</u>, if in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or a machine a prior Invention or improvement owned by Employee or in which

EXHIBIT A-3

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Employee has an interest, but not listed in <u>Exhibit 1</u>, Employee agrees to assign and hereby does assign all Employee's rights and interest in the Invention to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;List of Inventions**. Employee has attached hereto as <u>Exhibit 1</u> a complete list of all Inventions or improvements to which Employee claims ownership or in which Employee has an interest and that Employee desires to remove from the operation of this Agreement. Employee acknowledges and agrees that such list is complete. If no such list is attached to this Agreement or such Exhibit has not been completed and signed by Employee, Employee represents to the Company and agrees that Employee has no such Inventions or improvements at the time of signing this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Cooperation**. Employee agrees to make and maintain adequate and current written records, in a form specified by the Company, of all Inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this Agreement. Employee also agrees to perform, during and after Employee's employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in further evidencing and perfecting the assignments made to the Company under this Agreement and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with such Inventions and improvements in any and all countries. Such acts may include, without limitation, execution of documents and reasonable assistance or cooperation in legal proceedings. Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee's agents and attorney-in-fact, coupled with an interest, to act for and on Employee's behalf and in Employee's place and stead, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts to further the purposes set forth above in this Section, including, without limitation, the perfection of assignment and the prosecution and issuance of patents, patent applications, filing with the FDA, copyright applications and registrations, trademark applications and registrations or other rights in connection with such Inventions and improvements with the same legal force and effect as if executed by Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Assignment or Waiver of Moral Rights**. Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "***Moral Rights***" (collectively, "***Moral Rights***"). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the law in the various countries where Moral Rights exist, Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Holdover Assignment**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Employee agrees to, after the termination of Employee's employment with the Company for any reason: (1) disclose immediately to the Company all Inventions, patentable or not; (2) assist, at the Company's expense such applications for United States patents and foreign patents covering such Inventions as the Company may request; (3) assign to the Company without further compensation to Employee the entire title and rights to

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all such Inventions and applications that Employee may have; and (4) execute, acknowledge and deliver all such papers (including, but not limited to, patent applications, assignments and power of attorney), and act as otherwise necessary at the request of the Company, to secure the Company the full rights to such Inventions and applications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**The Inventions which shall come under this <u>Section 3(g)</u> shall include all Inventions that: (1) Employee conceives, reduces to practice, or otherwise makes or develops, either solely or jointly with others, within one (1) year after the termination of Employee's employment with the Company; and (2) are in any way based on any trade secret or confidential or proprietary information that Employee learned during employment at the Company; or result from any work performed by Employee for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;COMPANY PROPERTY**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Property of the Company**. Employee acknowledges and agrees that all Company Documents and Materials, Proprietary Information and all patents, patent rights, copyrights, trade secret rights, trademark rights and other rights (including, without limitation, intellectual property rights) anywhere in the world in connection therewith is and shall be the sole property of the Company. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in the Proprietary Information or any Company Documents and Materials. Employee further acknowledges and agrees that all business procured by Employee related to the Company's business and all Company-related business opportunities and plans made known to Employee while Employee is employed by the Company will remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Handling of the Company Documents and Materials**. Employee agrees that during Employee's employment by the Company, Employee shall not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except as Employee may be required to do in connection with performing the duties of Employee's employment. Employee further agrees that, immediately upon the termination of Employee's employment by Employee or by the Company for any reason, or during Employee's employment if so requested by the Company, Employee shall return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only: (i) Employee's personal copies of personnel records and records relating to Employee's compensation and benefits; (ii) Employee's copy of all agreements between Employee and the Company including this Agreement; and (iii) copies of any and all stockholder agreements to which Employee is a party in Employee's capacity as a stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;FAIR COMPETITION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of the Company's Investment**. Employee understands that the Company has expended significant resources developing and obtaining certain beneficial relationships with its employees, consultants, advisors and customers, which are part of the Company's Proprietary Information and goodwill and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of

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the Company's Proprietary Information and goodwill. Employee acknowledges that the Company's ability to protect its investment in the foregoing and to keep its Proprietary Information and goodwill for its sole and exclusive use is of great competitive importance and commercial value to the Company and that the use of same by another individual or business that competes with the Company would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Restrictive Covenants**. In light of the foregoing, Employee covenants and agrees that during the entire time Employee is employed by the Company and continuing for (i) the twelve (12) months after the date Employee's employment with the Company ends if such employment ends as a result of the Company's termination for Cause or Employee's termination without Good Reason or (ii) the six (6) months after the date Employee's employment with the Company ends if such employment ends as a result of the Company's termination without Cause or Employee's termination for Good Reason (the "***Restricted Period***") Employee shall not, directly or indirectly, with or without consideration, on Employee's own behalf or on behalf of any other person or entity:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Encourage or solicit any employee of the Company to leave the Company for any reason or to accept employment with any other person or entity. This restriction includes, but is not limited to, Employee's agreement that Employee shall not retain or hire in any capacity, either individually or for any company by which Employee may be employed or with which Employee may be affiliated, any person who is or was employed by the Company at any time during Employee's employment with the Company or during the six (6) months after Employee's employment with the Company ends. Notwithstanding the foregoing, the restrictions of this <u>Section 5(b)(i)</u> shall not apply with respect to: (1) the *bona fide* hiring and firing of Company personnel to the extent such acts are part of Employee's duties for the Company; (2) Employee's executive assistant; and (3) any former employee of the Company that has not worked for the Company or any of the Company's affiliates for at least one (1) year prior to the date of Employee's termination of employment with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**Interfere with or attempt to impair the relationship between the Company and any of its non-employee consultants and advisors or customers, nor shall Employee attempt, directly or indirectly, to solicit, entice, hire or otherwise induce any non-employee consultant or advisor or customer of the Company to terminate association with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**Render services in any capacity to any person or division or subsidiary of any business, firm or company that is engaged in any business that develops, sells or provides other services related to any product that is competitive with any of the Company's products (whether already in existence or that was developed or being developed by the Company during Employee's employment) with which Employee was involved in any capacity during Employee's employment with the Company (the "***Restricted Products***"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**Whether as a partner, stockholder, principal, member, employee, agent, trustee, consultant, or through any other relationship or capacity, become interested in any portion of a business which has a product competitive with the Restricted Products; provided, however, that such restriction shall not apply with respect to a less than or equal to one percent

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(1%) interest in an entity which is publicly traded and listed on a recognized securities exchange. In addition, nothing herein shall prevent Employee, after the end of Employee's employment with the Company, from being employed by a division or subsidiary of a company that does not have any products which compete with the Restricted Products, even though such new employer has other divisions or subsidiaries which have products competitive with the Restricted Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;CONFLICTS OF INTEREST**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;No Conflicts**. By entering into this Agreement, Employee represents and warrants to the Company that, except as previously disclosed to the Company: (i) Employee's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (ii) Employee is not aware of any conflicts which would restrict Employee's employment with the Company. Employee further represents and warrants that Employee has disclosed to the Company any contract to which Employee is a party that may restrict Employee's activities on behalf of the Company, and that Employee is presently in compliance with such contracts, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Non-Disclosure and Use of Third Party Information**. By entering into this Agreement, Employee further represents and warrants that in Employee's work for the Company, Employee will not use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom Employee has an obligation of confidentiality. Rather, Employee agrees that Employee will use only that information which is generally known and used by persons with training and experience comparable to Employee's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. Employee further agrees that Employee will not bring onto Company premises or use in Employee's work for the Company, any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that Employee is not authorized to use or disclose. By entering into this Agreement, Employee represents that Employee is able to perform Employee's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;GENERAL PROVISIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Effective Date and Binding Effect**. This Agreement shall be effective as of the first day of Employee's employment with the Company and shall be binding upon Employee, Employee's heirs, executor, assigns and administrators and shall inure to the benefit of the Company, its subsidiaries, successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Reasonableness of Terms; Severability**. The Company and Employee agree that the terms contained in this Agreement are reasonable in all respects and that the restrictions contained therein are designed to ensure that Employee does not engage in unfair competition with the Company. The Company and Employee further agree that in the event a court determines that any of the terms or provisions of this Agreement are unreasonable, the court may limit the application of any provision or term, or modify any provision or term, and proceed to enforce this Agreement as so limited or modified. Likewise, if one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be

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excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Remedies**. Employee acknowledges and agrees that a violation of the terms of this Agreement may give rise to irreparable injury to the Company inadequately compensable in monetary damages, and accordingly, agrees that the Company may seek injunctive relief against such breach or threatened breach, in addition to any other legal remedies which may be available, including recovery of monetary damages. In any action successfully brought by any party to this Agreement to enforce the rights of such party against the other party under this Agreement, the prevailing party shall also be entitled to recover from the other party reasonable attorneys' fees and other costs of the action. In addition, if Employee is determined to have violated any of Employee's obligations under this Agreement, then the applicable Restricted Period shall be extended to account for the period during which Employee was in breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Authorization to Notify New Employer**. Employee hereby authorizes the Company to notify Employee's new employer about Employee's rights and obligations under this Agreement following the end of Employee's employment with the Company regardless of the reason Employee's employment with the Company ends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Consent to Jurisdiction; Waiver of Jury Trial**. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan and any United States District Court in the State of Michigan for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement; Amendment**. This Agreement, the Employment Agreement, the award agreements for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, and supersedes all prior understandings, agreements or negotiations between such parties, whether written or oral. Employee understands and acknowledges that, except as set forth in this Agreement and in the Employment Agreement: (i) no other representation or inducement has been made to Employee; (ii) Employee has relied on Employee's own judgment and investigation in accepting Employee's employment with the Company; and (iii) Employee has

EXHIBIT A-8

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not relied on any representation or inducement made by any officer, employee or representative of the Company. No modification of, amendment to, or waiver of any rights under, this Agreement shall be effective unless in a writing signed by the Chairman of the Board of Directors of the Company and Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Nature of Obligations and Employment Relationship**. Employee understands and agrees that the obligations set forth in this Agreement shall survive the end of Employee's employment with the Company regardless of when or why Employee's employment ends. Employee understands and agrees that any subsequent change or changes in Employee's duties, salary or compensation shall not affect the validity or scope of this Agreement; nor will the existence of any claim Employee may have against the Company operate to nullify or reduce Employee's obligations under this Agreement. Employee understands and agrees that nothing in this Agreement alters the at-will nature of Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Construction; No Waiver; Execution**. Any ambiguity in this Agreement will not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, will be in writing and will not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which will be deemed to be part of one original, and facsimile and.pdf signatures will be equivalent to original signatures.

EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON EMPLOYEE WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO EMPLOYEE TO INDUCE EMPLOYEE TO SIGN THIS AGREEMENT. EMPLOYEE SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY.

---

| | |
|:---|:---|
| **THE COMPANY:** | **EMPLOYEE:** |
| SHOULDER INNOVATIONS, INC. |  |
| By: |  |
| Name: | ROBERT BALL |
| Title: |  |
| Date: November 1, 2020 | Date November 1, 2020: |

---

EXHIBIT A-9

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**<u>EXHIBIT 1</u>**

The following is a complete list of all Inventions or improvements relevant to the subject matter of Employee's employment by the Company that have been made or discovered or conceived or first reduced to practice by Employee, either alone or jointly with others, prior to Employee's employment by the Company that Employee desires to remove from the operation of that certain Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement between the Company and Employee:

☐&nbsp;&nbsp;&nbsp;&nbsp;No Inventions or improvements.

☒&nbsp;&nbsp;&nbsp;&nbsp;See below: Any and all Inventions regarding software tools and products related to the business of Genesis Software Innovations, LLC.

☐&nbsp;&nbsp;&nbsp;&nbsp;Additional sheets attached.

Employee proposes to bring to Employee's employment the following materials and documents of a former employer:

☐&nbsp;&nbsp;&nbsp;&nbsp;No materials or documents

☐&nbsp;&nbsp;&nbsp;&nbsp;See below:

---

| | |
|:---|:---|
| | **EMPLOYEE:** |
| Date: November 1, 2020 | ROBERT BALL |

---

EXHIBIT A-10

## Exhibit 10.16

**Exhibit 10.16**

**<u>EMPLOYMENT AGREEMENT</u>**

This **EMPLOYMENT AGREEMENT** (this "***Agreement***") is entered into as of September 25, 2023 (the "***Effective Date***") by and between **SHOULDER INNOVATIONS, INC.**, a Delaware corporation (the "***Company***"), and **JEFFREY POINTS** (the "***Executive***").

**RECITALS**

WHEREAS, the Board of Directors of the Company (the "***Board***") has determined that it is in the best interests of the Company and its stockholders to retain the Executive as an employee of the Company;

WHEREAS, the Executive will be employed as the Company's Chief Financial Officer (the "***CFO***"); and

WHEREAS, the Company and the Executive desire to enter into this Agreement to embody the terms of the relationship.

NOW, THEREFORE, in consideration of the foregoing and the terms and conditions set forth herein, the parties agree as follows:

**AGREEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DUTIES; REPORTING RELATIONSHIP**. Beginning on the Effective Date and continuing throughout the term of this Agreement, Executive shall be employed by the Company to serve as the CFO, reporting to the Chief Executive Officer of the Company (the "***CEO***"), and shall have such duties and responsibilities as are assigned to the Executive by the CEO consistent with the Executive's position as the CFO of the Company. Upon termination of the Executive's employment for any reason, the Executive will be deemed to have automatically resigned, effective as of the termination date, from any and all positions that the Executive holds as an officer, director, manager and/or member of any governing body (or a committee thereof), in any case, of the Company or any of its Affiliates. As used in this Agreement, "***Affiliate***," means, with respect to any specific entity, any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified entity, and, with respect to the Company, it also means all of its direct or indirect subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;OFFICE LOCATION**. The Executive will work remotely primarily from Executive's residence (currently in Minnesota but subject to change by the Executive with notice to the Company), subject to periodic travel to other locations as needed or reasonably requested from time to time by the CEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;COMPENSATION AND BENEFITS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Base Salary**. The Executive's initial annual base salary shall be $360,000 per annum, subject to all payroll deductions and all required withholdings as determined by the Company, except that during the period October 1 through October 15, 2023, Executive shall be

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on an unpaid leave. The Executive's salary will be paid in accordance with the regular payroll practices of the Company for similarly situated executives. During the Executive's employment with the Company, the Executive's base salary will be reviewed at least annually, beginning in calendar year 2024. For the avoidance of doubt, the Executive's base salary during the calendar year of 2023 shall be prorated by the number of days (or other measurement of time) during which the Executive was employed by the Company in the calendar year of 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Performance Bonus**. The Executive will be eligible to participate in any bonus program established by the Company and for which the Executive would be eligible. The Executive will be eligible to earn an annual performance bonus, paid quarterly in accordance with such bonus program, up to 50% of the Executive's effective salary for the applicable bonus quarter based upon the Executive's performance and the Company's performance, subject to payroll deductions and all required withholdings (the "***Performance Bonus***"). The Executive must be an employee on the Performance Bonus payment date to earn and be eligible to receive a Performance Bonus. The Board (or the Compensation Committee of the Board) will determine whether the Executive has earned the Performance Bonus and the amount of any Performance Bonus in accordance with the terms of the applicable bonus plan. Notwithstanding the foregoing, provided the Executive remains employed by the Company on December 31, 2023 and the Board or Compensation Committee of the Board determines that Executive has provided satisfactory performance during calendar year 2023, Executive shall earn and the Company shall pay the Executive a Performance Bonus for calendar year 2023 in the gross amount of $41,500.00.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Option Award**. Subject to the approval of the Board and terms of the Shoulder Innovations, Inc. Stock Option Plan, as amended (the "***Plan***"), and the form of stock option agreement issued thereunder, promptly following the Effective Date, the Company will issue the Executive an incentive stock option under Section 422 of the Internal Revenue Code of 1986, as amended (the "***Code***"), to purchase (the "***Option Award***") 2,024,641 shares of the Company's common stock (the "***Shares***"). The Option Award shall include the following additional terms: (i) the exercise price per share for the Shares shall be equal to $0.18; (ii) 25% of the Shares shall vest and become exercisable on the one (1) year anniversary of the Effective Date and the remainder of the Shares shall vest and become exercisable in equal monthly installments on the last day of each full month over the next thirty-six (36) months, subject to the Executive's continuous service with the Company through such vesting dates; and (iii) subject to the Release Requirements, upon the occurrence of a Change in Control (as defined below), then the Shares shall fully vest and become exercisable immediately prior to the effectiveness of such Change in Control, subject to the terms and conditions of this Agreement, the Option Award and the Plan (the "***Option Acceleration***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Benefit Plans**. During the Executive's employment with the Company, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under benefit plans, practices, policies and programs provided by the Company and made available to other senior executive officers of the Company. Notwithstanding the foregoing, the Company may amend or discontinue any such benefit plans, practices, policies and programs at any time in its sole discretion.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Expenses**. During the Executive's employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the plans, practices, policies and programs of the Company as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Paid Time Off**. During the Executive's employment with the Company, in addition to paid holidays provided by the Company, the Executive shall be entitled to utilize not less than four weeks of paid time off ("***PTO***") per year in accordance with the Company's handbook and other policies and practices for employees, as in effect from time to time. The amount of PTO available to the Executive may be increased by the Company, in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY AND PROPRIETARY INFORMATION OBLIGATIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Company Policies**. As a condition of the Executive's employment, the Executive agrees to continue to abide by all Company policies, rules and regulations, including, but not limited to, the policies contained in the employee handbook adopted by the Company (as amended from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Third Party Information**. In the Executive's work for the Company, the Executive is expected not to use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom the Executive has an obligation of confidentiality. The Executive is expected to use only that information which is generally known and used by persons with training and experience comparable to the Executive's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. The Executive hereby agrees that the Executive will not bring onto premises of the Company or use in the Executive's work for the Company any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that the Executive is not authorized to use or disclose. By entering into this Agreement, the Executive represents that the Executive is able to perform the Executive's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Exclusive Property**. The Executive agrees that all business procured by the Executive that relates to the Company and the Company's business and all Company related business opportunities and plans made known to the Executive while the Executive is employed by the Company shall remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Adverse or Outside Business Activities**. Throughout the Executive's employment with the Company, the Executive may serve on up to one for-profit board of directors and engage in related activities, subject to advance approval by the Board, may engage in civic, academic teaching and lectures, and may engage in not-for-profit activities, so long as such activities do not interfere with the performance of the Executive's duties hereunder or present a conflict of interest with the Company. The Executive may not engage in other employment or undertake other commercial or business activities unless the Executive obtains the prior written consent of the Board. The Board may rescind consent to the Executive's service

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as a director of all other corporations or participation in other business or public activities if the Board, in its sole discretion, determines that such activities compromise or threaten to compromise the Company's business interests or conflict with the Executive's duties to the Company. The Executive hereby represents and warrants that the Executive has disclosed previously to the Board all other employment or other commercial business activities that the Executive already undertakes or intends to undertake (to the extent currently known by the Executive), during the Executive's period of employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;NO CONFLICTS**. By signing this Agreement the Executive hereby represents to the Company that, except as previously disclosed to the Company: (a) the Executive's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (b) the Executive does not know of any conflicts that would restrict the Executive's employment with the Company. The Executive hereby represents that the Executive has disclosed to the Company any contract the Executive has signed that may restrict the Executive's activities on behalf of the Company, and that the Executive is presently in compliance with such contracts, if any. The Executive will not disclose to or use on behalf of the Company and its Affiliates any proprietary information of a third party without such party's consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;AT-WILL EMPLOYMENT**. Subject to <u>Section 7</u> below, the Executive's employment with the Company is an "at-will" arrangement and this Agreement does not constitute a guarantee of employment for any specific period of time. This means that the Company may terminate the Executive's employment at any time, with or without Cause (as defined below), and with or without advance notice, and that the Executive may resign his employment at any time, with or without Good Reason (as defined below), and with or without advance notice. This "at-will" employment relationship cannot be changed except in a written agreement approved by the Board and signed by the Executive and a representative of the Company authorized to sign on behalf of the Company by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;SEVERANCE BENEFITS**. If, at any time following the Effective Date, the Company (or any successor entity) terminates the Executive's employment without Cause, or if the Executive resigns the Executive's employment for Good Reason, the Executive will be eligible to receive, as the Executive's sole severance benefits (the "***Severance Benefits***"): (a) severance pay in the form of continuation of the Executive's base salary in effect as of the employment termination date for a period of twelve (12) months following the termination date of the Executive's employment with the Company; and (b) if the Executive validly elects to receive continuation coverage under the Company's group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("***COBRA***"), an amount equal to the applicable premium otherwise payable for such COBRA continuation coverage for the twelve (12) month period following the Executive's termination date (the "***COBRA Payment Period***"). The Severance Benefits shall be subject to all required payroll deductions and withholdings as determined by the Company. Notwithstanding the foregoing, in order to be eligible for the Severance Benefits, the Executive must meet the Release Requirements (as defined below) as set forth in <u>Section 9</u> within sixty (60) days after the date of the Executive's employment termination, and the Executive shall receive no severance if the Executive fails to meet the

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Release Requirements. Provided that the Executive meets the Release Requirements set forth in <u>Section 9</u>, the Severance Benefits set forth in subsection (a) of the first sentence of this <u>Section 7</u> will be paid in equal monthly installments in accordance with the Company's regular payroll practices, provided, however, that the first payment of such amounts will not be made to the Executive until the first regular monthly payroll date that is more than sixty (60) days after the termination date, with the first payment due on such first payroll date that is more than sixty (60) days after the termination date to include all payments that would have been due during the period beginning on the first regular monthly payroll date following the termination date and such first regular monthly payroll date after the sixtieth (60<sup>th</sup>) day following the termination date. Notwithstanding anything to the contrary in this Agreement, (i) the Executive's entitlement to any benefits or payments related to reimbursement for COBRA premiums shall cease on such date that the Executive becomes eligible to receive health insurance coverage from another employer group health plan due to the Executive's employment with a future employer, and (ii) if at any time the Company determines that its payment of COBRA premiums on the Executive's behalf would result in a violation of applicable law (including, but not limited to, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums pursuant to this <u>Section 7</u>, the Company shall pay the Executive on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, for the remainder of the COBRA Payment Period. For purposes of mitigation and reduction of the Company's financial obligations to the Executive under this <u>Section 7</u>, the Executive shall promptly and fully disclose to the Company in writing the fact that the Executive has become eligible for comparable group health, dental or life insurance coverage from any other employer, and the Executive shall be liable to repay any amounts to the Company that should have been so mitigated or reduced but for the Executive's failure or unwillingness to make such disclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;CERTAIN DEFINITIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Cause**. "***Cause***" for the Company (or any acquirer or successor in interest thereto) to terminate the Executive's employment shall exist if any of the following occurs and the Company terminates the Executive's employment within (y) thirty (30) days after the expiration of the 30-day cure period referenced in <u>Section 8(a)(i)</u> or (z) sixty (60) days after the Company's first knowledge of an occurrence under <u>Section 8(a)(ii)-(v)</u>: (i) the Executive's repeated failure, in the reasonable judgment of the Board, to substantially perform the Executive's assigned duties or responsibilities under this Agreement (for reasons other than death or disability) after written notice thereof from the Board to the Executive expressly referencing this <u>Section 8(a)</u> and describing in reasonable detail the Executive's failure to perform such duties or responsibilities and the Executive having had the opportunity to address the Board, with counsel, regarding such alleged failures and the Executive's failure to remedy same within thirty (30) days of receiving written notice; (ii) the Executive's engaging in knowing and intentional illegal conduct that was or is injurious to the Company or its Affiliates; (iii) the Executive's violation of a federal or state law or regulation applicable to the business of the Company or its Affiliates, which violation was or is reasonably likely to be injurious to the Company or its Affiliates; (iv) the Executive's material breach of the terms of any confidentiality

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agreement or invention assignment agreement between the Executive and the Company (or any Affiliate of the Company), including, without limitation the Invention Assignment Agreement; or (v) the Executive being convicted of, or entering a plea of nolo contendere to, a felony comprising any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, the Company or its Affiliates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Change in Control**. "***Change in Control***" shall mean a Deemed Liquidation Event, as defined in the Company's Third Amended and Restated Certificate of Incorporation, as may be further amended or restated from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Good Reason**. A resignation for "***Good Reason***" shall mean a resignation of the Executive's employment with the Company within sixty (60) days after the Executive's first knowledge of the occurrence of any of the following events which is not corrected by the Company within thirty (30) days after the Company (or any successor thereto) receives written notice from the Executive expressly referencing this <u>Section 8(c)</u> and stating that any of the following events have occurred and that the Executive asserts that grounds for a resignation for Good Reason exists as a result of: (i) the material reduction of the Executive's authority, duties or responsibilities; provided, however, neither (y) a mere change in title or reporting relationship nor (z) eliminating the Executive's title of Chief Financial Officer will constitute "***Good Reason***" for the Executive's resignation; (ii) any reduction of the Executive's then-current base salary or bonus opportunity set forth in <u>Section 3</u> of this Agreement, not including any reduction (y) in connection with any unpaid leave of absence taken by the Executive in accordance with Company policy or applicable law or (z) made pursuant to an across the board reduction applicable to all senior executives of the Company; (iii) any requirement that does not permit the Executive to work remotely primarily from Executive's residence as set forth in <u>Section 2</u> of this Agreement; or (iv) the Company's material breach of the compensation terms of this Agreement in <u>Section 3</u>. Notwithstanding the foregoing, a termination shall not be treated as a termination for Good Reason if the Executive shall have consented in advance in writing to the occurrence of the event giving rise to the claim of termination for Good Reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;RELEASE REQUIREMENTS**. To be eligible to receive the Option Acceleration and/or the Severance Benefits, the Executive must meet the following requirements (the "***Release Requirements***"): (a) the Executive must first timely execute, make effective, and deliver to the Company (y) in the case of the Severance Benefits, within sixty (60) days after the date of the Executive's employment termination or (z) in the case of the Option Acceleration, immediately prior to the effectiveness of the such Change in Control, a general release of all known and unknown claims, in a form acceptable to the Company (which may, at the Company's election, in the case of the Severance Benefits, be incorporated into a separation agreement); (b) the statutory period under which the Executive may revoke the release provided to the Company pursuant to this <u>Section 9</u> shall have expired without the Executive revoking such release; and (c) the Executive must not be in material breach of any other agreement or contract between the Executive and the Company at the time of the receipt of such benefits. In the event that, during such time as the Executive continues to receive any Severance Benefits, the Executive materially breaches any other agreement or contract between the Executive and the

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Company, the Company's obligation to continue to provide the Severance Benefits will immediately cease in full, and the Executive will not be entitled to receive any additional Severance Benefits as of the date of the Executive's breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Employee Proprietary Information, Inventions Assignment and Non-Solicitation Agreement**. The Executive is required, as a condition to the Executive's employment with the Company, to sign the Company's standard Employee Proprietary Information, Inventions Assignment and Non-Solicitation Agreement in the form attached hereto as <u>EXHIBIT A</u> (the "***Invention Assignment Agreement***"). To the extent that there are any conflicts between the terms and conditions of the Invention Assignment Agreement and this Agreement, the terms and conditions of this Agreement shall control. All non-conflicting terms of the Invention Assignment Agreement are hereby expressly preserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement**. This Agreement, the Invention Assignment Agreement, the award agreement for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, supersede all prior understandings, agreements or negotiations between such parties, whether written or oral and may be amended, supplemented or changed only by an agreement in writing which makes specific reference to this Agreement or the agreement or document delivered pursuant hereto, as the case may be, and which is signed by the party against whom enforcement of any such amendment, supplement or modification is sought. If any of the terms and conditions of this Agreement conflict with the terms and conditions of the Initial Option Award, the terms and conditions of this Agreement shall control. All non-conflicting terms of the award agreement for the Initial Option Award are hereby expressly preserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Parachute Payments**. Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "***Parachute Payments***"), would be subject to the excise tax imposed by Section 4999 of the Code, then to the extent available, the Company shall engage in the shareholder approval process set forth in Q/A 7 of Treasury Regulations Section 1.280G-1 with respect to such Parachute Payments exceeding the Threshold Amount. For purposes of this <u>Section 10(c)</u>, "***Threshold Amount***" shall mean three (3) times Executive's "base amount" within the meaning of Section 280G(b)(3) of the Code and the Treasury Regulations thereunder, less One Dollar ($1.00). Notwithstanding any other provision of this Agreement or any other plan, arrangement or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its affiliates to the Executive or for the Executive's benefit pursuant to the terms of this Agreement or otherwise (the "***Covered Payments***") constitute Parachute Payments within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the "***Code***") and will be subject to the excise tax imposed under Section 4999 of the Code (or any successor provision thereto) or any interest or penalties with respect to such excise tax (collectively, the "***Excise Tax***"), then the Company shall pay to

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the Executive, no later than the time the Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount (the "***Gross-up Payment***") equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, local and foreign income, employment and excise taxes (including the Excise Tax and any income and employment taxes imposed on the Gross-up Payment)) that he would have been in if the Executive had not incurred any tax liability under Section 4999 of the Code; provided, however, that in no event shall the Gross-up Payment exceed Five Hundred Thousand Dollars ($500,000).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Binding Effect; Severability**. This Agreement will bind the heirs, personal representatives, successors and assigns of both the Executive and the Company, and inure to the benefit of both the Executive and the Company, their heirs, successors and assigns. The Company shall use its best efforts to affirmatively and contractually assign this Agreement to any acquirer of or successor in interest to the Company. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Jury Trial Waiver**. The terms of this Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. By signing this Agreement, the Executive irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. In the event that a court of competent jurisdiction holds that the foregoing provisions for the selection of Michigan law and a Michigan forum for disputes arising out of this Agreement are void or unenforceable due to the operation of Minnesota law, the parties agree that Minnesota law and a Minnesota forum shall be substituted and the parties waive all objections to such substituted forum with respect to such disputes. BY SIGNING THIS AGREEMENT THE EXECUTIVE ALSO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Mutual Drafting**. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and.pdf signatures shall be equivalent to original signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Notices**. Any notices, requests, demands and other communications required or permitted required or permitted under this Agreement will be given to the Company at the location of its headquarters at the time notice is given, labeled "Attention: Chief Executive Officer," and to the Executive at the Executive's address as listed on the Company's payroll records, or at such other address as the Company or the Executive may designate by written

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notice to the other. Each such notice, request, demand or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient's next business day. In the event of any conflict between the Company's books and records and this Agreement or any notice delivered hereunder, the Company's books and records will control absent fraud or error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;CODE SECTION 409A COMPLIANCE**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The intent of the parties is that payments and benefits under this Agreement either are exempt from or comply with Code Section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement (and payments and benefits hereunder) shall be interpreted to be exempt from or in compliance therewith. However, in no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or for damages for failing to be exempt from or in compliance with Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service."

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other payment schedule provided herein to the contrary, if the Executive is deemed on the date of termination to be a "specified employee" within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**With regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a "separation from service," such payment shall be made on the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such "separation from service" of the Executive, and (B) the date of the Executive's death (the "***Delay Period***") to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein; and

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**To the extent that any benefits to be provided during the Delay Period is considered deferred compensation under Code Section 409A provided on account of a "separation from service," the Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse the Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to the Executive, the Company's share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**Subject to the applicable terms and conditions contained in <u>Section 3(e)</u>, all reimbursements of expenses under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive. Any right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. No such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**For purposes of Code Section 409A, the Executive's right to receive any installment payment pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes "deferred compensation" for purposes of Code Section 409A be subject to offset, counterclaim or recoupment by any other amount payable to the Executive unless and to the extent otherwise permitted by Code Section 409A. Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is to be paid for a specified continuing period of time beyond the date of the Executive's termination of employment in accordance with the Company's payroll practices (or other similar term), the payments of such base salary or other compensation shall be made upon such schedule as in effect upon the date of termination, but no less frequently than monthly.

**SIGNATURES ON THE FOLLOWING PAGE**

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**IN WITNESS WHEREOF**, the Company and the Executive have executed this Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **THE EXECUTIVE:** | **THE COMPANY:** | **THE COMPANY:** |
| | **SHOULDER INNOVATIONS, INC.** | **SHOULDER INNOVATIONS, INC.** |
| /s/ Jeffrey Points | By: | /s/ Robert Ball |
| JEFFREY POINTS | Name: Robert Ball | Name: Robert Ball |
|  | Title: CEO | Title: CEO |

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**SIGNATURE PAGE TO EMPLOYMENT AGREEMENT**

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**<u>EXHIBIT A</u>**

**<u>EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS</u>**

**<u>ASSIGNMENT AND NON-SOLICITATION AGREEMENT</u>**

This **EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS ASSIGNMENT AND NON-SOLICITATION AGREEMENT** (this "***Agreement***") is made as of the date set forth below between Shoulder Innovations, Inc., a Delaware corporation (the "***Company***"), and the undersigned employee of the Company ("***Employee***").

This Agreement confirms certain terms of Employee's employment with the Company, which Employee acknowledges are a material part of the consideration for Employee's employment and/or continued employment by the Company, and the compensation that the Company provides to Employee from time-to-time. This Agreement in entered into by and between the Company and Employee in connection with the Company and Employee entering into an Employment Agreement of even date herewith (the "***Employment Agreement***"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS**. The following capitalized terms used in this Agreement shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**"***Company Documents and Materials***" means documents or other media, whether in tangible or intangible form, that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents or media have been prepared by Employee or by others. Company Documents and Materials include, without limitation, blueprints, drawings, photographs, charts, graphs, notebooks, tests, test results, experiments, customer lists, computer disks, tapes or printouts, sound recordings and other printed, electronic, typewritten or handwritten documents or information, sample products, prototypes and models.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**"***Inventions***" means, without limitation, all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable or copyrightable that either: (i) relate to any current or prospective business, work, research or investigations of the Company; (ii) were developed, in whole or in part, on the Company's time or with the use of any of the Company's personnel, equipment, supplies, resources, facilities or Proprietary Information; (iii) result from or are suggested by any work that Employee may do or will have done for the Company; or (iv) were created or improved by Employee, or upon which Employee works in any fashion, during Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**"***Proprietary Information***" means information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known to, or was or is conveyed to the Company, which has commercial value in the Company's business, whether or not patentable or copyrightable, including, without limitation, information about software programs and subroutines, source and object code, algorithms, trade

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secrets, designs, technology, know-how, processes, data, ideas, techniques, inventions, works of authorship, formulas, business and product development plans, customer lists, terms of compensation and performance levels of the Company's employees and consultants, the Company's customers and other information concerning the Company's actual or anticipated business, research or development, or which is received in confidence by or for the Company from any other person or entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY OF THE COMPANY'S PROPRIETARY INFORMATION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of Proprietary Information**. Employee understands that the Company has expended significant resources developing and obtaining the Proprietary Information and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of the Company's Proprietary Information. Employee further understands and agrees that the Company's ability to protect its investment in its Proprietary Information and to keep that Proprietary Information for its sole and exclusive use is of great competitive importance and commercial value to the Company and the use of the Company's Proprietary Information by another business that competes with the Company would be highly detrimental to the Company and would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Confidentiality**. At all times, both during Employee's employment with the Company and after Employee's employment with the Company ends, regardless of the reason that employment ends, Employee shall keep in confidence and trust and shall not use or disclose any Proprietary Information or anything relating to it without the prior written consent of the Company's Chief Executive Officer of the Company (the "***CEO***") or other duly designated officer of the Company, except as may be necessary in the ordinary course of performing Employee's duties for the Company; provided, however, that Employee shall have no such obligation with respect to Proprietary Information that: (i) was already known to Employee at the time of its disclosure to Employee by or on behalf of the Company, as evidenced by written records; (ii) at the time of disclosure to Employee was generally available to the public or otherwise in the public domain; or (iii) subsequent to such disclosure becomes generally available to the public without fault on Employee's part.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Compelled Disclosure**. In the event that Employee is requested in any proceeding to disclose any Proprietary Information, Employee shall give the Company prompt notice of such request so that the Company may seek an appropriate protective order. If, in the absence of a protective order, Employee is nonetheless compelled by any court or tribunal of competent jurisdiction to disclose Proprietary Information, Employee may disclose such information without liability hereunder; provided, however, that Employee gives the Company notice of the Proprietary Information to be disclosed as far in advance of its disclosure as is practicable and uses Employee's commercially reasonable efforts to obtain assurances that confidential treatment will be accorded to such Proprietary Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Immunity Under Defend Trade Secrets Act of 2016**. Employee understands that Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret where such disclosure is made:

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(i) in confidence to a federal, state, or local governmental official or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or in a complaint or other document filed under seal in a lawsuit or other proceeding; or (ii) in a lawsuit for retaliation by an employer for reporting a suspected violation of law, if the disclosure is made to Employee's attorney for use in such court proceeding and if any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to a court order. Nothing in this <u>Section 2</u> is intended to conflict with 18 U.S.C. § 1833(b) or to limit or expand the rights, if any, that Employee may have thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;INVENTIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Disclosure**. Employee shall promptly disclose in writing to Employee's immediate supervisor or to such other person designated by the Company all Inventions made during the term of Employee's employment. Employee shall also disclose to Employee's immediate supervisor or such designee all Inventions made, discovered, conceived, reduced to practice or developed by Employee either alone or jointly with others, within six (6) months after the termination of Employee's employment with the Company which resulted, in whole or in part, from Employee's prior employment by the Company. Such disclosures shall be received by the Company in confidence, to the extent such Inventions are not assigned to the Company pursuant to <u>Section 3(b)</u> below, and do not extend the assignments made in such subsection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Assignment of Inventions to the Company**. Except as provided in <u>Sections 3(c)</u> and <u>3(d)</u> and below, Employee agrees that all Inventions which Employee makes, discovers, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during Employee's employment, including, but not limited to, conceptions or ideas derived prior to employment and developed for the first time (in whole or in part, either alone or jointly with others) during employment, shall be the sole property of the Company to the maximum extent permitted by law and Employee agrees to assign and hereby does assign to the Company any right, title and interest Employee has to the Inventions. **Minn. Stat. 181.78 Notice**. The foregoing assignment does not and shall not apply to an invention (including an Invention as defined herein) for which no equipment, supplies, facility or trade secret information of the Company was used and which was developed entirely on Employee's own time, and (1) which does not relate (a) directly to the business of the Company or (b) to the Company's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by Employee for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Works Made for Hire**. Employee agrees that the Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Inventions. Employee further acknowledges and agrees that such Inventions, including, without limitation, any computer programs, programming documentation and other works of authorship, are "works made for hire" for purposes of the Company's rights under copyright laws. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in such Inventions. If in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or machine a prior Invention or improvement owned by Employee or

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in which Employee has an interest, and listed in <u>EXHIBIT 1</u>, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute such prior Invention as part of or in connection with such product, process or machine. Pursuant to <u>Section 3(d)</u>, if in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or a machine a prior Invention or improvement owned by Employee or in which Employee has an interest, but not listed in <u>EXHIBIT 1</u>, Employee agrees to assign and hereby does assign all Employee's rights and interest in the Invention to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;List of Inventions**. Employee has attached hereto as <u>EXHIBIT 1</u> a complete list of all Inventions or improvements to which Employee claims ownership or in which Employee has an interest and that Employee desires to remove from the operation of this Agreement. Employee acknowledges and agrees that such list is complete. If no such list is attached to this Agreement or such Exhibit has not been completed and signed by Employee, Employee represents to the Company and agrees that Employee has no such Inventions or improvements at the time of signing this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Cooperation**. Employee agrees to make and maintain adequate and current written records, in a form specified by the Company, of all Inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this Agreement. Employee also agrees to perform, during and after Employee's employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in further evidencing and perfecting the assignments made to the Company under this Agreement and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with such Inventions and improvements in any and all countries. Such acts may include, without limitation, execution of documents and reasonable assistance or cooperation in legal proceedings. Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee's agents and attorney-in-fact, coupled with an interest, to act for and on Employee's behalf and in Employee's place and stead, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts to further the purposes set forth above in this Section, including, without limitation, the perfection of assignment and the prosecution and issuance of patents, patent applications, filing with the FDA, copyright applications and registrations, trademark applications and registrations or other rights in connection with such Inventions and improvements with the same legal force and effect as if executed by Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Assignment or Waiver of Moral Rights**. Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "***Moral Rights***" (collectively, "***Moral Rights***"). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the law in the various countries where Moral Rights exist, Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Holdover Assignment**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Employee agrees to, after the termination of Employee's employment with the Company for any reason: (1) disclose immediately to the Company all Inventions, patentable or not; (2) assist, at the Company's expense such applications for United States patents and foreign patents covering such Inventions as the Company may request; (3) assign to the Company without further compensation to Employee the entire title and rights to all such Inventions and applications that Employee may have; and (4) execute, acknowledge and deliver all such papers (including, but not limited to, patent applications, assignments and power of attorney), and act as otherwise necessary at the request of the Company, to secure the Company the full rights to such Inventions and applications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**The Inventions which shall come under this <u>Section 3(g)</u> shall include all Inventions that: (1) Employee conceives, reduces to practice, or otherwise makes or develops, either solely or jointly with others, within one (1) year after the termination of Employee's employment with the Company; and (2) are in any way based on any trade secret or confidential or proprietary information that Employee learned during employment at the Company; or result from any work performed by Employee for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;COMPANY PROPERTY**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Property of the Company**. Employee acknowledges and agrees that all Company Documents and Materials, Proprietary Information and all patents, patent rights, copyrights, trade secret rights, trademark rights and other rights (including, without limitation, intellectual property rights) anywhere in the world in connection therewith is and shall be the sole property of the Company. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in the Proprietary Information or any Company Documents and Materials. Employee further acknowledges and agrees that all business procured by Employee related to the Company's business and all Company-related business opportunities and plans made known to Employee while Employee is employed by the Company will remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Handling of the Company Documents and Materials**. Employee agrees that during Employee's employment by the Company, Employee shall not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except as Employee may be required to do in connection with performing the duties of Employee's employment. Employee further agrees that, immediately upon the termination of Employee's employment by Employee or by the Company for any reason, or during Employee's employment if so requested by the Company, Employee shall return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only: (i) Employee's personal copies of personnel records and records relating to Employee's compensation and benefits; (ii) Employee's copy of all agreements between Employee and the Company including this Agreement; and (iii) copies of any and all stockholder agreements to which Employee is a party in Employee's capacity as a stockholder.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;FAIR COMPETITION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of the Company's Investment**. Employee understands that the Company has expended significant resources developing and obtaining certain beneficial relationships with its employees, consultants, advisors and customers, which are part of the Company's Proprietary Information and goodwill and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of the Company's Proprietary Information and goodwill. Employee acknowledges that the Company's ability to protect its investment in the foregoing and to keep its Proprietary Information and goodwill for its sole and exclusive use is of great competitive importance and commercial value to the Company and that the use of same by another individual or business would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Restrictive Covenants**. In light of the foregoing, Employee covenants and agrees that during the entire time Employee is employed by the Company and continuing for the twelve (12) months after the date Employee's employment with the Company ends for any reason (the "***Restricted Period***") Employee shall not, directly or indirectly, with or without consideration, on Employee's own behalf or on behalf of any other person or entity:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Encourage or solicit any employee of the Company to leave the Company for any reason or to accept employment with any other person or entity. This restriction includes, but is not limited to, Employee's agreement that Employee shall not retain or hire in any capacity, either individually or for any company by which Employee may be employed or with which Employee may be affiliated, any person who is or was employed by the Company at any time during Employee's employment with the Company or during the six (6) months after Employee's employment with the Company ends. Notwithstanding the foregoing, the restrictions of this <u>Section 5(b)(i)</u> shall not apply with respect to: (1) the *bona fide* hiring and firing of Company personnel to the extent such acts are part of Employee's duties for the Company; (2) Employee's executive assistant; and (3) any former employee of the Company that has not worked for the Company or any of the Company's Affiliates for at least one (1) year prior to the date of Employee's termination of employment with the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**Interfere with or attempt to impair the relationship between the Company and any of its non-employee consultants and advisors or customers, nor shall Employee attempt, directly or indirectly, to solicit, entice, hire or otherwise induce any non-employee consultant or advisor or customer of the Company to terminate association with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;CONFLICTS OF INTEREST**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;No Conflicts**. By entering into this Agreement, Employee represents and warrants to the Company that, except as previously disclosed to the Company: (i) Employee's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (ii) Employee is not aware of any conflicts which would restrict Employee's employment with the Company. Employee further represents and warrants that Employee has disclosed to the Company any contract to which Employee is a party that may

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restrict Employee's activities on behalf of the Company, and that Employee is presently in compliance with such contracts, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Non-Disclosure and Use of Third Party Information**. By entering into this Agreement, Employee further represents and warrants that in Employee's work for the Company, Employee will not use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom Employee has an obligation of confidentiality. Rather, Employee agrees that Employee will use only that information which is generally known and used by persons with training and experience comparable to Employee's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. Employee further agrees that Employee will not bring onto Company premises or use in Employee's work for the Company, any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that Employee is not authorized to use or disclose. By entering into this Agreement, Employee represents that Employee is able to perform Employee's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;GENERAL PROVISIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Effective Date and Binding Effect**. This Agreement shall be effective as of the first day of Employee's employment with the Company and shall be binding upon Employee, Employee's heirs, executor, assigns and administrators and shall inure to the benefit of the Company, its subsidiaries, successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Reasonableness of Terms; Severability**. The Company and Employee agree that the terms contained in this Agreement are reasonable in all respects and that the restrictions contained therein are designed to ensure that Employee does not engage in unfair competition with the Company. The Company and Employee further agree that in the event a court determines that any of the terms or provisions of this Agreement are unreasonable, the court may limit the application of any provision or term, or modify any provision or term, and proceed to enforce this Agreement as so limited or modified. Likewise, if one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Remedies**. Employee acknowledges and agrees that a violation of the terms of this Agreement will give rise to irreparable injury to the Company that is adequately compensable in monetary damages, and accordingly, agrees that the Company may seek injunctive relief against such breach or threatened breach, in addition to any other legal remedies which may be available, including recovery of monetary damages. In any action successfully brought by any party to this Agreement to enforce the rights of such party against the other party under this Agreement, the prevailing party shall also be entitled to recover from the other party reasonable attorneys' fees and other costs of the action. In addition, if Employee is determined to have violated any of Employee's obligations under this Agreement, then the applicable Restricted Period shall be extended to account for the period during which Employee was in breach.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Authorization to Notify New Employer**. Employee hereby authorizes the Company to notify Employee's new employer about Employee's rights and obligations under this Agreement following the end of Employee's employment with the Company regardless of the reason Employee's employment with the Company ends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Consent to Jurisdiction; Waiver of Jury Trial**. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan and any United States District Court in the State of Michigan for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. In the event that a court of competent jurisdiction holds that the foregoing provisions for the selection of Michigan law and a Michigan forum for disputes arising out of this Agreement are void or unenforceable due to the operation of Minnesota law, the parties agree that Minnesota law and a Minnesota forum shall be substituted and the parties waive all objections to such substituted forum with respect to such disputes. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement; Amendment**. This Agreement, the Employment Agreement, the award agreements for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, and supersedes all prior understandings, agreements or negotiations between such parties, whether written or oral. Employee understands and acknowledges that, except as set forth in this Agreement and in the Employment Agreement: (i) no other representation or inducement has been made to Employee; (ii) Employee has relied on Employee's own judgment and investigation in accepting Employee's employment with the Company; and (iii) Employee has not relied on any representation or inducement made by any officer, employee or representative of the Company. No modification of, amendment to, or waiver of any rights under, this Agreement shall be effective unless in a writing signed by the CEO and Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Nature of Obligations and Employment Relationship**. Employee understands and agrees that the obligations set forth in this Agreement shall survive the end of Employee's employment with the Company regardless of when or why Employee's employment ends. Employee understands and agrees that any subsequent change or changes in Employee's duties, salary or compensation shall not affect the validity or scope of this Agreement; nor will the existence of any claim Employee may have against the Company operate to nullify or reduce

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Employee's obligations under this Agreement. Employee understands and agrees that nothing in this Agreement alters the at-will nature of Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Construction; No Waiver; Execution**. Any ambiguity in this Agreement will not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, will be in writing and will not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which will be deemed to be part of one original, and facsimile and.pdf signatures will be equivalent to original signatures.

EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON EMPLOYEE WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO EMPLOYEE TO INDUCE EMPLOYEE TO SIGN THIS AGREEMENT. EMPLOYEE SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY.

---

| | |
|:---|:---|
| **THE COMPANY:** | **EMPLOYEE:** |
| **SHOULDER INNOVATIONS, INC.** | |
| By: |  |
| Name: Robert Ball | **JEFFREY POINTS** |
| Title: CEO |  |
| Date: September 25, 2023 | Date: September __, 2023 |

---

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**<u>EXHIBIT 1</u>**

The following is a complete list of all Inventions or improvements relevant to the subject matter of Employee's employment by the Company that have been made or discovered or conceived or first reduced to practice by Employee, either alone or jointly with others, prior to Employee's employment by the Company that Employee desires to remove from the operation of that certain Employee Proprietary Information, Inventions Assignment and Non-Solicitation Agreement between the Company and Employee:

☐&nbsp;&nbsp;&nbsp;&nbsp;No Inventions or improvements.

☐&nbsp;&nbsp;&nbsp;&nbsp;See below:

☐&nbsp;&nbsp;&nbsp;&nbsp;Additional sheets attached.

Employee proposes to bring to Employee's employment the following materials and documents of a former employer:

☐&nbsp;&nbsp;&nbsp;&nbsp;No materials or documents

☐&nbsp;&nbsp;&nbsp;&nbsp;See below:

---

| | |
|:---|:---|
| | **EMPLOYEE:** |
| Date: September 25, 2023 | **JEFFREY POINTS** |

---

## Exhibit 10.17

**Exhibit 10.17**

**<u>EMPLOYMENT AGREEMENT</u>**

THIS EMPLOYMENT AGREEMENT (this "***Agreement***") is entered into as of November 1, 2020 (the "***Effective Date***") by and between SHOULDER INNOVATIONS, INC., a Delaware corporation (the "***Company***"), and DAVID BLUE (the "***Executive***").

**RECITALS**

**WHEREAS**, the Board of Directors of the Company (the "***Board***") has determined that it is in the best interests of the Company and its stockholders to retain the Executive as an employee of the Company;

**WHEREAS**, the Executive will be employed as the Company's Chief Commercial Officer (the "***CCO***"); and

**WHEREAS**, the Company and the Executive desire to enter into this Agreement to embody the terms of the relationship.

**NOW**, **THEREFORE**, in consideration of the foregoing and the terms and conditions set forth herein, the parties agree as follows:

**AGREEMENT**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DUTIES; REPORTING RELATIONSHIP**. Beginning on the Effective Date and continuing throughout the term of this Agreement, Executive shall be employed by the Company to serve as the CCO, reporting to the Chief Executive Officer of the Company (the "***CEO***"), and shall have such duties and responsibilities as are assigned to the Executive by the CEO consistent with the Executive's position as the CCO of the Company. Upon termination of the Executive's employment for any reason, the Executive will be deemed to have automatically resigned, effective as of the termination date, from any and all positions that the Executive holds as an officer, director, manager and/or member of any governing body (or a committee thereof), in any case, of the Company or any of its Affiliates. As used in this Agreement, "***Affiliate***," means, with respect to any specific entity, any other entity that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with such specified entity, and, with respect to the Company, it also means all of its direct or indirect subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;OFFICE LOCATION**. The Executive will work from the Company's Michigan headquarters office and such other locations as needed or reasonably requested from time to time by the CEO.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;COMPENSATION AND BENEFITS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Base Salary**. The Executive's initial annual base salary shall be $300,000 per annum, subject to all payroll deductions and all required withholdings as determined by the Company. The Executive's salary will be paid bi-weekly in accordance with the regular payroll practices of the Company. During the Executive's employment with the Company, the

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Executive's base salary will be reviewed at least annually. For the avoidance of doubt, the Executive's base salary during the calendar year of 2020 shall be prorated by the number of days (or other measurement of time) during which the Executive was employed by the Company in the calendar year of 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Performance Bonus**. The Executive will be eligible to participate in any bonus program established by the Company and for which the Executive would be eligible. The Executive will be eligible to earn an annual performance bonus, paid quarterly in accordance with such bonus program, up to 50% of the Executive's effective salary for the applicable bonus quarter based upon the Executive's performance and the Company's performance, subject to payroll deductions and all required withholdings (the "***Performance Bonus***"). The Executive must be an employee in good standing on the Performance Bonus payment date to earn and be eligible to receive a Performance Bonus. The Board (or the Compensation Committee of the Board) will determine whether the Executive has earned the Performance Bonus and the amount of any Performance Bonus. For the avoidance of doubt, any Performance Bonus earned by the Executive during the calendar year of 2020 shall be prorated by the number of days (or other measurement of time) during which the Executive was employed by the Company in the calendar year of 2020.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Equity Award**. Subject to the approval of the Board and terms of the Company's Stock Option Plan, as amended, or other newly adopted equity incentive plan of the Company (the "***Plan***"), and the form of stock option agreement issued thereunder, the Company will issue the Executive a stock option to purchase (the "***Initial Option Award***") 1,500,000 shares of the Company's common stock (the "***Initial Shares***"). The Initial Option Award shall include the following additional terms: (i) the exercise price per share for the Initial Shares shall be equal to the per share fair market value of the Company's common stock as reflected in the 409A valuation report obtained by the Company following the initial closing by the Company of the sale and issuance of shares of the Company's Series C Preferred Stock that results in gross proceeds to the Company of at least $18,000,000; (ii) subject to the Executive's continued employment and the terms and conditions of the Plan, twenty five percent (25%) of the Initial Shares shall vest and become exercisable on the one (1) year anniversary of the Effective Date and the balance of the Initial Shares subject to the Initial Option Award shall vest and become exercisable in equal monthly installments on the last day of each month over the thirty-six (36) month period following the one (1) year anniversary of the Effective Date; and (iii) subject to the Release Requirements, upon the occurrence of a Change in Control (as defined below) and if upon or within thirty (30) days prior to or after such Change in Control the Company (or any successor entity) terminates the Executive's employment without Cause or the Executive resigns the Executive's employment for Good Reason, then the Initial Shares shall fully vest and become exercisable immediately prior to the effectiveness of such Change in Control, subject to the terms and conditions of this Agreement, the Initial Option Award and the Plan (the "***Option Acceleration***").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Benefit Plans**. During the Executive's employment with the Company, the Executive and/or the Executive's family, as the case may be, shall be eligible for participation in and shall receive all benefits under benefit plans, practices, policies and programs

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provided by the Company and made available to other senior executive officers of the Company. Notwithstanding the foregoing, the Company may amend or discontinue any such benefit plans, practices, policies and programs at any time in its sole discretion.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Expenses**. During the Executive's employment with the Company, the Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in accordance with the plans, practices, policies and programs of the Company as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Paid Time Off**. During the Executive's employment with the Company, the Executive shall be entitled to utilize paid time off in accordance with the Company's handbook and other policies and practices for employees, as in effect from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY AND PROPRIETARY INFORMATION OBLIGATIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Company Policies**. As a condition of the Executive's employment, the Executive agrees to continue to abide by all Company policies, rules and regulations, including, but not limited to, the policies contained in the employee handbook adopted by the Company (as amended from time to time).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Third Party Information**. In the Executive's work for the Company, the Executive is expected not to use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom the Executive has an obligation of confidentiality. The Executive is expected to use only that information which is generally known and used by persons with training and experience comparable to the Executive's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. The Executive hereby agrees that the Executive will not bring onto premises of the Company or use in the Executive's work for the Company any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that the Executive is not authorized to use or disclose. By entering into this Agreement, the Executive represents that the Executive is able to perform the Executive's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Exclusive Property**. The Executive agrees that all business procured by the Executive that relates to the Company and the Company's business and all Company related business opportunities and plans made known to the Executive while the Executive is employed by the Company shall remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Adverse or Outside Business Activities**. Throughout the Executive's employment with the Company, the Executive may serve on for-profit boards of directors and engage in activities related thereto, and engage in civic, academic teaching and lectures, and not-for-profit activities, so long as such activities do not materially interfere with the performance of the Executive's duties hereunder or present a conflict of interest with the Company. The Executive may not engage in other employment unless the Executive obtains the prior written consent of the CEO. The CEO may rescind consent to the Executive's service as a director of all

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other corporations or participation in other business or public activities if the CEO, in his reasonable discretion, determines that such activities materially compromise or threaten to compromise the Company's business interests or conflict with the Executive's duties to the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;NO CONFLICTS**. By signing this Agreement the Executive hereby represents to the Company that, except as previously disclosed to the Company: (a) the Executive's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (b) the Executive does not know of any conflicts that would restrict the Executive's employment with the Company. The Executive hereby represents that the Executive has disclosed to the Company any contract the Executive has signed that may restrict the Executive's activities on behalf of the Company, and that the Executive is presently in compliance with such contracts, if any. The Executive will not disclose to or use on behalf of the Company and its Affiliates any proprietary information of a third party without such party's consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;AT WILL EMPLOYMENT**. The Executive's employment with the Company is an "at-will" arrangement and this Agreement does not constitute a guarantee of employment for any specific period of time. This means that either the Executive or the Company may terminate the Executive's employment at any time, with or without Cause (as defined below), and with or without advance notice. This "at-will" employment relationship cannot be changed except in a written agreement approved by the Board and signed by the Executive and a representative of the Company authorized to sign on behalf of the Company by the Board.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;SEVERANCE BENEFITS**. If, at any time following the Effective Date, the Company (or any successor entity) terminates the Executive's employment without Cause, or if the Executive resigns the Executive's employment for Good Reason, the Executive will be eligible to receive, as the Executive's sole severance benefits (the "***Severance Benefits***"): (a) severance pay in the form of continuation of the Executive's base salary in effect as of the employment termination date for twelve (12) months following the termination date of the Executive's employment with the Company; and (b) if the Executive validly elects to receive continuation coverage under the Company's group health plan pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 ("***COBRA***"), an amount equal to the applicable premium otherwise payable for such COBRA continuation coverage for the twelve (12) month period following the Executive's termination date (the "***COBRA Payment Period***"). The Severance Benefits shall be subject to all required payroll deductions and withholdings as determined by the Company. Notwithstanding the foregoing, in order to be eligible for the Severance Benefits, the Executive must meet the Release Requirements (as defined below) as set forth in <u>Section 9</u> within sixty (60) days after the date of the Executive's employment termination, and the Executive shall receive no severance if the Executive fails to meet the Release Requirements. Provided that the Executive meets the Release Requirements set forth in <u>Section 9</u>, the Severance Benefits set forth in subsection (a) of the first sentence of this <u>Section 7</u> will be paid in equal monthly installments in accordance with the Company's regular payroll practices, provided, however, that the first payment of such amounts will not be made to the Executive until the first regular monthly payroll date that is more than sixty (60) days after the

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termination date, with the first payment due on such first payroll date that is more than sixty (60) days after the termination date to include all payments that would have been due during the period beginning on the first regular monthly payroll date following the termination date and such first regular monthly payroll date after the sixtieth (60th) day following the termination date. Notwithstanding anything to the contrary in this Agreement, (i) the Executive's entitlement to any benefits or payments related to reimbursement for COBRA premiums shall cease on such date that the Executive becomes eligible to receive health insurance coverage from another employer group health plan due to the Executive's employment with a future employer, and (ii) if at any time the Company determines that its payment of COBRA premiums on the Executive's behalf would result in a violation of applicable law (including, but not limited to, the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of paying COBRA premiums pursuant to this <u>Section 7</u>, the Company shall pay the Executive on the last day of each remaining month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premium for such month, subject to applicable tax withholding, for the remainder of the COBRA Payment Period. For purposes of mitigation and reduction of the Company's financial obligations to the Executive under this <u>Section 7</u>, the Executive shall promptly and fully disclose to the Company in writing the fact that the Executive has become eligible for comparable group health, dental or life insurance coverage from any other employer, and the Executive shall be liable to repay any amounts to the Company that should have been so mitigated or reduced but for the Executive's failure or unwillingness to make such disclosure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.&nbsp;&nbsp;&nbsp;&nbsp;CERTAIN DEFINITIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Cause**. "***Cause***" for the Company (or any acquirer or successor in interest thereto) to terminate the Executive's employment shall exist if any of the following occurs: (i) the Executive's repeated failure, in the reasonable judgment of the Board, to substantially perform the Executive's assigned duties or responsibilities under this Agreement (for reasons other than death or disability) after written notice thereof from the Board to the Executive describing in reasonable detail the Executive's failure to perform such duties or responsibilities and the Executive having had the opportunity to address the Board, with counsel, regarding such alleged failures and the Executive's failure to remedy same within thirty (30) days of receiving written notice; (ii) the Executive's engaging in knowing and intentional illegal conduct that was or is injurious to the Company or its affiliates; (iii) the Executive's violation of a federal or state law or regulation applicable to the business of the Company or its affiliates, which violation was or is reasonably likely to be injurious to the Company or its affiliates; (iv) the Executive's breach of the terms of any confidentiality agreement or invention assignment agreement between the Executive and the Company (or any affiliate of the Company), including, without limitation the Invention Assignment Agreement; or (v) the Executive being convicted of, or entering a plea of nolo contendere to, a felony comprising any act of moral turpitude, dishonesty or fraud against, or the misappropriation of material property belonging to, the Company or its affiliates.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Change in Control**. "***Change in Control***" shall mean a Deemed Liquidation Event, as defined in the Company's Second Amended and Restated Certificate of Incorporation, as may be further amended or restated from time to time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Definition of Good Reason**. A resignation for "***Good Reason***" shall mean a resignation of the Executive's employment with the Company within sixty (60) days after the occurrence of any of the following events which is not corrected within thirty (30) days after the Company (or any successor thereto) receives written notice from the Executive that any of the following events have occurred and that the Executive asserts that grounds for a resignation for Good Reason exists as a result of: (i) the material reduction of the Executive's authority, duties or responsibilities; provided, however, neither (y) a mere change in title or reporting relationship nor (z) eliminating the Executive's title of CCO will constitute "***Good Reason***" for the Executive's resignation; or (ii) a material and permanent reduction of the Executive's base salary unless such reduction is made pursuant to an across the board reduction applicable to all senior executives of the Company. Notwithstanding the foregoing, a termination shall not be treated as a termination for Good Reason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of termination for Good Reason.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9.&nbsp;&nbsp;&nbsp;&nbsp;RELEASE REQUIREMENTS**. To be eligible to receive the Option Acceleration and/or the Severance Benefits, the Executive must meet the following requirements (the "***Release Requirements***"): (a) the Executive must first timely execute, make effective, and deliver to the Company within sixty (60) days after the date of the Executive's employment termination a general release of all known and unknown claims, in a form acceptable to the Company (which may, at the Company's election, be incorporated into a separation agreement); (b) the statutory period under which the Executive may revoke the release provided to the Company pursuant to this <u>Section 9</u> shall have expired without the Executive revoking such release; and (c) the Executive must not be in material breach of any other agreement or contract between the Executive and the Company at the time of the receipt of such benefits. In the event that, during such time as the Executive continues to receive any Severance Benefits, the Executive materially breaches any other agreement or contract between the Executive and the Company, the Company's obligation to continue to provide the Severance Benefits will immediately cease in full, and the Executive will not be entitled to receive any additional Severance Benefits as of the date of the Executive's breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10.&nbsp;&nbsp;&nbsp;&nbsp;MISCELLANEOUS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement**. The Executive is required, as a condition to the Executive's employment with the Company, to sign the Company's standard Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement in the form attached hereto as <u>EXHIBIT A</u> (the "***Invention Assignment Agreement***"). To the extent that there are any conflicts between the terms and conditions of the Invention Assignment Agreement and this Agreement, the terms and conditions of this Agreement shall control. All non-conflicting terms of the Invention Assignment Agreement are hereby expressly preserved.

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement**. This Agreement, the Invention Assignment Agreement, the award agreement for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, supersede all prior understandings, agreements or negotiations between such parties, whether written or oral, including that certain Consulting Agreement, dated May 12, 2017, by and between the Company and Blue Medical Services, Inc., which the Company and Executive acknowledge and agree is hereby terminated and is superseded in its entirety by this Agreement, which the Company and Executive acknowledge and agree shall be deemed terminated on the Effective Date and is superseded in its entirety by this Agreement and may be amended, supplemented or changed only by an agreement in writing which makes specific reference to this Agreement or the agreement or document delivered pursuant hereto, as the case may be, and which is signed by the party against whom enforcement of any such amendment, supplement or modification is sought. If any of the terms and conditions of this Agreement conflict with the terms and conditions of the Initial Option Award, the terms and conditions of this Agreement shall control. All non-conflicting terms of the award agreement for the Initial Option Award are hereby expressly preserved.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Parachute Payments**. Anything in this Agreement to the contrary notwithstanding, in the event that any compensation, payment or distribution by the Company to or for the benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise (the "***Parachute Payments***"), would be subject to the excise tax imposed by Section 4999 of the Code, then (i) the amounts payable to the Executive under this Agreement shall be reduced (but not below zero (0)) to the extent necessary so that the maximum Parachute Payments shall not exceed the Threshold Amount (the "***Reduction Amount***"), and (ii) the Company shall use commercially reasonable efforts to satisfy the shareholder approval requirements set forth in Q/A 7 of Treasury Regulations Section 1.280G-1 with respect to such Reduction Amount, and if such requirements are satisfied then such Reduction Amount shall become payable hereunder as if subsection (a) above had not applied thereto. For purposes of this <u>Section 10(c)</u>, "***Threshold Amount***" shall mean three (3) times Executive's "base amount" within the meaning of Section 280G(b)(3) of the Code and the Treasury Regulations thereunder, less One Dollar ($1.00).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Binding Effect; Severability**. This Agreement will bind the heirs, personal representatives, successors and assigns of both the Executive and the Company, and inure to the benefit of both the Executive and the Company, their heirs, successors and assigns. If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination shall not affect any other provision of this Agreement and the provision in question shall be modified so as to be rendered enforceable in a manner consistent with the intent of the parties insofar as possible under applicable law.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Jury Trial Waiver**. The terms of this Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. By signing this Agreement, the Executive irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan for the

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purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. BY SIGNING THIS AGREEMENT THE EXECUTIVE ALSO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Mutual Drafting**. Any ambiguity in this Agreement shall not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, shall be in writing and shall not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which shall be deemed to be part of one original, and facsimile and.pdf signatures shall be equivalent to original signatures.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Notices**. Any notices, requests, demands and other communications required or permitted required or permitted under this Agreement will be given to the Company at the location of its headquarters at the time notice is given, labeled "Attention Chief Executive Officer," and to the Executive at the Executive's address as listed on the Company's payroll records, or at such other address as the Company or the Executive may designate by written notice to the other. Each such notice, request, demand or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent via electronic mail, when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient's next business day. In the event of any conflict between the Company's books and records and this Agreement or any notice delivered hereunder, the Company's books and records will control absent fraud or error.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11.&nbsp;&nbsp;&nbsp;&nbsp;CODE SECTION 409A COMPLIANCE**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**The intent of the parties is that payments and benefits under this Agreement either are exempt from or comply with Code Section 409A and the regulations and guidance promulgated thereunder and, accordingly, to the maximum extent permitted, this Agreement (and payments and benefits hereunder) shall be interpreted to be exempt from or in compliance therewith. However, in no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on the Executive by Code Section 409A or for damages for failing to be exempt from or in compliance with Code Section 409A.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**A termination of employment shall not be deemed to have occurred for purposes of any provision of this Agreement providing for the payment of any amounts or benefits upon or following a termination of employment unless such termination is also a "separation from service" within the meaning of Code Section 409A and, for purposes of any such provision of this Agreement, references to a "termination," "termination of employment" or like terms shall mean "separation from service."

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other payment schedule provided herein to the contrary, if the Executive is deemed on the date of termination to be a "specified employee" within the meaning of that term under Code Section 409A(a)(2)(B), then each of the following shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**With regard to any payment that is considered deferred compensation under Code Section 409A payable on account of a "separation from service," such payment shall be made on the date which is the earlier of (A) the expiration of the six (6)-month period measured from the date of such "separation from service" of the Executive, and (B) the date of the Executive's death (the "***Delay Period***") to the extent required under Code Section 409A. Upon the expiration of the Delay Period, all payments delayed pursuant to this Section (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid to the Executive in a lump sum, and all remaining payments due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**To the extent that any benefits to be provided during the Delay Period is considered deferred compensation under Code Section 409A provided on account of a "separation from service," the Executive shall pay the cost of such benefits during the Delay Period, and the Company shall reimburse the Executive, to the extent that such costs would otherwise have been paid by the Company or to the extent that such benefits would otherwise have been provided by the Company at no cost to the Executive, the Company's share of the cost of such benefits upon expiration of the Delay Period, and any remaining benefits shall be reimbursed or provided by the Company in accordance with the procedures specified herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;**Subject to the applicable terms and conditions contained in <u>Section 3(e)</u>, all reimbursements of expenses under this Agreement shall be made on or prior to the last day of the taxable year following the taxable year in which such expenses were incurred by the Executive. Any right to reimbursement or in kind benefits is not subject to liquidation or exchange for another benefit. No such reimbursement, expenses eligible for reimbursement, or in-kind benefits provided in any taxable year shall in any way affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;**For purposes of Code Section 409A, the Executive's right to receive any installment payment pursuant to this Agreement shall be treated as a right to receive a series of separate and distinct payments. Whenever a payment under this Agreement specifies a payment period with reference to a number of days (e.g., "payment shall be made within thirty (30) days following the date of termination"), the actual date of payment within the specified period shall be within the sole discretion of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;**Notwithstanding any other provision of this Agreement to the contrary, in no event shall any payment under this Agreement that constitutes "deferred compensation" for purposes of Code Section 409A be subject to offset, counterclaim or recoupment by any other amount payable to the Executive unless and to the extent otherwise permitted by Code Section 409A. Unless this Agreement provides a specified and objectively determinable payment schedule to the contrary, to the extent that any payment of base salary or other compensation is

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to be paid for a specified continuing period of time beyond the date of the Executive's termination of employment in accordance with the Company's payroll practices (or other similar term), the payments of such base salary or other compensation shall be made upon such schedule as in effect upon the date of termination, but no less frequently than monthly.

**SIGNATURES ON THE FOLLOWING PAGE**

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**IN WITNESS WHEREOF**, the Company and the Executive have executed this Agreement as of the date first above written.

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| | | |
|:---|:---|:---|
| **THE EXECUTIVE:** | **THE COMPANY:** | **THE COMPANY:** |
| | SHOULDER INNOVATIONS, INC. | SHOULDER INNOVATIONS, INC. |
| /s/ David Blue | By: | /s/ Robert Ball |
| DAVID BLUE | Name: Robert Ball | Name: Robert Ball |
|  | Title: Chief Executive Officer | Title: Chief Executive Officer |

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SIGNATURE PAGE TO EMPLOYMENT AGREEMENT

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**<u>EXHIBIT A</u>**

**<u>EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS</u>**

**<u>ASSIGNMENT AND NON-COMPETITION AGREEMENT</u>**

THIS EMPLOYEE PROPRIETARY INFORMATION, INVENTIONS ASSIGNMENT AND NON-COMPETITION AGREEMENT (this "***Agreement***") is made as of the date set forth below between SHOULDER INNOVATIONS, INC., a Delaware corporation (the "***Company***"), and the undersigned employee of the Company ("***Employee***").

This Agreement confirms certain terms of Employee's employment with the Company, which Employee acknowledges are a material part of the consideration for Employee's employment and/or continued employment by the Company, and the compensation that the Company provides to Employee from time-to-time. This Agreement in entered into by and between the Company and Employee in connection with the Company and Employee entering into an Employment Agreement of even date herewith (the "***Employment Agreement***"). Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Employment Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.&nbsp;&nbsp;&nbsp;&nbsp;DEFINITIONS**. The following capitalized terms used in this Agreement shall have the following meanings:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;**"***Company Documents and Materials***" means documents or other media, whether in tangible or intangible form, that contain or embody Proprietary Information or any other information concerning the business, operations or plans of the Company, whether such documents or media have been prepared by Employee or by others. Company Documents and Materials include, without limitation, blueprints, drawings, photographs, charts, graphs, notebooks, tests, test results, experiments, customer lists, computer disks, tapes or printouts, sound recordings and other printed, electronic, typewritten or handwritten documents or information, sample products, prototypes and models.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;**"***Inventions***" means, without limitation, all software programs or subroutines, source or object code, algorithms, improvements, inventions, works of authorship, trade secrets, technology, designs, formulas, ideas, processes, techniques, know-how and data, whether or not patentable or copyrightable that either: (i) relate to any current or prospective business, work, research or investigations of the Company; (ii) were developed, in whole or in part, on the Company's time or with the use of any of the Company's personnel, equipment, supplies, resources, facilities or Proprietary Information; (iii) result from or are suggested by any work that Employee may do or will have done for the Company; or (iv) were created or improved by Employee, or upon which Employee works in any fashion, during Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;**"***Proprietary Information***" means information that was or will be developed, created, or discovered by or on behalf of the Company, or which became or will become known to, or was or is conveyed to the Company, which has commercial value in the Company's business, whether or not patentable or copyrightable, including, without limitation, information about software programs and subroutines, source and object code, algorithms, trade

EXHIBIT A-1

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secrets, designs, technology, know-how, processes, data, ideas, techniques, inventions, works of authorship, formulas, business and product development plans, customer lists, terms of compensation and performance levels of the Company's employees and consultants, the Company's customers and other information concerning the Company's actual or anticipated business, research or development, or which is received in confidence by or for the Company from any other person or entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.&nbsp;&nbsp;&nbsp;&nbsp;CONFIDENTIALITY OF THE COMPANY'S PROPRIETARY INFORMATION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of Proprietary Information**. Employee understands that the Company has expended significant resources developing and obtaining the Proprietary Information and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of the Company's Proprietary Information. Employee further understands and agrees that the Company's ability to protect its investment in its Proprietary Information and to keep that Proprietary Information for its sole and exclusive use is of great competitive importance and commercial value to the Company and the use of the Company's Proprietary Information by another business that competes with the Company would be highly detrimental to the Company and would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Confidentiality**. At all times, both during Employee's employment with the Company and after Employee's employment with the Company ends, regardless of the reason that employment ends, Employee shall keep in confidence and trust and shall not use or disclose any Proprietary Information or anything relating to it without the prior written consent of the Chairman of the Board of Directors (the "***Chairman***") or other duly designated officer of the Company, except as may be necessary in the ordinary course of performing Employee's duties for the Company; provided, however, that Employee shall have no such obligation with respect to Proprietary Information that: (i) was already known to Employee at the time of its disclosure to Employee by or on behalf of the Company, as evidenced by written records; (ii) at the time of disclosure to Employee was generally available to the public or otherwise in the public domain; or (iii) subsequent to such disclosure becomes generally available to the public without fault on Employee's part.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Compelled Disclosure**. In the event that Employee is requested in any proceeding to disclose any Proprietary Information, Employee shall give the Company prompt notice of such request so that the Company may seek an appropriate protective order. If, in the absence of a protective order, Employee is nonetheless compelled by any court or tribunal of competent jurisdiction to disclose Proprietary Information, Employee may disclose such information without liability hereunder; provided, however, that Employee gives the Company notice of the Proprietary Information to be disclosed as far in advance of its disclosure as is practicable and uses Employee's commercially reasonable efforts to obtain assurances that confidential treatment will be accorded to such Proprietary Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Notice of Immunity Under Defend Trade Secrets Act of 2016**. Employee understands that Employee shall not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret where such disclosure is made:

EXHIBIT A-2

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(i) in confidence to a federal, state, or local governmental official or to an attorney and solely for the purpose of reporting or investigating a suspected violation of law or in a complaint or other document filed under seal in a lawsuit or other proceeding; or (ii) in a lawsuit for retaliation by an employer for reporting a suspected violation of law, if the disclosure is made to Employee's attorney for use in such court proceeding and if any document containing the trade secret is filed under seal and the trade secret is not disclosed except pursuant to a court order. Nothing in this <u>Section 2</u> is intended to conflict with 18 U.S.C. § 1833(b) or to limit or expand the rights, if any, that Employee may have thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.&nbsp;&nbsp;&nbsp;&nbsp;INVENTIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Disclosure**. Employee shall promptly disclose in writing to Employee's immediate supervisor or to such other person designated by the Company all Inventions made during the term of Employee's employment. Employee shall also disclose to Employee's immediate supervisor or such designee all Inventions made, discovered, conceived, reduced to practice or developed by Employee either alone or jointly with others, within six (6) months after the termination of Employee's employment with the Company which resulted, in whole or in part, from Employee's prior employment by the Company. Such disclosures shall be received by the Company in confidence, to the extent such Inventions are not assigned to the Company pursuant to <u>Section 3(b)</u> below, and do not extend the assignments made in such subsection.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Assignment of Inventions to the Company**. Except as provided in <u>Sections 3(c)</u> and <u>3(d)</u>, Employee agrees that all Inventions which Employee makes, discovers, conceives, reduces to practice or develops (in whole or in part, either alone or jointly with others) during Employee's employment, including, but not limited to, conceptions or ideas derived prior to employment and developed for the first time (in whole or in part, either alone or jointly with others) during employment, shall be the sole property of the Company to the maximum extent permitted by law and Employee agrees to assign and hereby does assign to the Company any right, title and interest Employee has to the Inventions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Works Made for Hire**. Employee agrees that the Company shall be the sole owner of all patents, patent rights, copyrights, trade secret rights, trademark rights and all other intellectual property or other rights in connection with Inventions. Employee further acknowledges and agrees that such Inventions, including, without limitation, any computer programs, programming documentation and other works of authorship, are "works made for hire" for purposes of the Company's rights under copyright laws. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in such Inventions. If in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or machine a prior Invention or improvement owned by Employee or in which Employee has an interest, and listed in <u>Exhibit 1</u>, the Company is hereby granted and shall have a non-exclusive, royalty-free, irrevocable, perpetual, sublicensable, worldwide license to make, have made, modify, use, market, sell and distribute such prior Invention as part of or in connection with such product, process or machine. Pursuant to <u>Section 3(d)</u>, if in the course of Employee's employment with the Company, Employee incorporates into a Company product, process or a machine a prior Invention or improvement owned by Employee or in which

EXHIBIT A-3

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Employee has an interest, but not listed in <u>Exhibit 1</u>, Employee agrees to assign and hereby does assign all Employee's rights and interest in the Invention to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;List of Inventions**. Employee has attached hereto as <u>Exhibit 1</u> a complete list of all Inventions or improvements to which Employee claims ownership or in which Employee has an interest and that Employee desires to remove from the operation of this Agreement. Employee acknowledges and agrees that such list is complete. If no such list is attached to this Agreement or such Exhibit has not been completed and signed by Employee, Employee represents to the Company and agrees that Employee has no such Inventions or improvements at the time of signing this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Cooperation**. Employee agrees to make and maintain adequate and current written records, in a form specified by the Company, of all Inventions, trade secrets and works of authorship assigned or to be assigned to the Company pursuant to this Agreement. Employee also agrees to perform, during and after Employee's employment, all acts deemed necessary or desirable by the Company to permit and assist it, at the Company's expense, in further evidencing and perfecting the assignments made to the Company under this Agreement and in obtaining, maintaining, defending and enforcing patents, patent rights, copyrights, trademark rights, trade secret rights or any other rights in connection with such Inventions and improvements in any and all countries. Such acts may include, without limitation, execution of documents and reasonable assistance or cooperation in legal proceedings. Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee's agents and attorney-in-fact, coupled with an interest, to act for and on Employee's behalf and in Employee's place and stead, to execute and file any documents, applications or related findings and to do all other lawfully permitted acts to further the purposes set forth above in this Section, including, without limitation, the perfection of assignment and the prosecution and issuance of patents, patent applications, filing with the FDA, copyright applications and registrations, trademark applications and registrations or other rights in connection with such Inventions and improvements with the same legal force and effect as if executed by Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Assignment or Waiver of Moral Rights**. Any assignment of copyright hereunder (and any ownership of a copyright as a work made for hire) includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as "***Moral Rights***" (collectively, "***Moral Rights***"). To the extent such Moral Rights cannot be assigned under applicable law and to the extent the following is allowed by the law in the various countries where Moral Rights exist, Employee hereby waives such Moral Rights and consents to any action of the Company that would violate such Moral Rights in the absence of such consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Holdover Assignment**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Employee agrees to, after the termination of Employee's employment with the Company for any reason: (1) disclose immediately to the Company all Inventions, patentable or not; (2) assist, at the Company's expense such applications for United States patents and foreign patents covering such Inventions as the Company may request; (3) assign to the Company without further compensation to Employee the entire title and rights to

EXHIBIT A-4

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all such Inventions and applications that Employee may have; and (4) execute, acknowledge and deliver all such papers (including, but not limited to, patent applications, assignments and power of attorney), and act as otherwise necessary at the request of the Company, to secure the Company the full rights to such Inventions and applications.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**The Inventions which shall come under this <u>Section 3(g)</u> shall include all Inventions that: (1) Employee conceives, reduces to practice, or otherwise makes or develops, either solely or jointly with others, within one (1) year after the termination of Employee's employment with the Company; and (2) are in any way based on any trade secret or confidential or proprietary information that Employee learned during employment at the Company; or result from any work performed by Employee for the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4.&nbsp;&nbsp;&nbsp;&nbsp;COMPANY PROPERTY**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Property of the Company**. Employee acknowledges and agrees that all Company Documents and Materials, Proprietary Information and all patents, patent rights, copyrights, trade secret rights, trademark rights and other rights (including, without limitation, intellectual property rights) anywhere in the world in connection therewith is and shall be the sole property of the Company. Employee hereby assigns to the Company any and all rights, title and interest Employee may have or acquire in the Proprietary Information or any Company Documents and Materials. Employee further acknowledges and agrees that all business procured by Employee related to the Company's business and all Company-related business opportunities and plans made known to Employee while Employee is employed by the Company will remain the permanent and exclusive property of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Handling of the Company Documents and Materials**. Employee agrees that during Employee's employment by the Company, Employee shall not remove any Company Documents and Materials from the business premises of the Company or deliver any Company Documents and Materials to any person or entity outside the Company, except as Employee may be required to do in connection with performing the duties of Employee's employment. Employee further agrees that, immediately upon the termination of Employee's employment by Employee or by the Company for any reason, or during Employee's employment if so requested by the Company, Employee shall return all Company Documents and Materials, apparatus, equipment and other physical property, or any reproduction of such property, excepting only: (i) Employee's personal copies of personnel records and records relating to Employee's compensation and benefits; (ii) Employee's copy of all agreements between Employee and the Company including this Agreement; and (iii) copies of any and all stockholder agreements to which Employee is a party in Employee's capacity as a stockholder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5.&nbsp;&nbsp;&nbsp;&nbsp;FAIR COMPETITION**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Nature and Value of the Company's Investment**. Employee understands that the Company has expended significant resources developing and obtaining certain beneficial relationships with its employees, consultants, advisors and customers, which are part of the Company's Proprietary Information and goodwill and by virtue of Employee's position and responsibilities with the Company, Employee will have access to and knowledge of

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the Company's Proprietary Information and goodwill. Employee acknowledges that the Company's ability to protect its investment in the foregoing and to keep its Proprietary Information and goodwill for its sole and exclusive use is of great competitive importance and commercial value to the Company and that the use of same by another individual or business that competes with the Company would cause the Company irreparable harm.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Restrictive Covenants**. In light of the foregoing, Employee covenants and agrees that during the entire time Employee is employed by the Company and continuing for (i) the twelve (12) months after the date Employee's employment with the Company ends if such employment ends as a result of the Company's termination for Cause or Employee's termination without Good Reason or (ii) the six (6) months after the date Employee's employment with the Company ends if such employment ends as a result of the Company's termination without Cause or Employee's termination for Good Reason (the "***Restricted Period***") Employee shall not, directly or indirectly, with or without consideration, on Employee's own behalf or on behalf of any other person or entity:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(i)&nbsp;&nbsp;&nbsp;&nbsp;**Encourage or solicit any employee of the Company to leave the Company for any reason or to accept employment with any other person or entity. This restriction includes, but is not limited to, Employee's agreement that Employee shall not retain or hire in any capacity, either individually or for any company by which Employee may be employed or with which Employee may be affiliated, any person who is or was employed by the Company at any time during Employee's employment with the Company or during the six (6) months after Employee's employment with the Company ends. Notwithstanding the foregoing, the restrictions of this <u>Section 5(b)(i)</u> shall not apply with respect to: (1) the *bona fide* hiring and firing of Company personnel to the extent such acts are part of Employee's duties for the Company; (2) Employee's executive assistant; and (3) any former employee of the Company that has not worked for the Company or any of the Company's affiliates for at least one (1) year prior to the date of Employee's termination of employment with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(ii)&nbsp;&nbsp;&nbsp;&nbsp;**Interfere with or attempt to impair the relationship between the Company and any of its non-employee consultants and advisors or customers, nor shall Employee attempt, directly or indirectly, to solicit, entice, hire or otherwise induce any non-employee consultant or advisor or customer of the Company to terminate association with the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iii)&nbsp;&nbsp;&nbsp;&nbsp;**Render services in any capacity to any person or division or subsidiary of any business, firm or company that is engaged in any business that develops, sells or provides other services related to any product that is competitive with any of the Company's products (whether already in existence or that was developed or being developed by the Company during Employee's employment) with which Employee was involved in any capacity during Employee's employment with the Company (the "***Restricted Products***"); or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(iv)&nbsp;&nbsp;&nbsp;&nbsp;**Whether as a partner, stockholder, principal, member, employee, agent, trustee, consultant, or through any other relationship or capacity, become interested in any portion of a business which has a product competitive with the Restricted Products; provided, however, that such restriction shall not apply with respect to a less than or equal to one percent

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(1%) interest in an entity which is publicly traded and listed on a recognized securities exchange. In addition, nothing herein shall prevent Employee, after the end of Employee's employment with the Company, from being employed by a division or subsidiary of a company that does not have any products which compete with the Restricted Products, even though such new employer has other divisions or subsidiaries which have products competitive with the Restricted Products.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.&nbsp;&nbsp;&nbsp;&nbsp;CONFLICTS OF INTEREST**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;No Conflicts**. By entering into this Agreement, Employee represents and warrants to the Company that, except as previously disclosed to the Company: (i) Employee's employment with the Company is not prohibited under any employment agreement or other contractual arrangement; and (ii) Employee is not aware of any conflicts which would restrict Employee's employment with the Company. Employee further represents and warrants that Employee has disclosed to the Company any contract to which Employee is a party that may restrict Employee's activities on behalf of the Company, and that Employee is presently in compliance with such contracts, if any.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Non-Disclosure and Use of Third Party Information**. By entering into this Agreement, Employee further represents and warrants that in Employee's work for the Company, Employee will not use or disclose any confidential information, including trade secrets, of any former employer or other third party to whom Employee has an obligation of confidentiality. Rather, Employee agrees that Employee will use only that information which is generally known and used by persons with training and experience comparable to Employee's own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company. Employee further agrees that Employee will not bring onto Company premises or use in Employee's work for the Company, any unpublished documents or property (including but not limited to proprietary information) belonging to any former employer or other third party that Employee is not authorized to use or disclose. By entering into this Agreement, Employee represents that Employee is able to perform Employee's job duties within these guidelines.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7.&nbsp;&nbsp;&nbsp;&nbsp;GENERAL PROVISIONS**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(a)&nbsp;&nbsp;&nbsp;&nbsp;Effective Date and Binding Effect**. This Agreement shall be effective as of the first day of Employee's employment with the Company and shall be binding upon Employee, Employee's heirs, executor, assigns and administrators and shall inure to the benefit of the Company, its subsidiaries, successors and assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(b)&nbsp;&nbsp;&nbsp;&nbsp;Reasonableness of Terms; Severability**. The Company and Employee agree that the terms contained in this Agreement are reasonable in all respects and that the restrictions contained therein are designed to ensure that Employee does not engage in unfair competition with the Company. The Company and Employee further agree that in the event a court determines that any of the terms or provisions of this Agreement are unreasonable, the court may limit the application of any provision or term, or modify any provision or term, and proceed to enforce this Agreement as so limited or modified. Likewise, if one or more provisions of this Agreement are held to be unenforceable under applicable law, such provisions shall be

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excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(c)&nbsp;&nbsp;&nbsp;&nbsp;Remedies**. Employee acknowledges and agrees that a violation of the terms of this Agreement may give rise to irreparable injury to the Company inadequately compensable in monetary damages, and accordingly, agrees that the Company may seek injunctive relief against such breach or threatened breach, in addition to any other legal remedies which may be available, including recovery of monetary damages. In any action successfully brought by any party to this Agreement to enforce the rights of such party against the other party under this Agreement, the prevailing party shall also be entitled to recover from the other party reasonable attorneys' fees and other costs of the action. In addition, if Employee is determined to have violated any of Employee's obligations under this Agreement, then the applicable Restricted Period shall be extended to account for the period during which Employee was in breach.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(d)&nbsp;&nbsp;&nbsp;&nbsp;Authorization to Notify New Employer**. Employee hereby authorizes the Company to notify Employee's new employer about Employee's rights and obligations under this Agreement following the end of Employee's employment with the Company regardless of the reason Employee's employment with the Company ends.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(e)&nbsp;&nbsp;&nbsp;&nbsp;Governing Law; Consent to Jurisdiction; Waiver of Jury Trial**. This Agreement shall be governed by and construed in accordance with the internal laws of the State of Michigan, without regard to its principles of conflicts of laws. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of Michigan and any United States District Court in the State of Michigan for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(f)&nbsp;&nbsp;&nbsp;&nbsp;Entire Agreement; Amendment**. This Agreement, the Employment Agreement, the award agreements for the Initial Option Award and all agreements, documents, instruments, schedules, exhibits or certificates prepared in connection herewith, represent the entire understanding and agreement between the parties with respect to the subject matter hereof, and supersedes all prior understandings, agreements or negotiations between such parties, whether written or oral. Employee understands and acknowledges that, except as set forth in this Agreement and in the Employment Agreement: (i) no other representation or inducement has been made to Employee; (ii) Employee has relied on Employee's own judgment and investigation in accepting Employee's employment with the Company; and (iii) Employee has

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not relied on any representation or inducement made by any officer, employee or representative of the Company. No modification of, amendment to, or waiver of any rights under, this Agreement shall be effective unless in a writing signed by the Chairman of the Board of Directors of the Company and Employee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(g)&nbsp;&nbsp;&nbsp;&nbsp;Nature of Obligations and Employment Relationship**. Employee understands and agrees that the obligations set forth in this Agreement shall survive the end of Employee's employment with the Company regardless of when or why Employee's employment ends. Employee understands and agrees that any subsequent change or changes in Employee's duties, salary or compensation shall not affect the validity or scope of this Agreement; nor will the existence of any claim Employee may have against the Company operate to nullify or reduce Employee's obligations under this Agreement. Employee understands and agrees that nothing in this Agreement alters the at-will nature of Employee's employment with the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**(h)&nbsp;&nbsp;&nbsp;&nbsp;Construction; No Waiver; Execution**. Any ambiguity in this Agreement will not be construed against either party as the drafter. Any waiver of a breach of this Agreement, or rights hereunder, will be in writing and will not be deemed to be a waiver of any successive breach or rights hereunder. This Agreement may be executed in counterparts which will be deemed to be part of one original, and facsimile and.pdf signatures will be equivalent to original signatures.

EMPLOYEE HAS READ THIS AGREEMENT CAREFULLY AND UNDERSTANDS AND ACCEPTS THE OBLIGATIONS WHICH IT IMPOSES UPON EMPLOYEE WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO EMPLOYEE TO INDUCE EMPLOYEE TO SIGN THIS AGREEMENT. EMPLOYEE SIGNS THIS AGREEMENT VOLUNTARILY AND FREELY.

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| | |
|:---|:---|
| **THE COMPANY:** | **EMPLOYEE:** |
| SHOULDER INNOVATIONS, INC. |  |
| By: |  |
| Name: | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAVID BLUE |
| Title: |  |
| Date: November 1, 2020 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Date: November 1, 2020 |

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EXHIBIT A-9

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**<u>EXHIBIT 1</u>**

The following is a complete list of all Inventions or improvements relevant to the subject matter of Employee's employment by the Company that have been made or discovered or conceived or first reduced to practice by Employee, either alone or jointly with others, prior to Employee's employment by the Company that Employee desires to remove from the operation of that certain Employee Proprietary Information, Inventions Assignment and Non-Competition Agreement between the Company and Employee:

☐&nbsp;&nbsp;&nbsp;&nbsp;No Inventions or improvements.

☒&nbsp;&nbsp;&nbsp;&nbsp;See below: Any and all Inventions regarding software tools and products related to the business of Genesis Software Innovations, LLC.

☐&nbsp;&nbsp;&nbsp;&nbsp;Additional sheets attached.

Employee proposes to bring to Employee's employment the following materials and documents of a former employer:

☐&nbsp;&nbsp;&nbsp;&nbsp;No materials or documents

☐&nbsp;&nbsp;&nbsp;&nbsp;See below:

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| | | |
|:---|:---|:---|
| | | **EMPLOYEE:** |
| Date: November 1, 2020 | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAVID BLUE | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;DAVID BLUE |

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EXHIBIT A-10

## Exhibit 23.1

**Exhibit 23.1**

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this Registration Statement on Form S-1 of our report dated April 17, 2025, relating to the financial statements of Shoulder Innovations, Inc. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

/s/ Deloitte & Touche LLP

Grand Rapids, Michigan

July 7, 2025

## Exhibit 99.1

**Exhibit 99.1** 

**CONSENT TO BE NAMED AS A DIRECTOR NOMINEE** 

Shoulder Innovations, Inc., a Delaware corporation (the "Company"), is filing a Registration Statement on Form S-1 (the "Registration Statement") with the Securities and Exchange Commission under the Securities Act of 1933, as amended (the "Securities Act"), in connection with a public offering (the "Public Offering") of its common stock. In connection with the Public Offering, I hereby consent, pursuant to Rule 438 of the Securities Act, to being named as a nominee to the board of directors of the Company in the Registration Statement, and any amendments and supplements thereto. I also consent to the filing of this consent as an exhibit to the Registration Statement and any amendments and supplements thereto.

---

| |
|:---|
| /s/ Richard Buchholz |
| Name: Richard Buchholz |
| Date: June 27, 2025 |

---

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